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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
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    References listed on IDEAS

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    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.
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    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.
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    Cited by:

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    4. Mário Nuno Mata & José Moleiro Martins & Pedro Leite Inácio, 2024. "Collaborative Innovation and Absorptive Capacity as an Antecedent on IT Firm Financial Performance," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 6339-6361, June.
    5. 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.
    6. Sahar Hayaeian & Reza Hesarzadeh, 2024. "Knowledge Management Strategies, Intellectual Capital, and Ambidextrous Innovation Capability in SMEs: Are They Relevant?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 6832-6859, June.
    7. Ömer Tuğsal Doruk, 2024. "The Link Between R&D and Financing Constraints in Manufacturing Sectors for Two Emerging Markets," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 12596-12621, September.
    8. 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.

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