Impact of Intellectual Capital on Financial Performance: A Study of Pharmaceutical Companies of India

Abstract

Intellectual capital includes intangible assets of firm which has three components i.e.; human capital, relational capital and structural capital. These components are very important for the growth in financial performance of firm. It can be most important subject for technology-driven enterprises that how to use intellectual capital more effectively in order to promote organization performance.  Value added intellectual capital is used in this study to validate the effect on financial performance of firms. This study is performed on Indian pharmaceutical companies. The cause and effect relationship was checked by regression model using EViews10. Since, the time series data was employed, stationarity of the data was checked in order to avoid spurious regression. The Augmented Dickey – Fuller test was used for unit root testing to check the stationarity of the time series data. Research has disclosed a significant impact of Human capital, structural capital, and value added intellectual capital on financial performance.