Journal Press India^®

Author Details ( * ) denotes Corresponding author

Purpose: The present research aims to examine the connection between the three types of “intellectual capital” (“human capital”, “structural capital” and “Value-Added Capital”) and the financial performance of pharmaceutical companies trading on the India Stock Exchange (BSE and NSE). Design/Methodology/Approach: To gauge the connection between intellectual capital & financial performance of companies, 10 companies on the basis of their market capitalization belonging to the pharmaceutical sector were selected and the information pertaining to these companies is collected for the period 2000-2022. The stationarity of the data was checked by applying a unit root test & regression analysis. Findings: The size of a country’s financial performance might differ signi- ficantly from one country to the next. Whereas, Pharmaceutical businesses perform more effectively and charge less when there is competition in the market. Furthermore, “structural capital”, “Value Added capital”, and “human capital,” have a substantial impact on ROA. Research Limitation: This study was limited to a small sample size consisting of 10 companies belonging to the pharmaceutical sector, generali- zing across the entire sector challenging. Future researchers could employ a larger sample size and include diverse sectors in their analysis for a more comprehensive look. Managerial Implications: Pragmatically, the study’s findings imply that pharmaceutical companies would benefit from creating an internal division or program dedicated to measuring, managing, and expanding intellectual capital as a key resource in order to better position themselves to benefit financially from the knowledge economy, also investments in Intellectual capitalwould have a substantial impact on ROA. Originality/Value: This research paper presents an original work of authors in the field of intellectual capital and its linkage with financial performance.

Keywords

Intellectual Capital, “Human Capital”, “Structural Capital”, “Value Added Capital” Return on Assets (ROA), Regression Test, Regression Test, Heteroscedasticity Test, Breusch-Godfrey Serial Correlation LM Test

1. Abhayawansa, S., & Azim, M. (2014). Corporate reporting of intellectual capital: evidence from the Bangladeshi pharmaceutical sector. Asian Review of Accounting, 22(2), 98-127. https://doi.org/10.1108/ARA-10-2013-0067.


2. Acuña-Opazo, C., & Contreras Gonz Alez, O. (n.d.). The impacts of intellectual capital on financial performance and value-added of the production evidence from Chile Standard-Nutzungsbedingungen: The impacts of intellectual capital on financial performance and value- added of the production evidence from Chile. https:// doi.org/10.1108/JEFAS-08-2019-0178.


3. Baliga, B. R., Moyer, R., & Rao, R. S. (1996). CEO Duality and Firm Performance: What’s the Fuss? Strategic Management Journal. https://doi.org/10.1002/ (SICI)1097-0266(199601)17:1.


4. Bharathi Kamath, G. (2008). Intellectual capital and corporate performance in Indian pharmaceutical industry. Journal of Intellectual Capital, 9(4), 684-704. https:// doi.org/10.1108/14691930810913221/FULL/XML


5. Bontis, N., Chua Chong Keow, W., & Richardson, S. (2000). Intellectual capital and business performance in Malaysian industries. Journal of Intellectual Capital, 1(1), 85-100. https://doi.org/10.1108/14691930010324188.


6. Carter, D. A., Simkins, B. J., & Simpson, W. G. (2003). Corporate Governance, Board Diversity, and Firm Value. Financial Review, 38(1), 33-53. https://doi.org/10.1111/1540-6288.00034.


7. Chen, M. C., Cheng, S. J., & Hwang, Y. (2005). An empiri- cal investigation of the relationship between intellectual capital and firms’ market value and financial performance. Journal of Intellectual Capital, 6(2), 159-176. https://doi.org/10.1108/14691930510592771/FULL/XML.


8. Firer, S., & Mitchell Williams, S. (2003). Intellectual capital and traditional measures of corporate performance. Journal of Intellectual Capital, 4(3), 348-360. https:// doi.org/10.1108/14691930310487806.


9. Gan, K., & Saleh, Z. (2008). Intellectual Capital and Corporate Performance of Technology-Intensive Companies: Malaysia Evidence. Asian Journal of Business and Accounting, 1(1), 113-130.


10. Ghosh, S., & Mondal, A. (2009). Indian software and pharmaceutical sector IC and financial performance. Journal of Intellectual Capital, 10(3), 369-388. https:// doi.org/10.1108/14691930910977798/FULL/XML.


11. Glynn, P. W., & Asmussen, S. (2007). Stochastic Simu- lation: Algorithms and Analysis. https://link.springer.com/ book/10.1007/978-0-387-69033-9.


12. Hejazi, R., Ghanbari, M., & Alipour, M. (2016). Intellectual, Human and Structural Capital Effects on Firm Performance as Measured by Tobin’s Q. Knowledge and Process Management, 23(4), 259-273. https://doi.org/ 10.1002/KPM.1529.


13. Hitt, M. A., Hoskisson, R. E., & Kim, H. (2017). Inter- national Diversification: Effects on Innovation and Firm Performance in Product-Diversified Firms. https:// Doi.Org/10.5465/256948, 40(4), 767-798. https://doi.org/ 10.5465/256948.


14. Jalil, A., & Rao, N. H. (2019). Time Series Analysis (Stationarity, Cointegration, and Causality). In Environ- mental Kuznets Curve (EKC) (pp. 85-99). Elsevier. https://doi.org/10.1016/B978-0-12-816797-7.00008-4.


15. Maditinos, D., Chatzoudes, D., Tsairidis, C., & Theriou, G. (2011). The impact of intellectual capital on firms’ market value and financial performance. Journal of Intellectual Capital, 12(1), 132-151. https://doi.org/ 10.1108/14691931111097944.


16. Marr, B., Schiuma, G., & Neely, A. (2004). Intellectual capital – defining key performance indicators for organizational knowledge assets. Business Process Management Journal, 10(5), 551-569. https://doi.org/ 10.1108/14637150410559225.


17. Mehralian, G., Rajabzadeh, A., Sadeh, M. R., & Rasekh, H. R. (2012). Intellectual capital and corporate perfor- mance in Iranian pharmaceutical industry. Journal of Intellectual Capital, 13(1), 138-158. https://doi.org/ 10.1108/14691931211196259/FULL/XML.


18. Nimtrakoon, S. (2015). The relationship between intellect- ual capital, firms’ market value and financial performance: Empirical evidence from the ASEAN. Journal of Intellectual Capital, 16(3), 587-618. https://doi.org/ 10.1108/JIC-09-2014-0104/FULL/XML.


19. Riahi Belkaoui, A. (2003). Intellectual capital and firm performance of US multinational firms. Journal of Intellectual Capital, 4(2), 215-226. https://doi.org/10.1108/14691930310472839.


20. Sharabati, A. A., Naji Jawad, S., & Bontis, N. (2010). Intellectual capital and business performance in the pharmaceutical sector of Jordan. Management Decision, 48(1), 105-131. https://doi.org/10.1108/00251741011014481.


21. Singh, R. D., & Narwal, K. P. (2015a). Intellectual capital and its consequences on company performance: a study of Indian sectors. International Journal of Learning and Intellectual Capital, 12(3), 300-322.


22. Singh, R. D., & Narwal, K. P. (2015b). Intellectual capital and its consequences on company performance: a study of Indian sectors. International Journal of Learning and Intellectual Capital, 12(3), 300. https://doi.org/10.1504/ IJLIC.2015.070169.


23. Tan, H. P., Plowman, D., & Hancock, P. (2007). Intellectual capital and financial returns of companies. Journal of Intellectual Capital, 8(1), 76-95. https://doi.org/10.1108/ 14691930710715079/FULL/XML.


24. Young, K., & Franklin, P. (2009). Effective consulting and historytaking skills for prescribing practice. British Journal of Nursing, 18(17), 1056-1061. https://doi.org/10.12968/ bjon.2009.18.17.44160.



 
25.