Correlation between intellectual capital and business performance of construction industry - an empirical study in Taiwan

Researchers have sought to determine the correlation between intellectual capital and business performance to enable corporations to shape policy decisions that benefit business performance in the past two decades. Previous works have focused on information technology and biotechnology industries rather than on the construction industry. This research aims at developing a construction industry intellectual capital valuation model for managers of construction-related firms to make better decisions in managing intellectual capitals. An empirical study was conducted on the application of the proposed intellectual capital valuation model to four representative firms from the construction industry listed in Taiwan's stock market. It is found from the results of the empirical study that the business performance of construction industry relies highly on intellectual capital. As a result, the managers of construction related-firms should emphasize more on accumulation of the intellectual assets in order to improve their business performance. Moreover, the empirical results also show that the traditionally conceived 'capital- and labour-intensive' construction industry is actually highly intellectually capitalized, with the average values of the MV/BV and Tobin's q values significantly greater than 1.0 similar to that in the high-tech industries.