Linking Intellectual Capital and Financial Performance in Pharmaceutical Companies

Abhay Singh Chauhan, S.K. Singh, Sanjeev Gupta

Vol 24 , Issue 1 , January - June 2023 | Pages: 65-73 | Research Paper

https://doi.org/10.51768/dbr.v24i1.241202306

Published Online: June 03, 2023

Author Details ( * ) denotes Corresponding author

1. * Abhay Singh Chauhan, Assistant Professor, Symbiosis Centre for Management Studies, Symbiosis International (Deemed University), Pune, Maharashtra, India (drabhaysinghchauhan@gmail.com)

2. S.K. Singh, Professor, School of Commerce and Business Studies, Jiwaji University, Gwalior, Madhya Pradesh, India (shivkumar67@gmail.com)

3. Sanjeev Gupta, Professor, Department of Commerce, Govt. S.L.P. P.G. College, Gwalior, Madhya Pradesh, India (sanjeevgupta67@gmail.com)

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

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