The Impact of Intellectual Capital on Firm Performance: A Modified and Extended VAIC Model
Jian Xu, Feng Liu
Keywords:
intellectual capital, firm performance, Value Added Intellectual Coefficient (VAIC), manufacturing
sector
Abstract:
Intellectual capital (IC) is generally understood as an important driver of firm competitiveness
improvement and value generation in the knowledge economy. The manufacturing industry, the
backbone of the South Korean economy, is coming under increasing international pressure. In
order to increase the competitiveness of Korean industry, the main objective of this paper is to
examine the impact of IC and its components on the performance of Korean manufacturing
firms over the period 2013–2018. The modified and extended Value Added Intellectual Coefficient
(VAIC) model was adopted to more accurately measure IC, and firm performance was
systematically and comprehensively measured in three distinct parameters: profitability, productivity
and market value. Our regression results show that physical capital was the most influential
factor to firm performance; human capital was viewed as a performance enhancing measure;
structural capital had no significant impact on firm performance; and innovation capital and
relational capital hurt a firm’s profitability. It is also evident that the modified and extended
VAIC model performs better than the original VAIC model proposed by Pulic (1998). This study
extends the understanding of IC in achieving a competitive edge in the manufacturing sector,
with IC representing a valuable platform for the sustainable development of the manufacturing
sector in emerging Asian markets.
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 The Impact of Intellectual Capital on Firm Performance: A Modified and Extended VAIC Model [PDF file] [Filesize: 537.74 KB]
 10.7441/joc.2010.01.10
Xu, J., & Liu, F. (2020). The Impact of Intellectual Capital on Firm Performance: A Modified and
Extended VAIC Model. Journal of Competitiveness, 12(1), 161–176. https://doi.org/10.7441/joc.2010.01.10
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