Article2012

Intellectual capital and corporate performance in Iranian pharmaceutical industry

Gholamhossein Mehralian · Ali Rajabzadeh Ghatari · Mohammad Reza Sadeh · Hamid Reza Rasekh

193 citations0/0 files storedJournal of Intellectual Capital

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Intellectual Capital and Performance Analysis Accounting Theory and Financial Reporting Financial Reporting and Valuation Research

Abstract

Purpose The purpose of this study is to empirically study the relationship between intellectual capital (IC) components (human, structural, and physical capitals) with the traditional measures of performance of the firm (profitability, productivity and market valuation) within the pharmaceutical sector of Iran. Design/methodology/approach The empirical data were drawn from pharma companies listed in the Iranian Stock Exchange (ISE), over the six‐year period of 2004 to 2009. The analysis of correlation, simple linear multiple regression and artificial neural networks (ANNs) were applied for analyzing any existing relationship between variables in the present study. Findings The analysis indicates that the relationships between the performance of a company's IC and conventional performance indicators are varied. The findings suggest that the performance of a company's IC can explain profitability but not productivity and market valuation in Iran. Also the empirical analysis found that physical capital (VACA) was the one which was seen to have the major impact on the profitability of the firms over the period of study, in addition the result of ANN method also confirmed findings of multiple regression. Practical implications There is an immediate need for policy makers and corporate managers wake up to the need to start disclosure of the IC of firms. IC measurement is of primary interest for top executives of pharmaceutical firms in Iran. Originality/value This is an initial and pioneering study to evaluate the IC and its relationship with the traditional measures of corporate performance in the Iranian pharmaceutical industry. The present study provides a new aspect of performance measurement for research‐based industries in emerging economies and would be a good topic for further research.

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References

1992The balanced scorecard : measures that drive performance 1992The balanced scorecard--measures that drive performance.1998Intellectual capital: The new wealth of organizations 1997Intellectual Capital: Realizing Your Company's True Value by Finding Its Hidden Brainpower 1997The New Organizational Wealth: Managing and Measuring Knowledge-Based Assets 1998Capturing Value from Knowledge Assets: The New Economy, Markets for Know-How, and Intangible Assets 2000Intellectual capital and business performance in Malaysian industries 2001Assessing knowledge assets: a review of the models used to measure intellectual capital

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