The Impact of Intellectual Capital on International Business – An Analysis of Investments in Intellectual Capital & Export Performance

Abstract

International Business is understood as commercial activity which transcends borders. In the era of Globalization, the distinction between domestic business and international business has become insignificant. Most of the domestic firms go international due to some ‘proactive/reactive’ factors prevailing in the international economy and in the domestic economy. The competitive edge gives the firm an opportunity to expand its market both domestic and overseas. The characteristic change in the economy - from that of natural resource based to that of knowledge based - has not altered the game rules of competition. No more the competitive edge of a firm lies in the possession of tangible wealth, but in intangible assets. The competitive advantage of the firms in Knowledge economy depends on the effective utilization of the Intellectual Capital generated by them. International Business takes many forms, viz. Technology Licensing, Franchising, Joint Ventures, Contract Manufacturing apart from, Exports and Imports. Many studies have substantiated the economic rationale for cross border investments and business on the plank of technology. But studies on the role of Intellectual Capital, acting as a ‘proactive’ agent of International Business finds limited mention. Exports in knowledge economy is driven and composed of Intellectual Capital. Strengthening this supposition, the Agreement on Trade Related aspects of Intellectual Property Rights (TRIPS) has brought to prominence the role of Intellectual Capital in International Business. This paper attempts to analyze the relationship between Intellectual Capital and Exports of Pharmaceutical industries in India to theorize that Intellectual Capital is a prominent determinant of export competitiveness for knowledge based companies.