The impact of intellectual capital on firm performance: a study of Indian firms listed in COSPI

2018 ◽  
Vol 19 (5) ◽  
pp. 935-964 ◽  
Author(s):  
Neha Smriti ◽  
Niladri Das
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Creation ◽  
Generalized Method Of Moments ◽  
Value Added ◽  
Secondary Data ◽  
Share Price ◽  
Content Type ◽  
Listed Firms ◽  
The Impact

Purpose The purpose of this paper is to examine the effect of intellectual capital (IC) on financial performance (FP) for Indian companies listed on the Centre for Monitoring Indian Economy Overall Share Price Index (COSPI). Design/methodology/approach Hypotheses were developed according to theories and literature review. Secondary data were collected from Indian companies listed on the COSPI between 2001 and 2016, and the value-added intellectual coefficient (VAIC) of Pulic (2000) was used to measure IC and its components. A dynamic system generalized method of moments (SGMM) estimator was employed to identify the variables that significantly contribute to firm performance. Findings Indian listed firms appear to be performing well and efficiently utilizing their IC. Overall, human capital had a major impact on firm productivity during the study period. Furthermore, the empirical analysis showed that structural capital efficiency and capital employed efficiency were equally important contributors to firm’s sales growth and market value. The growing importance of the contribution of IC to value creation was consistently reflected in the FP of these Indian companies. Practical implications This study has robust theoretical grounds and employs a validated methodology. The present study extends knowledge of IC among academicians and managers and highlights its contribution to value creation. The findings may help stakeholders and policymakers in developing countries properly reallocate intellectual resources. Originality/value This study is the first study to evaluate IC and its relationship with traditional measures of firm performance among Indian listed firms using dynamic SGMM and VAIC models.

Intellectual capital and firm performance in emerging economies: the case of India

2016 ◽  
Vol 26 (3) ◽  
pp. 410-430 ◽  
Author(s):  
Santi Gopal Maji ◽  
Mitra Goswami
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Added ◽  
Relative Importance ◽  
Content Type ◽  
Knowledge Based ◽  
Traditional Sector ◽  
Steel Sector ◽  
Capital Efficiency ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of intellectual capital (IC) on Indian traditional sector and compare the relative importance of IC on corporate performance of Indian knowledge-based sector (engineering sector) and traditional sector (steel sector). Design/methodology/approach Secondary data on 100 listed Indian firms, comprising of 44 firms from the engineering sector and 56 from the steel sector, are collected from “Capitaline Plus” Corporate database for a period of 14 years from 1999-2000 to 2012-2013. IC and its components are computed using Pulic’s value-added intellectual coefficient model and firm performance is measured by return on asset. Fixed effect regression model is used to investigate the hypothetical relationship between IC and firm performance. Further, quantile regression is used to check the robustness of the results. Findings The results indicate that IC efficiency and physical capital efficiency are positively and significantly associated with the firm performance for both the sectors. Regarding the components of IC, the coefficient of human capital efficiency is positive and significant, but the present effort fails to disentangle any significant influence of structural capital efficiency on firm performance. However, the results indicate that the influence of IC efficiency on firm performance is significantly greater in case of knowledge-based sector than that of traditional sector. Practical implications The findings of the study are useful for the decision makers, as the results indicate that the IC plays crucial role in value creation not only for knowledge-based firms but also for the firms belonging to the traditional manufacturing sector. Originality/value In the Indian context, this is the first study to examine the relative importance of IC in a knowledge-based sector and a traditional sector using appropriate methodology.

scholarly journals Intellectual Capital and Firm Performance in the Context of Venture-Capital Syndication Background in China

Complexity ◽  
2021 ◽  
Vol 2021 ◽  
pp. 1-17
Author(s):  
Yuzhong Lu ◽  
Zengrui Tian ◽  
Guillermo Andres Buitrago ◽  
Shuiwen Gao ◽  
Yuanjun Zhao ◽  
...  
Keyword(s):  
Firm Performance ◽  
Venture Capital ◽  
Intellectual Capital ◽  
Generalized Method Of Moments ◽  
Theoretical Development ◽  
Relational Capital ◽  
Return On Equity ◽  
Listed Firms ◽  
The Impact ◽  
Innovation Capital

This paper is intended to investigate the role of Venture-Capital Syndication (VCS) background in the relationship between intellectual capital (IC) and portfolio firm performance (PFP); specifically, this article examines the moderating effect of VCS’s leading firm background and member heterogeneity on the effect of IC on PFP. This study used a modified VAIC model to measure IC to compose a 4-component variable including human capital, structural capital, relational capital, and innovation capital. The data were collected from VCS-backed and listed firms in China during 2014 to 2018 applying the pooled OLS model for hypotheses test, Generalized Method of Moments (GMMs) to reduce endogeneity and unobserved factor control, and also return on equity (ROE) instead of ROA for the robustness test. Empirical results showed that IC and its components can improve PFP for VCS-backed firms in China; in detail, IC showed greater impact on performance of firms invested by foreign lead investors than in private or government VCS, specially reflected in the impact of innovation capital on PFP. Furthermore, IC showed weaker impact on PFP of mixed VCS-backed firms compared to pure VCS-backed firms and showed diminished effect on higher VCS member heterogeneity mainly reflected in the impact of relational capital on firm performance. These findings propose a new way of combining IC and VC to improve firm performance and are beneficial to theoretical development of IC and VC as well as a perspective for VC firm managers to choose suitable partners prior to join a VCS.

Dynamic study of corporate governance structure and firm performance in China

2019 ◽  
Vol 13 (2) ◽  
pp. 299-317 ◽  
Author(s):  
Lin Shao
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Generalized Method Of Moments ◽  
Supervisory Board ◽  
Governance Structure ◽  
State Ownership ◽  
Content Type ◽  
Listed Firms ◽  
The Impact ◽  
The Relationship

Purpose The paper aims to provide a comprehensive investigation of the relationship between corporate governance (CG) structure and firm performance in Chinese listed firms from 2001 to 2015. The authors’ motivation derives from the fact that the CG system in China is different from those in the US, the UK, Germany, Japan and other countries. Design/methodology/approach A large unbalanced sample, covering more than 22,700 observations in Chinese listed firms, was used to explore, by means of a system-generalized method-of-moments (GMM) estimator, the relationship between CG structure and firm performance to remove potential sources of endogeneity. Findings Results show that Chinese CG structure is endogenously determined by the CG mechanisms investigated: there is no relationship between board size (including independent directors) and firm performance; CEO duality has a significantly negative effect on firm performance; concentration of ownership has a significantly positive influence on firm performance; managerial ownership is negatively correlated with firm performance; state ownership has a significantly positive effect on firm performance; and a supervisory board is positively correlated with firm performance. Practical implications The findings provide policymakers and firm managers with useful empirical guidance concerning CG in China. Originality/value Few integrative studies have examined the impact of CG structure on firm performance in China. This study adds new empirical evidence that the relation between CG structure and performance in China is endogenous and dynamic when controlling for unobserved heterogeneity, simultaneity, and dynamic endogeneity.

Intellectual capital and financial performance in the Serbian ICT industry

2016 ◽  
Vol 17 (2) ◽  
pp. 373-396 ◽  
Author(s):  
Vladimir Dženopoljac ◽  
Stevo Janoševic ◽  
Nick Bontis
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Value Creation ◽  
Value Added ◽  
Physical Capital ◽  
Content Type ◽  
Main Research ◽  
Ict Industry ◽  
The Impact ◽  
Ict Companies

Purpose – The purpose of this paper is to examine whether intellectual capital (IC) creates value in the Serbian information communication technology (ICT) sector. More specifically, it examines the degree to which IC and its key components affect the financial performance of selected ICT companies compared to effects on physical and financial capital. Design/methodology/approach – The analysis included 13,989 Serbian ICT companies during 2009-2013. Value-added intellectual coefficient (VAIC) was used to measure the level of IC contribution to value creation. Measures of financial performance used in the study were return on equity, return on assets, return on invested capital, profitability, and asset turnover. Findings – Results indicate that, when using firm size and leverage as control variables, only capital-employed efficiency has significant effect on financial performance. Finally, the research confirms that there were no significant differences in financial performance among different ICT subsectors. Research limitations/implications – Main research limitation is related to the disadvantages of VAIC as the measure of IC’s contribution to value creation. Practical implications – Owners and managers of Serbian ICT companies must recognize the importance of managing both the physical capital and the intangible resources embedded in their employees and processes. Originality/value – This is the first paper to examine comprehensively the impact of IC on financial performance in the ICT sector in a transitional economy. This study differs from prior studies in that the authors analyzed every company that operated in Serbian ICT sector.

scholarly journals Intellectual Capital, Political Uncertainty and Firm Performance: Evidence from Pakistan

2021 ◽  
Vol 7 (2) ◽  
Author(s):  
Farheen Hussain ◽  
Ayub Khan Mehar
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Intellectual Capital ◽  
Stock Exchange ◽  
Value Added ◽  
Secondary Data ◽  
Political Uncertainty ◽  
Negative Effect ◽  
Performance Results ◽  
The Impact

This research has examined the impact of Intellectual Capital (IC) on performance of the firms in Pakistan while considering political uncertainty as moderating variable. The research used secondary data of firms, related to manufacturing sectors, listed in Karachi Stock Exchange - KSE 100 Pakistan for a ten-year period of 2010-2019. Value Added Intellectual Coefficient (VAIC) model by Pulic (1998) has been used to calculate IC and its components and ROA is used to measure firm’s performance. Regression Model has been employed to investigate the hypothetical relationship between IC and firm performance. Results of this paper revealed that CEE and CCE have a positive relationship with the financial performance of firms in Pakistan whereas SCE has negative effect on the financial performance of the firms. Furthermore, the findings suggest political instability as a significant moderating variable on the relationship among intellectual capital, its components and firms’ performance. This research is the first attempt in investigating the relative importance of intellectual capital success of any firm under political uncertainty.

scholarly journals The Impact of Intellectual Capital on Firm Performance of the Turkish Real Estate Companies Before and After the Crisis

2018 ◽  
Vol 14 (1) ◽  
pp. 29 ◽  
Author(s):  
Sedeaq Nassar
Keyword(s):  
Firm Performance ◽  
Real Estate ◽  
Intellectual Capital ◽  
Value Creation ◽  
Positive Impact ◽  
Value Added ◽  
Significant Relation ◽  
Capital Efficiency ◽  
The Impact ◽  
Positive Significant Relation

Purpose- The main purpose of this study is to find the impact of intellectual capital on firm performance of real estate companies listed in Borsa Istanbul, using data of 27 listed companies over the period 2004-2015. Value Added Intellectual Coefficient (VAIC) method is utilized as a measure of intellectual capital (IC). Methodology- An OLS regression is used to examine the impact of intellectual capital (VAIC); Human capital efficiency (HCE), Structural capital efficiency (SCE), and Capital employed efficiency (CEE) on market, productivity, and financial performance. Findings- The findings show that SCE consider as a key role of value creation in real estate companies where has a positive significant relation with MB, ROE, and EPS before the crisis and with ROA and ROE after the crisis. HCE show a positive significant relation with ROA and ROE before the crisis and a negative significant association with MBand ATO after the crisis. CEE show a negative significant impact on ATO after the crisis. VAIC shows a significant positive impact on ROA, ROE, and EPS before the crisis, while it has the same relation with ROE after the crisis. Conclusion- Although the good result of using intellectual capital for value creation, real estate Turkish companies still weakly depend on its intellectual capital.

Does intellectual capital efficiency improve firm performance in BRICS economies? A dynamic panel estimation

2017 ◽  
Vol 21 (1) ◽  
pp. 65-85 ◽  
Author(s):  
Muhammad Nadeem ◽  
Christopher Gan ◽  
Cuong Nguyen
Keyword(s):  
South Africa ◽  
Firm Performance ◽  
Intellectual Capital ◽  
Generalized Method Of Moments ◽  
Value Added ◽  
Least Square ◽  
Dynamic Nature ◽  
Dynamic Panel ◽  
Content Type ◽  
Dynamic Relationship

Purpose The aim of the current study is to measure the dynamic relationship between intellectual capital (IC) and firm performance in Brazil, Russia, India, China and South Africa (BRICS) economies. Design/methodology/approach The current study applies dynamic panel system generalized method of moments estimator to investigate the dynamic relationship between IC and firm performance of 6,045 publically listed firms in BRICS economies for the period of 2005-2014. Findings The results revealed that IC efficiency is significantly associated with return on assets and return on equity. Furthermore, human, structural and physical capitals have a positive and significant impact on firm performance. The results, while endorsing resource-based, resource-dependency and learning organization theories, emphasize the importance of IC for firm performance. Practical implications The current study does not only provides new direction for future research to analyze dynamic nature of IC and firm performance relationship but also emphasizes the importance of intangibles because of their contribution toward value added. The current study does provide cross-country comparison of top five emerging economies which is useful for the policy makers to evaluate investments in intangibles. Originality/value The current study is the first study to use dynamic ordinary least square (OLS) and Wooldridge strict exogeneity test to test the dynamic nature of the relationship between IC and firm performance. Moreover, unlike previous studies which ignore South Africa, this study covers all BRICS economies.

The interrelationship between intellectual capital and firm performance: evidence from China's manufacturing sector

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jian Xu ◽  
Jingsuo Li
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Manufacturing Sector ◽  
Value Added ◽  
Physical Capital ◽  
Listed Companies ◽  
High Tech ◽  
Manufacturing Companies ◽  
Content Type ◽  
The Impact

PurposeThe purpose of this paper is to examine the impact of intellectual capital (IC) and its components (human, structural and relational capitals) on the performance of manufacturing listed companies in China. This paper also investigates the impacts of company ownership, industry attributes and region on the IC-performance relationship.Design/methodology/approachThe study uses the data of 953 manufacturing companies listed on the Shanghai and Shenzhen Stock Exchanges over the period 2012–2016. The modified value-added intellectual coefficient (MVAIC) model is applied to measure IC efficiency. Finally, multiple regression analysis is employed to test the research hypotheses.FindingsThis study reveals that IC can enhance firm performance in China's manufacturing sector. Overall, earnings are affected by physical capital, human capital (HC) and structural capital (SC), and profitability and productivity are influenced by physical capital, HC, SC and relational capital. Physical capital is the most influential contributor to firm performance. In addition, state-owned enterprises have a greater impact of IC on firm performance than private-owned enterprises; high-tech manufacturing companies have higher IC performance than non-high-tech manufacturing companies; manufacturing companies in China's eastern region have higher IC performance than the counterparts in central and western regions.Practical implicationsThe findings may help managers, stakeholders and policymakers in developing countries to effectively and efficiently manage their IC resources.Originality/valueThis is the first study to evaluate IC and its relationship with firm performance among Chinese manufacturing listed companies using the MVAIC model.

Intellectual capital performance during financial crises

2016 ◽  
Vol 20 (3) ◽  
pp. 55-78 ◽  
Author(s):  
Sampath Kehelwalatenna
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Creation ◽  
Financial Crises ◽  
Minor Role ◽  
Resource Base ◽  
Content Type ◽  
Creation Process ◽  
The Impact ◽  
Value Creation Process

Purpose This paper aims to examine empirically the behaviour of the impact of intellectual capital (IC) on firm performance during financial crises, having observed that there was no prior research carried out to examine whether the theoretically expected sustainable firm performance created by IC holds during a financially unstable situation in the economy. Design/methodology/approach The Pulic’s value-added intellectual coefficient method is used to measure IC. Firm performance is measured through productivity, profitability and revenue growth. Structural stability tests and dynamic regression models for panel data are used for the data of 191 banking firms listed on the New York Stock Exchange during 2000-2011. Findings The paper reveals, contrary to theoretical expectations, that the impact of IC on firm performance is inconsistent during financial crises. This behaviour emerges mainly because of the incapability of human capital, the main component of IC, to create value for the sample firms during financial crises. Research limitations/implications The findings of the study are confined to financial crises that existed in the US economy during the period 2000-2011. The findings provide evidence that heterogeneity in the resource base of a firm plays a very minor role in the value creation process during turbulent economic situations. The findings also question the practicality of investing in intangible assets, including IC, during periods of financial crises. Originality/value This paper could be the first attempt to evident empirically that the heterogeneity in the resource base of the firm has a very minor role to play in the value creation process when instability exists in the macroeconomic environment.

Intellectual capital: a determinant of firms' operational efficiency

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kanishka Gupta ◽  
T.V. Raman
Keyword(s):  
Intellectual Capital ◽  
Stochastic Frontier Analysis ◽  
Stock Exchange ◽  
Stochastic Frontier ◽  
Value Added ◽  
Financial Sector ◽  
Operational Efficiency ◽  
Content Type ◽  
Frontier Analysis ◽  
The Impact

PurposeIntellectual capital (IC) has been recognized in improving the efficiency of businesses and gaining competitive edge in the developed world. The present study offers perspectives into the effect of IC on the efficiency of the Indian financial sector companies.Design/methodology/approachFor the purpose of evaluating efficiency, the research has used stochastic frontier analysis (SFA). All Indian financial sector companies listed in National Stock Exchange (NSE-500) for the timeframe of ten years (2008–2018) have been considered. The paper has employed modified Pulic's Value Added Intellectual Coefficient (VAICTM) as a proxy to measure IC. Correlation and panel data regression have been used in order to examine the relationship.FindingsThe results of the study indicate positive and significant relationship between IC and efficiency of the firm. The results also show that all the components of IC, that is, human capital, relational capital, process capital and capital employed have a significant impact on firms' efficiency. Additionally, it has been seen that sample companies do not invest in research and development leading to no innovation capital.Practical implicationsThe research will assist managers in managing and controlling the IC, investors in matters related to investment and financial experts in improving the company's IC and value creation.Originality/valueThe current research is one of the pioneering studies in the context of Indian financial sector that examines the impact of modified VAIC on operational efficiency calculated using SFA.

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