Intellectual capital performance in the case of Romanian public companies

Purpose - Considering the number of studies that have used emerging economies corroborated with the lack of a study analysing whether this resource is being efficiently utilized by the Romanian companies challenged us to the present study. Accordingly, the primary objectives of this study are to identify the IC performance of the sample companies, to empirically examine the association between IC performance and traditional measures of corporate performance, and last but not least to analyze the relative importance of various components of IC on the company's performance. Design/methodology/approach - In achieving our objective, Value Added Intellectual Coefficient model (VAICTM), is applied to measure IC performance and its components. Data for the analysis presented in this paper is drawn from a sample of 72 firms listed on Bucharest Stock Exchange (BSE) operating into eight industry sectors. Corporate conventional financial performance is measured through the values obtained for profitability, productivity, and market capitalisation. We predict a positive relationship between companies' performance and IC performance of the related Romanian companies. Accordingly we propose for examination a total of 12 hypotheses tested using multiple regression analysis. Additionally, two control variables (firm size and industry type) are generally included. Originality/value - This is the first study that replicates VAICTM model in the case of Romanian companies. The results provide valuable insights into the association between IC and traditional perceptions of corporate performance. It enriches IC literature with new empirical evidence and provides a basis for comparison with the studies conducted in similar emerging economies. This research is not without limitations. First, the results related to the impact of control factors are mixed and sometimes not significant. Additional research could introduce other control factors to provide clearer results. Future research can also be undertaken to investigate associations studied in the present paper across time and could revisit some of the basic assumptions of the VAIC method and assess their potential consequences for the validity of empirical testing and results. Practical implications - The results show that entities that were generally more effective in creating value from their intellectual, physical and financial resources are penalised by the capital market. Capital employed has an insignificant role in value creation and it does not play a major role in reducing a company's production costs. Market value can not be necessarily improved by managing the SC properly. The results confirm that human capital plays a major role in productivity variation. Regarding the control variables, it can be noticed that company size influences market value and productivity and that industry type is negatively associated with market value, but positively associated with productivity. No significant association is identified between company size/industry type and profitability