Determining Value Added Intellectual Capital (VAIC) Using the TOPSIS-CRITIC Method in Small and Medium-Sized Farms in Selected European Countries

Abstract

The purpose of this paper is to develop a modified method of measuring VAIC for small and medium-sized farms and to determine the relationship of this measure on farm area. The main objective will be implemented through the following specific objectives: (1) indication of the generating variables VA, VC, HC and SC, (2) determination of synthetic measures of VA, VC, HC and SC, (3) determination of CEE, HCE, SCE and VAIC and (4) to determine the relationship between the values obtained in objective 2 and 3 and the area of the farm. The analyses were carried out on data obtained from 2980 small and medium-sized farms from Lithuania, Poland, Romania, Moldova and Serbia. The determination of VAIC was carried out on the basis of synthetic measures determined by the TOPSIS-CRITIC method. VAIC was determined in accordance with the scheme proposed by Pulic. All data were converted to one hectare of farm area. The analysed farms were divided into four classes depending on the area. A contrast analysis was carried out between the designated classes. Analyses were conducted for each of the five countries separately. The alternative VAIC measurement method presented needs to be refined in terms of the selection of classified variables to create synthetic measures. The analysis indicates that it is feasible to measure VAIC through the use of alternative measures in the form of synthetic measures while at the same time preserving the principles resulting from the VAIC concept. The uniqueness of the method lies in the use of synthetic measures to determine VAIC in companies that do not possess complete accounting information. In addition, failures in the proposed method have been eliminated in terms of the method’s compatibility with human capital theory. The methodology used is an original approach to measuring the value of intellectual capital. In addition, it should contribute to the re-verification of the VAIC.

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