IDEAS home Printed from https://ideas.repec.org/a/spr/jknowl/v12y2021i3d10.1007_s13132-020-00654-0.html
   My bibliography  Save this article

Measuring the Impact of Intellectual Capital on the Financial Performance of the Finance Sector of India

Author

Listed:
  • Faizi Weqar

    (Aligarh Muslim University)

  • Ahmed Musa Khan

    (Aligarh Muslim University)

  • Mohd. Anas Raushan

    (Khwaja Moinuddin Chishti Arabi Urdu-Farsi University)

  • S. M. Imamul Haque

    (Aligarh Muslim University)

Abstract

In the current scenario, intellectual capital has been recognised as a vital corporate asset because the conventional performance measurement techniques are incapable of measuring intangible dimensions of corporate performance. It is a challenge, especially for knowledge-driven firms, to measure the impact of intangibles on their financial performance. This study tries to explore the impact of intellectual capital on the financial performance of knowledge-driven firms of India. For conducting the study, Bombay Stock Exchange’s finance index has been taken for a period ranging from 2009 to 2018, and the Value Added Intellectual Coefficient (VAIC™) methodology has been used to measure the intangible aspects of these firms. The results reveal that Value Added Intellectual Coefficient has an insignificant association with the profitability and productivity of the sample companies. While among the components of Value Added Intellectual Coefficient, the capital employed efficiency has a significant positive relationship only with the profitability of the financial sector. In the case of productivity, all the components of intellectual capital have an insignificant effect on the financial companies of India. The SCE remain insignificant for all the financial performance measures, whereas human capital efficiency is substantial only for enhancing the return on assets of the sample companies.

Suggested Citation

  • Faizi Weqar & Ahmed Musa Khan & Mohd. Anas Raushan & S. M. Imamul Haque, 2021. "Measuring the Impact of Intellectual Capital on the Financial Performance of the Finance Sector of India," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(3), pages 1134-1151, September.
    • Handle: RePEc:spr:jknowl:v:12:y:2021:i:3:d:10.1007_s13132-020-00654-0
    DOI: 10.1007/s13132-020-00654-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13132-020-00654-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13132-020-00654-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nasif Ozkan & Sinan Cakan & Murad Kayacan, 2017. "Intellectual capital and financial performance: A study of the Turkish Banking Sector," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 17(3), pages 190-198, September.
    2. Carol Corrado & Charles Hulten & Daniel Sichel, 2005. "Measuring Capital and Technology: An Expanded Framework," NBER Chapters, in: Measuring Capital in the New Economy, pages 11-46, National Bureau of Economic Research, Inc.
    3. Bontis, Nick & Dragonetti, Nicola C. & Jacobsen, Kristine & Roos, Göran, 1999. "The knowledge toolbox:: A review of the tools available to measure and manage intangible resources," European Management Journal, Elsevier, vol. 17(4), pages 391-402, August.
    4. Ahmed Musa Khan & Mohd Yasir Arafat & Mohd Anas Raushan & Imran Saleem & Nawab Ali Khan & Mohd Mohsin Khan, 2019. "Does intellectual capital affect the venture creation decision in India?," Journal of Innovation and Entrepreneurship, Springer, vol. 8(1), pages 1-15, December.
    5. Ahmed Musa Khan & Mohd Yasir Arafat & Mohd Anas Raushan & Mohd Saeem Khan & Amit Kumar Dwivedi & Mohd Mohsin Khan & Imran Saleem, 2019. "Role of intellectual capital in augmenting the start-up intentions of Indians—an analysis using GEM data," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 9(1), pages 1-14, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ummu Salma Al-Azizah & Bagus Pamungkas Wibowo, 2023. "Impact of Intellectual Capital on Financial Performance: Panel Evidence from Banking Industry in Indonesia," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 51-65.
    2. Monika Barak & Rakesh Kumar Sharma, 2024. "Does intellectual capital impact the financial performance of Indian public sector banks? An empirical analysis using GMM," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-11, December.
    3. Sheng Xu & Michael Asiedu & Nana Adwoa Anokye Effah, 2023. "Inclusive Finance, Gender Inequality, and Sustainable Economic Growth in Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 4866-4902, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Md. Mominur Rahman & Bilkis Akhter, 2021. "The impact of investment in human capital on bank performance: evidence from Bangladesh," Future Business Journal, Springer, vol. 7(1), pages 1-13, December.
    2. Murat Ocak & Derya Fındık, 2019. "The Impact of Intangible Assets and Sub-Components of Intangible Assets on Sustainable Growth and Firm Value: Evidence from Turkish Listed Firms," Sustainability, MDPI, vol. 11(19), pages 1-23, September.
    3. Guangchun Jin & Jian Xu, 2022. "Does Intellectual Capital Affect Financial Leverage of Chinese Agricultural Companies? Exploring the Role of Firm Profitability," Sustainability, MDPI, vol. 14(5), pages 1-14, February.
    4. Adil Khan & Mohd Yasir Arafat & Imran Saleem, 2022. "Does Social Legitimacy Matter in an Indian’s Decision to Start a New Venture?," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 8(2), pages 188-205, July.
    5. Ahmed Musa Khan & Mohd Yasir Arafat & Mohd Anas Raushan & Imran Saleem & Nawab Ali Khan & Mohd Mohsin Khan, 2019. "Does intellectual capital affect the venture creation decision in India?," Journal of Innovation and Entrepreneurship, Springer, vol. 8(1), pages 1-15, December.
    6. Kyoji Fukao & Cristiano Perugini, 2021. "The Long‐Run Dynamics of the Labor Share in Japan," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(2), pages 445-480, June.
    7. Qing Li & Long Hai Vo, 2021. "Intangible Capital and Innovation: An Empirical Analysis of Vietnamese Enterprises," Economics Discussion / Working Papers 21-02, The University of Western Australia, Department of Economics.
    8. Anmol Bhandari & Ellen R. McGrattan, 2017. "Sweat Equity in U.S. Private Business," Staff Report 560, Federal Reserve Bank of Minneapolis.
    9. Carol Corrado & Mary O'Mahony & Lea Samek, 2020. "Measuring education services using lifetime incomes," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2020-02, Economic Statistics Centre of Excellence (ESCoE).
    10. Czarnitzki, Dirk & Fernández, Gastón P. & Rammer, Christian, 2023. "Artificial intelligence and firm-level productivity," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 188-205.
    11. De, Supriyo, 2014. "Intangible capital and growth in the ‘new economy’: Implications of a multi-sector endogenous growth model," Structural Change and Economic Dynamics, Elsevier, vol. 28(C), pages 25-42.
    12. Emanuele Giovannetti & Claudio Piga, 2023. "The multifaceted nature of cooperation for innovation, ICT and innovative outcomes: evidence from UK Microdata," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(3), pages 639-666, September.
    13. Sebastien Bradley & Estelle Dauchy & Makoto Hasegawa, 2018. "Investor valuations of Japan’s adoption of a territorial tax regime: quantifying the direct and competitive effects of international tax reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(3), pages 581-630, June.
    14. Ellen R. McGrattan & Edward C. Prescott, 2005. "Taxes, Regulations, and the Value of U.S. and U.K. Corporations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(3), pages 767-796.
    15. Lisa Evers & Helen Miller & Christoph Spengel, 2015. "Intellectual property box regimes: effective tax rates and tax policy considerations," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(3), pages 502-530, June.
    16. Ellen McGrattan, 2012. "Transition to FDI Openness: Reconciling Theory and Evidence," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(4), pages 437-458, October.
    17. Bart van Ark, 2015. "From Mind the Gap to Closing the Gap. Avenues to Reverse Stagnation in Europe through Investment and Productivity Growth," European Economy - Discussion Papers 006, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    18. Ellen R. McGrattan & Edward C. Prescott, 2010. "Unmeasured Investment and the Puzzling US Boom in the 1990s," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 88-123, October.
    19. Edquist, Harald, 2009. "How Much does Sweden Invest in Intangible Assets?," Working Paper Series 785, Research Institute of Industrial Economics.
    20. Magnus Lodefalk, 2014. "The role of services for manufacturing firm exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(1), pages 59-82, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jknowl:v:12:y:2021:i:3:d:10.1007_s13132-020-00654-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.