Intellectual Capital and Financial Performance of Indian IT Sector

In present scenario, the intellectual capital has carved a niche as an important corporate asset because the conventional performance measurement techniques are incapable to measure intangible dimensions of corporate performance. It is a challenge especially for knowledge driven firms to measure the impact of intangibles on their financial performance. This study has shown the impact of intellectual capital on the financial performance of IT sector in India. To conduct the study BSE's Finance & IT index has been taken for a period ranging from 2006 to 2015 and the VAICTM has been used to measure the intangibility of these firms. The CEE and HCE both have a positively significant relationship with the productivity and profitability of Indian IT sector. The SCE also has a significant positive impact on profitability but not with the productivity. None of the VAIC™ components have any significant relationship with market valuation.