Intellectual Capital and Financial Performance in Serbia

Abstract

Purpose This research paper explores the impact of intellectual capital (IC) and its various components on financial performance of 100 Serbian companies within the real sector (which includes all companies in the Serbian economy not including banking and insurance). Design/methodology/approach The performance measures used were net profit, operating revenues, operating profit, return on equity (ROE), and return on assets (ROA), whereas IC efficiency was measured using value added intellectual coefficient (VAIC). A multiple‐regression model was used to assess the relationship among individual components of VAIC and financial performance. Findings Net profit, operating revenue, and operating profit are not the consequence of the efficient use of IC in Serbian companies. On the other hand, human and structural capital affect ROE and ROA, whereas physical capital influences ROE. Research limitations/implications VAIC is an accounting measure of performance and therefore does not provide an adequate framework for analyzing synergy between human, structural, and physical capital. In addition, the model fails to offer adequate analysis for those companies that have negative values for equity and operating profit. Practical implications The presented results are especially useful for further research regarding the role and significance of IC for Serbian companies. By focusing on adequate IC management and use, the Serbian economy's competitiveness level would increase. Originality/value This paper is original as no previous empirical work on IC and its effects on financial performance have been carried out among Serbian companies in the real sector. Copyright © 2013 John Wiley & Sons, Ltd.

Intellectual Capital Performance of the Commercial Banking Sector of Malawi

“…1;2015 measurement methods are still being developed, the VAIC TM seems to be most preferred. Generally the cost methods have the following disadvantages according to Janosević et al (2013) On the other hand, VAIC TM is considered appropriate for organizations that are intellectually inclined (Kamath, 2007) like the banks. As already indicated, the VAIC TM method is not aimed at valuing the intellectual capital of a firm, rather it primarily measures the efficiency of firms' three types of inputs: physical and financial capital, human capital, and structural capital, namely the Capital Employed Efficiency (CEE), the Human Capital Efficiency (HCE), and the Structural Capital Efficiency (SCE) (Mohiuddin et al, 2006).…”

“…Entity resources are the most significant necessity for realizing and maintaining competitive advantage (Janosević et al, 2013). In today's economy which is knowledge-based (Gan & Saleh, 2008), wealth and growth are predominantly driven by intangible assets (Cabrita & Vaz, 2005).…”

“…These intangible assets collectively are referred to as intellectual capital. They are called "intellectual" simply because their source is the human mind (Janosević et al, 2013). However, though they are products of human mind hence intangible or invisible drivers (i.e.…”

“…According to Janosević et al (2013) intellectual capital has been defined in various ways due to its heterogeneous nature. These definitions though different they consensually stress on the intellectual capital's potential benefits and its reliance on non-material resources (Janosević et al, 2013).…”

“…These definitions though different they consensually stress on the intellectual capital's potential benefits and its reliance on non-material resources (Janosević et al, 2013). Mondal and Ghosh (2012) described intellectual capital as "intangible assets or intangible business factors of the company, which have a significant impact on its performance and overall business success, although they are not explicitly listed in the balance sheet (if so, then under the term goodwill)."…”