Influence of Intellectual Capital on Foreign Portfolio Investments in Indian Pharmaceutical Industry

International capital flow is considered to be one of the prominent determinants of International business operation. Knowledge economy is characterized by a new genre of industries, which use knowledge as a prominent resource. The intellectual assets may influence international business operations in knowledge-based industries. Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) are the prominent avenues of international investments. While decision regarding Foreign Direct Investment is influenced by macro-economic factors like ownership, location and internationalization, Foreign Portfolio Investments decision is influenced by industry specific and firm specific factors, primarily the expected returns on investment and risk diversification. But the investments in knowledge-based industries may be driven by the quality and worth of intellectual capital. There are many studies to prove this postulate from the perspective of foreign direct investment. But, studies are not abundant from the perspective of Foreign Portfolio Investments. Therefore the present study is undertaken to analyze the relationship between 'intellectual capital' and 'international finance capital' from the foreign pOortfolio Investments perspective. As the pharmaceutical industry of India is a successful model for thriving on its intellectual capital, the study proposes to test the above postulate in this industry.