Impact of Intellectual Capital on Performance of Karachi Stock Exchange 30-Index Companies of Pakistan

Abstract

The aim of this paper is to investigate the impact of Intellectual Capital (IC) on the financial performance of the organization. IC relationship is measured with the firm performance by using Pulic’s method known as value added intellectual coefficient (VAICTM) and its mechanisms i.e., human, structural and capital employed efficiencies (HCE, SCE, CEE). The outcome provides an additional empirical confirmation for the contribution of IC on the company’s financial performance. The financial indicators of this study are Karachi stock exchange (KSE)-30 index companies. In this regard, quantitative data is collected by the companies of Pakistan from the period of 2010 to 2014. In the era of competition, every company is seeking for the efficient way to increase their financial performance, the IC plays a significant role in the economy as found evidence in developed countries, this study will help the organizations to make modern operations by using different sources in order to increase their financial performance. The study of IC has endured on various stages, from initial conscious awareness efforts to the sorting of IC, and to the search for suitable measures of IC. This article presents the first study that explores IC impact on financial performance of KSE-30 index companies in Pakistan.