Intellectual Capital and Corporate Value in an Emerging Economy: Empirical Study of Taiwanese Manufacturers

Competitive success now is based less on the strategic allocation of physical and financial resources, and more on the strategic management of intellectual capital. Although intellectual capital is intangible and cannot be accurately measured, companies must develop methods of increasing corporate value by proactively focusing on intellectual capital management. This study examines the relationship between intellectual capital and corporate value in an emerging economy. This study employs an intellectual capital perspective, resource-based view and a financial perspective, and investigates how to apply the concept of intellectual capital to value creation. After reviewing the relevant literature, this study identifies human capital, organizational capital, innovation capital and relationship capital as four constructs of intellectual capital. Corporate value is measured using three selection methods: (1) Market/Book value, (2) Tobin's Q and (3) Value Added Intellectual Coefficient (VAIC[TM]). Through a questionnaire survey and secondary data collection, this study applies the Structure Equation Model to analyze the relationships among four constructs of intellectual capital, as well as the relationship between intellectual capital and corporate value. From the empirical findings, for Taiwanese manufacturers, a positive relationship exists between intellectual capital and corporate value. This study visualizes and mobilizes intellectual capital to articulate eight value creation paths.