Vol. 3, Issue 2 (2018)
The concept of intellectual capital was coined by economist named John Kenneth Galbrais(1969). The other view on intellectual capital was stated by Drucker (1992) as the only major source of capital that can create productivity and contribute towards profits for corporations. The problem statement refers to lack of recognition about this significant contribution of intellectual capital towards corporate performance. Intellectual capital can be defined as the ‘economic value’ of four categories of intangible assets of a company-that includes human capital, structural capital, capital employed and innovation capital collectively. It is the knowledge that is to be leveraged and utilized by an organization to help conduct its business in order to achieve its long term competitiveness. Sustained advantage can occur only in situations in which this capital varies across the firms and where some firms may be unable to obtain necessary resources that are benefiting other firms. Intellectual capital is viewed as a sub-set of intangible capital, where the term intangible relates to assets without physical existence and capital refers to assets retained by the organization to contribute to future profits. Intangible resources are more likely to produce a competitive advantage because they often are rare and socially complex there by making them difficult to imitate. A company’s intangible assets are increasingly crucial and positively related to organizational performance in today’s knowledge economy. The purpose of this research is to conduct a detailed literature review of the various intellectual capital models and to critically evaluate the value added intellectual capital model and to test the adequacy of the variables used in this model. The results of this research will enhance knowledge and recognition of intellectual capital value as another source of productivity and a contributor towards corporate performance and profitability, thereby enhancing the value of the firm.
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