Present economy is considered as knowledge economy since the source of economic value is no longer depend upon the production of material goods but the creation of intellectual resources. In this new economy conventional measurement systems are not adequate for intellectual capital performance measurement. Alternately, Pulic's Value Added Intellectual Capital (VAICTM) gained popularity among the researchers for measuring intellectual capital performance. It is a performance indicator comprising of three efficiency indicators namely, human capital efficiency, structural capital efficiency and physical capital efficiency. In calculating VAICTM, Pulic excludes relationship capital, an important element of intellectual resources. We extend the formula of VAICTM to include relation capital in the model. Present study makes an attempt to examine efficiency of intellectual capital management of 30 Indian knowledge companies comprising leading software and pharmaceutical companies during the period 2010 to 2014. From the study results it is revealed that intellectual capital is playing an important role in the value creation process of sample companies. Study results also show that inclusion of relation capital in the VAIC model extends the explanatory power of the model.
Intellectual Capital, Human Capital, Structural Capital, Relational Capital, VAICTM, Profitability
