Effect of Intellectual Capital on Firms¡¯ Competitive Advantage Condition: An Empirical Investigation in India

Trilochan Tripathy (), Luis Gil-Alana and Debadutta Sahoo ()
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Trilochan Tripathy: XLRI- Xavier School of Management, Jamshedpur-831001, INDIA
Debadutta Sahoo: Tata Consultancy Services, Infocity, Bhubaneswar-751024, INDIA

Review of Economics & Finance, 2017, vol. 8, 61-78

Abstract: This paper aims to model the effect of intellectual capital on firms¡¯ competitive advantage condition across selected Indian industries. Using a panel dataset consisting of 146 Indian companies listed in the Bombay Stock Exchange (BSE), spanning across 7 industries during 2003 to 2012. The study suggests that the firms¡¯ competitive advantage condition is relatively better explained by some of the individual intellectual capital components rather than by the Public¡¯s Composite Value Added Intellectual Capital Coefficient (VAIC) measure. Physical and financial capital efficiency (VACA) statistically determines the firms¡¯ competitive advantage condition irrespective of the industry segments. However, along with VACA, human capital efficiency (HCVA) is also observed to be a significant determinant of firms¡¯ competitive advantage conditions for automobiles, consumer goods, health and pharmaceuticals and information technology industries. The result extends the understanding of how VAIC and other associated components determine competitive advantage condition of firms¡¯ across industries in India. To the best of authors' knowledge, for the first time the firms¡¯ competitive advantage condition is modeled in a VAIC framework.

Keywords: Intellectual capital; Competitive advantage; Physical capital; Structural capital and human capital; Innovative capital and relational capital (search for similar items in EconPapers)
JEL-codes: L20 L21 L25 (search for similar items in EconPapers)
Date: 2017
Note: The authors thank the anonymous reviewers and the editor of the ¡®Review of Economics & Finance¡¯ for their valuable comments that bring rigor into this work.
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