Intellectual Capital Efficiency and Sustained Competitive Position of KSE-100 Index Companies in Pakistan

Abstract

Intellectual capital is a value creating a tool that makes it possible to deploy firm’s tangible and intangible array of resources in such a way that no other can access or duplicate it in the industry, and led towards the sustained competitive position. The study evaluates the performance of 100 top performing companies listed on Karachi Stock Exchange  that  remain at the competitive position for last five consecutive years during the period 2009-2013. A panel data set has been compiled from the audited annual reports of the KSE 100 index companies covering the period  2009-2013, and panel regression analysis are utilized. Value added intellectual coefficient (VAIC)” methodology is utilized to measure the intellectual capital efficiency and acts as an independent variable in explaining the firm competitive position in terms of profitability, productivity and market capitalization. Empirical results suggest that intellectual capital efficiency is found to be significant determinants in explaining the KSE 100 index companies.  Other explanatory variables such as firm size, leverage, firm’s physical capital intensity, and book value of the company also found to be statistically significant with expected signs in the panel regression analysis.