IC performance of Indian pharmaceutical and textile industry

Abstract

PurposeThe purpose of the present study is to make a comparison of intellectual capital performance between Indian pharmaceutical and textile industry. Further, the study attempts to investigate association between intellectual capital efficiency with financial performance and market valuation.Design/methodology/approachAn empirical study was carried out on data collected from CMIE database Prowess. VAIC was calculated on a select sample of 105, pharmaceutical companies and 102, textile companies. Correlation and OLS regressions models are used on panel data for the analysis.FindingsResults indicated that profitability and intellectual capital are positively associated but no significant relationship is observed between intellectual capital with productivity and market valuation in both industries. In spite of the growing importance of intellectual capital, its reflection is not proportionally observed in the financial performance of the select sample of companies.Research limitations/implicationsA more detailed study may be carried out taking the major knowledge‐intensive industries with cross‐section analysis to have better assessments of the results.Practical implicationsThe present study extends the knowledge of academician and managers about intellectual capital performance and its impact on financial and market performance of the companies. They may enhance the profitability and productivity of the companies by proper utilization of intellectual capital.Originality/valuePresent study extends the knowledge of intellectual capital performance and its utilization for increasing the financial and market performance of the companies.