Measuring the impact of intellectual capital on the firm’s financial performance: evidence from Indian public sector companies

The study’s primary objective is to observe the upshot of intellectual capital (IC) on the financial performance of Indian public sector companies. The article also sheds light on the effect of the global financial crisis of 2008 on the financial performance of Indian public companies. Secondary data were collected for 24 Indian “Central Public Sector Enterprises (CPSEs)” between 1999 and 2018. The “Value Added Intellectual Coefficient (VAIC™)” methodology was employed for measuring IC and its dimensions. The result shows that public Indian firms effectively utilize their IC to enhance their sales growth. At the same time, they failed to leverage their IC to improve their profitability and productivity. Additionally, among the dimensions of VAIC, human capital efficiency (HCE) and structural capital efficiency (SCE) enhance only the firm’s sales growth. Lastly, the results confirm the adverse effect of the global economic crisis of 2008 on the firm’s financial performance.