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Intellectual Capital, Financial Performance and Market Valuation:
A Study on IT and Pharmaceutical Companies in India
--Harsh Purohit and Kamini Tandon
In the new economy, Intellectual Capital (IC) has been identified as one of the most important factors in driving economic growth. Rapid globalization characterized by advances in technology, research and development and increasing competition has been essentially driven by growth in IC. Companies operating in industries like banking, software, pharmaceuticals, hotel, etc. can be said to be extensively dependent on IC as an asset for generating revenues. Until the recent years, the true value of IC was missing from the balance sheets of firms as the focus of economists as well as accountants was primarily the transaction model comprising of historic value of tangible performance. The evidence for the same can be derived from the ever-increasing gap between market and book value of firms. As IC is the sum of hidden resources of any organization not being fully reflected in the accounting statements, neither IC nor its components are capable of being identified and analyzed by the managers. Nevertheless, looking beyond the assets reported in financial statements should be a critical exercise for every organization wholly or partly dependent on intangibles for its value creation. The present study is based on Pulic’s Value Added Intellectual Coefficient (VAIC) as a measure of IC of a firm to empirically examine the relationship between IC and traditional measures of financial performance, namely, profitability, productivity and market valuation using a sample of 10 BSE 100 IT and Pharmaceuticals companies for the period 2008-12.
© 2015 IUP. All Rights Reserved.
A Methodology for the Development and Implementation
of Knowledge Management Strategy in a Mexican SME
Trading Company
--Alonso Perez-Soltero, Ana Gabriel Zavala-Guerrero,
Mario Barcelo-Valenzuela, Gerardo Sanchez-Schmitz
and Angel Luis Meroño-Cerdan
Knowledge Management (KM) has become a key factor in the performance of organizations. The literature shows results of the application of KM mainly in big companies, although there are a few studies that target Small and Medium Enterprises (SMEs). Based on the literature related to the implementation of KM strategies in SMEs, there is a gap in understanding how these strategies allow improvements in the development process of the areas involved in them. The objective of this study is to illustrate the application of a strategy of KM in SMEs that contributes to the improvement of organizational processes while responding to favor internal organization changes. The case study approach is used to develop and implement a methodology for implementing a Knowledge Management Strategy (KMS) in a medium enterprise located in the northwest of Mexico. To complete this, it was necessary within the methodology to determine the area to develop and implement the strategy of KM, having chosen marketing area as the area of interest, based on elements that were considered key to the company. The main results obtained were the identification of key knowledge, where it is and who possesses it; the detailed specification of process activities and the structure of existing knowledge and its conservation; and a decrease in the time to find the information and/or knowledge required for the development of processes in the area of marketing. © 2015 IUP. All Rights Reserved.
Linking Knowledge Management and Innovation in SMEs:
A Structural Equation Modeling Approach
--Ritika Saini
Small and Medium Enterprises (SMEs), the backbone of the economy, significantly benefit from Knowledge Management (KM). However, the extant literature has little empirical support for this statement. Using the literature review, this paper has developed KM instrument to test a conceptual model linking KM and innovation using regression analysis and structural equation modeling technique. Primary data was collected from SMEs of three industries i.e., software, pharmaceutical and textiles, in North India. The study confirmed the relationship between adoption of KM practices and innovation strategies in the selected SMEs. The findings of the study also revealed that the use of KM practices provides the ability to make use of information flowing into an organization to improve organizational performance, facilitate innovation and create sustainable competitive advantage. © 2015 IUP. All Rights Reserved.
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