Intellectual Capital & Firm Performance: An Empirical Study on the Oil & Gas Sector of Pakistan

Abstract

Knowledge has become power now a days and organization in the ever changing world now a day consider knowledge and intellect of tier employees as a competitive edge which enables such organizations to compete effectively in the marketplace. The literature in the domain of intellectual capital management has received considerable evidence as to whether the intellectual capital contributes towards the firm performance and value or not. This study extends the evidence in this regard by conducting research on Oil & Gas sector of Pakistan.

Using VAIC model of intellectual capital measurement and ROA, ROE, EPS, Sales growth ad M/B ratio as proxies of internal and external performance of the company this study documents a positive impact of intellectual capital on the organizational performance and value in the Oil & Gas sector of Pakistan. Thus, intellectual capital could be considered an intangible asset and spending with regard to the development and establishment of intellectual capita should be considered asset with long term value. Recommendations and implications of the study are also provided in the end.