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Effect of Intellectual Capital on Firms¡¯ Competitive Advantage Condition: An Empirical Investigation in India

Author

Listed:
  • Trilochan Tripathy

    (XLRI- Xavier School of Management, Jamshedpur-831001, INDIA)

  • Luis A. Gil-Alana

    (Faculty of Economics & Business Administration, University of Navarra Pamplona, E-31080, SPAIN)

  • Debadutta Sahoo

    (Tata Consultancy Services, Infocity, Bhubaneswar-751024, INDIA)

Abstract

This paper aims to model the effect of intellectual capital on firms¡¯ competitive advantage condition across selected Indian industries. Using a panel dataset consisting of 146 Indian companies listed in the Bombay Stock Exchange (BSE), spanning across 7 industries during 2003 to 2012. The study suggests that the firms¡¯ competitive advantage condition is relatively better explained by some of the individual intellectual capital components rather than by the Public¡¯s Composite Value Added Intellectual Capital Coefficient (VAIC) measure. Physical and financial capital efficiency (VACA) statistically determines the firms¡¯ competitive advantage condition irrespective of the industry segments. However, along with VACA, human capital efficiency (HCVA) is also observed to be a significant determinant of firms¡¯ competitive advantage conditions for automobiles, consumer goods, health and pharmaceuticals and information technology industries. The result extends the understanding of how VAIC and other associated components determine competitive advantage condition of firms¡¯ across industries in India. To the best of authors' knowledge, for the first time the firms¡¯ competitive advantage condition is modeled in a VAIC framework.

Suggested Citation

  • Trilochan Tripathy & Luis A. Gil-Alana & Debadutta Sahoo, 2017. "Effect of Intellectual Capital on Firms¡¯ Competitive Advantage Condition: An Empirical Investigation in India," Review of Economics & Finance, Better Advances Press, Canada, vol. 8, pages 61-78, May.
    • Handle: RePEc:bap:journl:170205
    Note: The authors thank the anonymous reviewers and the editor of the ¡®Review of Economics & Finance¡¯ for their valuable comments that bring rigor into this work.
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    References listed on IDEAS

    as
    1. Christina Suciu, 2006. "Intellectual capital as a source of the competitive advantage," Management & Marketing, Economic Publishing House, vol. 1(4), Winter.
    2. Goran Roos & Stephen Pike & Lisa Fernstrom, 2005. "Valuation and reporting of intangibles – state of the art in 2004," International Journal of Learning and Intellectual Capital, Inderscience Enterprises Ltd, vol. 2(1), pages 21-48.
    3. repec:eme:arapps:v:17:y:2009:i:1:p:23-39 is not listed on IDEAS
    4. Trilochan Tripathy & Luis A. Gil-Alana & Debadutta Sahoo, 2015. "The effect of intellectual capital on firms' financial performance: an empirical investigation in India," International Journal of Learning and Intellectual Capital, Inderscience Enterprises Ltd, vol. 12(4), pages 342-371.
    5. Trilochan Tripathy & Ashok Kumar Sar & Debadatta Sahoo, 2014. "The Effect of Intellectual Capital on Firms’ Valuation: An Empirical Investigation with Reference to India," The IUP Journal of Applied Economics, IUP Publications, vol. 0(3), pages 45-68, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Muhammad Mujtaba & Sadaf Jamal & Jawaid Ahmed Qureshi & Yaseen Shaikh, 2018. "Human Capital is a Competitive Advantage of Businesses: Analysis of Automobile Firms of Pakistan," Asian Themes in Social Sciences Research, Knowledge Press, vol. 2(1), pages 16-22.

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    More about this item

    Keywords

    Intellectual capital; Competitive advantage; Physical capital; Structural capital and human capital; Innovative capital and relational capital;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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