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Article: An empirical study of the impact of intellectual capital on business performance

TitleAn empirical study of the impact of intellectual capital on business performance
Authors
KeywordsIntellectual capital
VAIC
Financial performance
Value creation
Hang Seng Index
Issue Date2011
PublisherWorld Scientific Publishing Co Pte Ltd. The Journal's web site is located at http://www.worldscinet.com/jikm/jikm.shtml
Citation
Journal of Information & Knowledge Management, 2011, v. 10 n. 1, p. 11-21 How to Cite?
AbstractThis empirical study examines the intellectual capital (IC) performance of Hong Kong companies and its association with business performance. Data were collected from constituent companies of the Hang Seng Index listed on the Hong Kong Stock Exchange (2005–2008). An IC measurement, Value Added Intellectual Coefficient (VAICTM), was utilised to evaluate the IC investment of the companies. Four accounting ratios: market-to-book value (MB), return on assets (ROA), asset turnover (ATO) and return on equity (ROE) were used as the indicators of business performance. Regression analyses were conducted to test the ability of IC and its components in order to explain the variance in business performance measures. No conclusive evidence was found to support the associations between VAICTM as an aggregate measure and the four financial indicators. However, components of VAICTM were found to predict a substantial variance in business performance. Capital Employed Efficiency (CEE) was found to be a key factor in predicting business financial performance. Structural Capital Efficiency (SCE) was found to have a significant effect on businesses' market valuation, as measured by MB, and on profitability, as measured by ROE. Negative correlations were found between Human Capital Efficiency (HCE) and the financial indicators. The findings indicate a gap between the traditional accounting perspective and the value creation perspective, which is central to the VAICTM methodology in measuring IC. It is believed that the findings of this research provide insights for business stakeholders of Hong Kong companies in utilising IC, particularly the noted impact of structural capital. While our findings indicate the importance of IC for corporations, as shown by the significant effect of SCE on ROE, physical and financial assets may still be considered as the key resources in delivering business success.
Persistent Identifierhttp://hdl.handle.net/10722/135619
ISSN
2015 SCImago Journal Rankings: 0.339

 

DC FieldValueLanguage
dc.contributor.authorChu, SKWen_US
dc.contributor.authorChan, KHen_US
dc.contributor.authorYu, KYen_US
dc.contributor.authorNg, HTen_US
dc.contributor.authorWong, WKen_US
dc.date.accessioned2011-07-27T01:37:35Z-
dc.date.available2011-07-27T01:37:35Z-
dc.date.issued2011en_US
dc.identifier.citationJournal of Information & Knowledge Management, 2011, v. 10 n. 1, p. 11-21en_US
dc.identifier.issn0219-6492-
dc.identifier.urihttp://hdl.handle.net/10722/135619-
dc.description.abstractThis empirical study examines the intellectual capital (IC) performance of Hong Kong companies and its association with business performance. Data were collected from constituent companies of the Hang Seng Index listed on the Hong Kong Stock Exchange (2005–2008). An IC measurement, Value Added Intellectual Coefficient (VAICTM), was utilised to evaluate the IC investment of the companies. Four accounting ratios: market-to-book value (MB), return on assets (ROA), asset turnover (ATO) and return on equity (ROE) were used as the indicators of business performance. Regression analyses were conducted to test the ability of IC and its components in order to explain the variance in business performance measures. No conclusive evidence was found to support the associations between VAICTM as an aggregate measure and the four financial indicators. However, components of VAICTM were found to predict a substantial variance in business performance. Capital Employed Efficiency (CEE) was found to be a key factor in predicting business financial performance. Structural Capital Efficiency (SCE) was found to have a significant effect on businesses' market valuation, as measured by MB, and on profitability, as measured by ROE. Negative correlations were found between Human Capital Efficiency (HCE) and the financial indicators. The findings indicate a gap between the traditional accounting perspective and the value creation perspective, which is central to the VAICTM methodology in measuring IC. It is believed that the findings of this research provide insights for business stakeholders of Hong Kong companies in utilising IC, particularly the noted impact of structural capital. While our findings indicate the importance of IC for corporations, as shown by the significant effect of SCE on ROE, physical and financial assets may still be considered as the key resources in delivering business success.-
dc.languageengen_US
dc.publisherWorld Scientific Publishing Co Pte Ltd. The Journal's web site is located at http://www.worldscinet.com/jikm/jikm.shtml-
dc.relation.ispartofJournal of Information & Knowledge Managementen_US
dc.rightsJournal of Information & Knowledge Management. Copyright © World Scientific Publishing Co Pte Ltd.-
dc.subjectIntellectual capital-
dc.subjectVAIC-
dc.subjectFinancial performance-
dc.subjectValue creation-
dc.subjectHang Seng Index-
dc.titleAn empirical study of the impact of intellectual capital on business performanceen_US
dc.typeArticleen_US
dc.identifier.emailChu, SKW: samchu@hku.hken_US
dc.identifier.emailChan, KH: hkukin@hku.hk-
dc.identifier.emailYu, KY: yukayin1212@yahoo.com.hk-
dc.identifier.emailNg, HT: tai0119@hotmail.com-
dc.identifier.emailWong, WK: kwan 118@hotmail.com-
dc.identifier.authorityChu, SKW=rp00897en_US
dc.description.naturelink_to_OA_fulltext-
dc.identifier.doi10.1142/S0219649211002791-
dc.identifier.hkuros188464en_US
dc.identifier.volume10en_US
dc.identifier.issue1-
dc.identifier.spage11en_US
dc.identifier.epage21en_US
dc.publisher.placeSingapore-

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