Abstract
The purpose of this research is to investigate the role of intellectual capital in business performance. Specifically, I examine the relationship between the value added intellectual coefficient and some common measures of performance. The value added intellectual coefficient (VAIC) is an efficiency measure developed by Ante Pulic. In order to better understand the relationship I use the full calculation of VAIC as well as break it down into its individual components, and use lagged and non-lagged data for the performance measures. I also explore how industry influences the values of VAIC and its components. The study focuses on North American companies over the years 2003 – 2006, with the data being sourced from COMPUSTAT. As my hypotheses were rejected I cannot claim that Intellectual Capital influences firm performance. However, problems with regression and the results of non-parametric correlations and additional analysis suggest that there is support for the idea that Intellectual Capital influences performance. Although I can offer no concrete evidence there are indications that Intellectual capital has a positive influence on firm performance. Intellectual capital seems to influence firm productivity more than market evaluation. The interaction between structural capital and physical capital seems to be the key driver of productivity improvements. Industries which are knowledge based seem to be better at using intellectual capital effectively. There is a need for further empirical research and theory development in the field of intellectual capital.