Open AccessImpact of Intellectual Capital Efficiency on Profitability (A Case Study of LSE25 Companies)
Author(s) -
Muhammad Makki,
Suleman Aziz Lodhi
Publication year - 2008
Publication title -
the lahore journal of economics
Language(s) - English
Resource type - Journals
eISSN - 1811-5446
pISSN - 1811-5438
DOI - 10.35536/lje.2008.v13.i2.a5
Subject(s) - profitability index , intellectual capital , profit (economics) , classical economics , business , industrial organization , economics , microeconomics , finance
The aim of this study is to examine the relationship between intellectual capital efficiency and the firm's profitability. The importance of intellectual capital (IC) and the related philosophy of the knowledge economy have captured the attention of researchers and business enterprises in the World Trade Organization (WTO) era. IC is widely recognized as a tool that is critical to running a successful business in a highly competitive environment. Various models have been introduced to measure the numerous facets of IC, including the Skandia navigator, Tobin's Q, and value added intellectual coefficient (VAIC). This article examines the role of IC efficiency in the firm’s net profit using the VAIC developed by Ante Pulic (1998). It also investigates its correlation with the firm’s profitability, using regression models.