Value added intellectual coefficient (VAIC)

Abstract

Purpose -The purpose of this paper is to study, mainly from the point of view of methodological accounting principles, the value added intellectual coefficient (VAIC), introduced by Pulic as a measure of intellectual capital efficiency (ICE). More specifically, the aim of the analysis is to investigate the strengths and weaknesses of the VAIC, primarily from the accounting theory perspective. Design/methodology/approach -The approach to the study of Pulic's contribution is as follows: first the authors submitted Pulic's methodology to a "conceptual" test, in order to check whether it contradicts any basic accounting principles. Then the results of this methodological test were compared to those obtained by the authors who have criticized Pulic's proposal, in order to check for any concordance or discordance with the literature. Findings -Several authors have discussed the crucial aspects of the VAIC. In this paper the focus is primarily on Andriessen's concerns, since they relate to the theoretical accounting aspects of Pulic's proposal, which is the topic of the paper. First of all, the authors have found that the suggestion of Pulic, centered on the Value Added Income Statement, does not modify or contradict any of the fundamental accounting principles. Therefore the criticisms made by Professor Andriessen should be subject to future research. Furthermore the performance measure proposed by Pulic ( VAIC) is not a genuine rival to the traditional methodologies (e.g. the Economic Value Added ( EVA)), as instead emerges from Pulic's papers. VAIC and EVA measure different aspects of the performance and therefore may usefully live together in a context in which the performance is measured through multicriteria methodologies, such as the Balanced Scorecard, Skandia Navigator or Intangible Asset Monitor. Practical implications -The practical implications of the results are: the correct placing of Pulic's contribution into the accounting principles theory; and the manner for using the VAIC methodology in a multicriteria performance evaluation. The authors believe that both aspects have relevant implications for business accounting practice. Originality/value -The paper shows that almost all of the misunderstandings of the literature debate, regarding Pulic's proposal, arise from a "semantic shift" generated by the fact that Pulic uses the terms human capital and structural capital with a completely different meaning from that of the Skandia Navigator. Authors' hope is that the study described in the paper will contribute to a better understanding of: the way to calculate and to interpret the efficiency of intellectual capital (IC) in a correct manner; and the role of IC on firm multicriteria performances.

Do Corporate Social Responsibility and Corporate Governance Influence Intellectual Capital Efficiency?

“…With the awareness that measuring IC performance is still an open question [18], we estimate the financial contribution of IC performance through value-added intellectual capital (VAIC) by Pulic [39], a model that has been widely used as the primary measure of IC (e.g., Reference [31,[40][41][42]). Consistent with Iazzolino and Laise [43] and relative to the indicators that measure value creation from shareholders' perspective, VAIC measures value creation from the stakeholder perspective and clearly accounts for IC.…”

“…Although VAIC has been widely employed in the empirical research as a measure of IC efficiency [134], it suffers from several drawbacks (for details see References [133,135]). In spite of this, in their study, Iazzolino and Laise [43] (p. 548) determined that VAIC "is a method that complements those existing and for this reason, it can be usefully included, as an innovative indicator of intellectual capital efficiency".…”

“…As noted in the previous studies (e.g., Reference [38]), Asset4 generates transparent, auditable, and comparable information for the evaluation of corporate social performance.With the awareness that measuring IC performance is still an open question [18], we estimate the financial contribution of IC performance through value-added intellectual capital (VAIC) by Pulic [39], a model that has been widely used as the primary measure of IC (e.g., Reference [31,[40][41][42]). Consistent with Iazzolino and Laise [43] and relative to the indicators that measure value creation from shareholders' perspective, VAIC measures value creation from the stakeholder perspective and clearly accounts for IC.Therefore, to achieve the objectives of the current study, the remainder of this paper is organized as follows. Section 2 presents the conceptual framework and the hypotheses.…”

The Effects of Intellectual Capital on Financial Performance and Market Value: Evidence from Turkey

“…They asserted two reasons for this situation; firstly, there is a confusion regarding capitalized items and secondly cash flow items used and intellectual capital concepts are mostly misused. Iazzolino and Laise (2013) criticizes VAIC TM model due to the misperception in the meanings of terms such as structural capital (SC) and human capital (HC). They also claimed that VAIC TM is not an alternative to other performance measurement tools, such as Economic Value Added (EVA), instead it measures a different aspect of performance, and therefore it can be a complementary part of performance measurement together with other traditional methods.…”

Board Structures dan Value-Added Intellectual Capital: Studi Kasus pada Industri Barang Konsumsi dan Perdagangan Indonesia

“…Guthrie et al (2004) (Appuhami and Bhuyan, 2015;Chang and Hsieh, 2011;Murale et al, 2010). Pulic berpendapat bahwa indikator yang tepat untuk mengukur kinerja pada era knowledge-based economy adalah value added (Iazzolino and Laise, 2013 (Iazzolino and Laise, 2013;Zéghal and Maaloul, 2010). Sehingga, alasan utama digunakannya VAIC sebagai indikator atas intellectual capital karena VAIC menggunakan data dari laporan keuangan dan hal tersebut akan mengurangi adanya kemungkinan subjektifitas atas data yang diperoleh (Chang and Hsieh, 2011).…”