Article2019

Intellectual capital and firm performance: an extended VAIC model

Ayse Elvan Bayraktaroglu · Fethi Çalışır · Murat Baskak

325 citations0/0 files storedJournal of Intellectual Capital

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Intellectual Capital and Performance Analysis Accounting Theory and Financial Reporting Innovation and Knowledge Management

Abstract

Purpose The purpose of this paper is to propose an extended and modified value-added (VA) intellectual coefficient (VAIC) model, which includes intellectual capital (IC) components which were missing in the original VAIC approach. The proposed model has been used to explore the relationship between IC and firm performance for Turkish manufacturing firms on a more detailed level. Design/methodology/approach Multiple regression analysis has been employed to identify the IC components, which predict the performance of the firm and the moderating effect of some IC components on IC components–firm performance relationship. Data are required to calculate the IC components, and firm performance variables have been obtained from the financial reports of the Turkish manufacturing firms for the period 2003–2013. Findings According to the results for Turkish manufacturing sector innovation capital efficiency has a moderating effect on the relationship between structural capital efficiency (SCE) and profitability, meaning, depending on an increase in R&D expenses, the effect of SCE on profitability also increases. On the other hand, it has been found that innovation capital efficiency has a direct impact on firms’ productivity. The results also showed that IC efficiency components have a moderating role on the relationship between capital employed efficiency and profitability. Research limitations/implications There might be a time lag until the effect of R&D investments can be observed in firms’ performance. However, this lagged impact of innovation capital and also other IC components on future firm performance has not been investigated due to concerns related to sample size. Originality/value The proposed model differs from the original VAIC model in three ways: it, namely, includes two additional IC components, customer capital (CC) and innovation capital. It explores the moderating effect of innovation capital on structural capital–firm performance relationship and the moderating effect of IC components on employed capital–firm performance relationship. As the last difference, it proposes an alteration in the VA calculation due to newly added IC components, CC and innovation capital.

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References

1992The balanced scorecard--measures that drive performance.1998Intellectual capital: an exploratory study that develops measures and models 1996Developing a model for managing intellectual capital 2003Intellectual capital and traditional measures of corporate performance 2005An empirical investigation of the relationship between intellectual capital and firms’ market value and financial performance 2000VAIC™ an accounting tool for IC management 1997Measuring your company's intellectual performance 2007Intellectual capital and financial returns of companies

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