Assessing the Impact of Intellectual Capital on Firms’ Profitability: Evidence from the Indian Information Technology Sector Using Dynamic Panel System GMM Approach

The present study focuses on how intellectual investment influences the financial success of companies in India’s rapidly evolving information technology (IT) sector. Using data from 158 IT companies between 2016 and 2023, the study uses dynamic panel estimation techniques. The modified value-added intellectual coefficient model is used to analyse the key performance proxies such as return on assets, net profit margin and return on net worth. The random effect model and fixed effect model are used to analyse the effects of relational and structural capital results, which exhibit weaker and ineffective impact, while capital employed efficiency and human capital efficiency are significant factors that affect firms’ profitability by using System GMM, which encountered endogeneity issues. In today’s highly competitive and knowledge-driven IT sector, the findings highlight how crucial it is to nurture human talent and use resources efficiently. These insights can guide managers, investors and policymakers in making smart investments in intellectual capital that drive lasting value.