Indian software and pharmaceutical sector IC and financial performance

Abstract

Purpose -This paper seeks to estimate and analyze the relationship between intellectual capital and corporate conventional financial performance measures of Indian software and pharmaceutical companies for a period of five years from 2002 to 2006. Design/methodology/approach -Annual reports, especially the profit and loss accounts and balance sheets of the selected companies for the relevant years have been used to obtain the data. International literatures on intellectual capital with specific reference to measurement tools and techniques have been reviewed. Value Added Intellectual Coefficient TM (VAIC) method is applied for measuring the value based performance of the companies. Corporate conventional performance financial measures used in this analysis are: profitability; productivity; and market valuation. It is an empirical study using multiple regression analysis for the data analysis. The intellectual capital (human capital and structural capital) and physical capital of the arbitrarily selected companies have been analyzed and their impact on corporate performance has been measured using multiple regression technique. Findings -The analysis indicates that the relationships between the performance of a company's intellectual capital and conventional performance indicators, namely, profitability, productivity and market valuation, are varied. The findings suggest that the performance of a company's intellectual capital can explain profitability but not productivity and market valuation in India.Research limitations/implications -The study has been conducted on a small sample of 80 companies belonging to the India software and pharmaceutical sectors. For a better understanding, a larger data set covering all prominent industry segments will be helpful. Practical implications -Intellectual capital is an area of interest to numerous parties, e.g. shareholders, managers, policy makers, institutional investors. This paper throws some light on the new performance indicator, which Indian managers can use in order to evaluate the corporate performance and benchmark it with global standards. This is useful particularly in the context of the "knowledge economic" environment. Originality/value -The paper represents a pioneering attempt to understand the implications of the business performance of the Indian software and pharmaceutical sectors from an intellectual resource perspective.

Impact of intellectual capital on financial performance in the pharmaceutical industry in Iran

“…For example, although some researchers [23,8,25] emphasized the role of intellectual capital in explaining the difference between book and market values of companies, the current study, like some similar studies [15,14,10], has not find any signs regarding the relationship between intellectual capital and market value of companies. On the other hand, as some researchers [34,30,26,17,12,10] confirm the role of intellectual capital in explaining the profitability, the current study also showed the mentioned relationship. This study includes significant themes for practitioners and managers of pharmaceutical companies and researchers who are interested in the topic of intellectual capital.…”

Intellectual Capital, Innovation and Performance: a Systematic Review of the Literature

“…Chen, 2009;Ghosh & Mondal, 2009;Shiu, 2006;Ting & Lean, 2009). This indicator-based method (called VAIC TM , Value Added Intellectual Coefficient) has been widely used, across sectors and countries, and provides a standardized measure, easy to understand and allowing benchmarking.…”

Makna Intellectual Capital Perspektif the Role Theory Dan the Resource Based Theory

“…Artinya, bahwa HC (farmasis atau apoteker) dapat menjalankan CPOB yang merupakan SOP proses produksi obat sehingga kegiatan operasional perusahaan dapat berjalan dengan lancar dan mutu obat terjamin. Namun, hasil penelitian ini berbeda dengan salah satu hasil penelitian Ghosh dan Mondal (2009), yang menyatakan bahwa IC tidak berpengaruh pada produktivitas perusahaan farmasi dan software di India. Artinya, IC tidak berperan dan tidak berkontribusi pada produktivitas.…”

“…Dengan demikian, apabila dikaitkan dengan hasil penelitian sebelumnya bahwa penelitian ini mendukung dan mampu menjelaskan hasil penelitian lain, seperti hasil penelitian Sharabati et al (2010), Ghosh dan Mondal (2009), Bramhandkar et al (2007, Chen et al (2004), Cabrita dan Bontis (2007), Bontis et al (2000), Chen (2008), Stewart (1997), dan Mageza (2004 (lihat tabel 5). Artinya, bahwa farmasis yang berkualitas, unggul, mampu menjaga mutu obat, dan mampu melaksanakan CPOB dengan baik, dapat dipastikan akan menghasilkan mutu obat yang diminati oleh konsumen (lihat tabel 6).…”