Assessing the Impact of Intellectual Capitals towards Business and Stock Market Performance for Indonesian Consumer Goods Industries Post AFCTA using VAIC™ Method Ergo Number

Abstract

This study investigates the influence of Intellectual Capital (IC) on the profitability and market valuation of consumer goods companies listed on the Indonesia Stock Exchange (IDX) during the 2012–2018 period. In the era of globalization and increased competition under free trade agreements like the ACFTA, firms are compelled to innovate and strategically utilize their intangible assets to gain competitive advantage. Using the Value Added Intellectual Coefficient (VAIC™) model developed by Pulic (2000), this research measures IC efficiency through components of human capital, structural capital, and capital employed. Employing panel data regression to analyze firm-level financial data, this study replicates the approach of Sardo et al. (2018), combining time-series and cross-sectional analysis to minimize omitted-variable bias. The results reveal mixed but noteworthy associations between components of IC and firm performance, indicating that effective IC management may enhance profitability and investor confidence. However, the impact varies across components and years, suggesting that the dynamic use of IC remains underutilized in Indonesia’s consumer goods sector. This research contributes to the growing discourse on IC by applying the VAIC™ model in a Southeast Asian context and offers strategic insights for firms to optimize intangible resources for long-term value creation. Implications of the findings encourage firms to invest in knowledge-based assets and recommend policymakers to incorporate IC considerations in corporate governance frameworks.