The term intellectual capital and intangible assets have been
used interchangeably by different scholars. There is not
any standardized definition of corporate intellectual capital.
Choong (2008) has drawn attention towards the different
definitions of corporate intellectual capital given by different
authors. The crux of the most definitions was that intellectual
capital is non-monetary assets without physical in nature and
can generate future benefits for the organization. Sanchez
et al. (2000) divided intellectual capital into three different
components namely human capital, structural capital and
relational capital.
Bruggen et al. (2009) investigated the determinants of
intellectual capital disclosure in decision making. Content
analysis method was used in the study of 125 publicly listed
Australian companies. The results suggested that industry
type and firm size were the major determinants of intellectual
capital disclosure.
Ghosh & Mondal (2009) examined the association between
intellectual capital and financial performance of the Indian
pharmaceuticals and software companies. Results found that
intellectual capital efficiency in companies were an indicator
of profitability but not of productivity and market valuation.
Sriram (2008) carried out a study to check the importance of
composition of tangible and intangible assets of the firms and
for that purpose sample was divided into two sub-samples,
one having traditional physical assets and other having
primarily intangible assets. Results have shown that although
financial variables played an important role in financial health
of the companies but intangible assets information has also
revealed improvement in the financial health.
Kamath (2008) concluded that Indian domestic companies
were better in utilizing and performing in case of intellectual
capital by VAIC ranking. Among the different components of
intellectual capital, human capital was found of having major
impact on profitability and productivity of the companies.
Gan & Saleh (2008) carried out the research to assess the
association between value added efficiency and corporate
performance of technology-intensive companies in Bursa
Malaysia. Findings of the study suggested that there
was dependency on the physical capital efficiency of the
companies. Physical capital efficiency has been significantly
related with profitability and human capital efficiency with
the productivity of the companies.
Kamath (2007) evaluated 98 Indian banks to analyze their
value added efficiency. Results found that the best performers
in case of intellectual capital efficiency were the foreign
banks. Human capital efficient banks were foreign banks
and Indian public sector banks were efficient in utilizing
the physical capital. It was because of the investments of
funds in the large amount of human capital which may not
be contributing to the efficiency of the banks.
Tan et al. (2007) also carried out a study and concluded that
companies’ intellectual capital was positively related with its
current and future performances. The three financial ratios
selected as the indicator of companies’ performance were
return on equity (ROE), earning per share (EPS) and annual
stock return (ASR). Positive correlation was also found
between increase in company’s IC with that of company’
future performances.
Wang & Chang (2005) analyzed the effects of intellectual
capital elements on the performance of business in Taiwanese
IT companies. Results found that all elements of intellectual
capital (innovation capital, process capital and customer
capital) except human capital directly affected the business
performance.
Chen et al. (2005) examined the association between
intellectual capital efficiency and company’s financial
performance and market valuation. Results were in support
of the hypothesis that corporate intellectual capital with
financial and market performance were positively related.
Bozzolan et al. (2003) investigated the disclosure of
intellectual capital was related to external capital and
factors affecting disclosure were industry and size of the
organization. Villalonga (2004) observed that intangibility
and sustainability of competitive advantage have interrelationship
among them. Two methods were calculated,
namely Tobin’s q and hedonic regression of q and it was
concluded that intangible assets played a significant role in
sustaining a firm’s competitive advantage.
Firer & Stainbank (2003) investigated with a sample of
65 companies in South Africa and found that intellectual
capital efficiency have explanatory power of productivity,
profitability and market valuation. The reason for this could
be less information disclosure available in the annual reports
of the companies and hence value of the intellectual capital
was not reflected in the market valuation of the companies.
Firer & Williams (2003) examined the association between
intellectual capital and traditional measures of performance
i.e. return on assets, a