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Diversity in Estimates of the Impact of Intellectual Capital on Firm Performance Created by Varied Adoptions of VAIC Method

Authors:

Sampath Kehelwalatenna ,

University of Colombo, LK
About Sampath
Department of Accounting
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Gamini Premaratne

Universiti Brunei Darussalam, BN
About Gamini
UBD School of Business and Economics
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Abstract

Value Added Intellectual Coefficient (VAIC) method has become the most efficient method for measuring intellectual capital (IC). However, there are inconsistencies in the mechanism of adopting the VAIC method to measure IC, thus questioning the robustness of established relationships between IC and firm performance. Therefore, this study attempts to examine the diversity in estimates of the impact of IC on firm performance as a result of adopting the VAIC method in a diverse manner. The study also proposes a modification to the basic VAIC method to eliminate its key limitation. Findings of the study indicate that there are differences in the estimates of the impact of IC on firm performance as a result of varied VAIC adoptions. The proposed modification to the basic VAIC method incorporates theoretically agreed value compositions of IC (human capital, structural capital and relational capital) replacing traditional value compositions (human capital and structural capital) in the basic VAIC method.
How to Cite: Kehelwalatenna, S. and Premaratne, G., 2019. Diversity in Estimates of the Impact of Intellectual Capital on Firm Performance Created by Varied Adoptions of VAIC Method. Colombo Business Journal, 10(1), pp.66–113. DOI: http://doi.org/10.4038/cbj.v10i1.43
Published on 30 Jun 2019.
Peer Reviewed

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