Trends and relationship among intellectual capital disclosures, patent statistics and firm performance in Indian manufacturing sector

Abstract

PurposeThis study highlights the trends of qualitative intellectual capital disclosures and patent statistics in the Indian manufacturing context by considering the numerous patent applications, patent grants, forward citations and backward citations. Furthermore, the study investigates the relation among qualitative disclosures, patent statistics and firm performance.Design/methodology/approachAll manufacturing companies of CNX 500 Index of National Stock Exchange of India Limited are considered. Based on data availability, 243 manufacturing firms spanning across seven major manufacturing sectors are included. Secondary data were obtained from the annual report of companies and patent databases from 2004 to 2005 to 2013–2014, generating a sample of 2,430 firm years. Content analysis and citation analysis are used for collecting the relevant data.FindingsOverall, the study results indicated increasing trends for all types of intellectual capital disclosures. Similar trends are observed for patent applications and patent grants, indicating a surge in patenting activities across the manufacturing sector. However, increasing trends in patenting activities are not reflected for forward and backward citations. In addition, significant differences in means and trend coefficients for qualitative disclosures and patent statistics indicated industry specificity within the Indian manufacturing sector. Furthermore, industry specificity is observed when translating intellectual capital to firm performance. The measure of firm performance, that is, Tobin's Q, is having a significant positive association with qualitative disclosures and patent statistics.Research limitations/implicationsAs the study is based on secondary data, its accuracy is limited by the accuracy of the data sources such as the annual reports of companies and patent databases.Practical implicationsThe study findings imply that policymakers should devise and execute sector-specific policy interventions. Moreover, managers and policymakers should emphasize the qualitative aspect of patenting activities.Originality/valueThe study is an original work that highlights the trends in qualitative disclosures in the Indian manufacturing context. The value relevance of intellectual capital and patent statistics has been established.

Intellectual capital and firm performance in India after the companies act, 2013: A study of selected BSE-listed firms

“…Kamath (2017) found that market capitalization, ownership, and age of the firms are the major determinants of IC disclosure in India. Dharni and Jameel (2021) found a positive association between IC disclosure and the market valuation of firms in India. Maji and Goswami (2016) reported that IC efficiency and physical capital efficiency are positively and significantly associated with firm performance in India and observed that the impact of IC on performance is greater in the knowledge-based sector than that of the traditional sector.…”

“…Joshi et al (2010), and therefore, the growing knowledge economy has amplified the significance of IC in the organization (Pinto, 2013). The ability of the organization to transform its properties and competencies into a competitive advantage is the key to success in the contemporary business environment (Dharni & Jameel, 2021).…”

The evolution of intellectual capital disclosure driven by European regulatory change: evidence from the Italian stock market

“…In the previous section we have highlighted how in the extant literature economic performances, capitalization and capital structure are correlated with the creation, measurement or evaluation of IC. Recent studies demonstrated that firm performance has a significant positive association with qualitative disclosures (Dharni and Jameel, 2021). Furthermore, a positive correlation between disclosure and size had already been found in the literature (Dhar et al, 2022), For this reason, to investigate the firms' propensity to disclose their IC, we analysed the correlation among levels of disclosure and indicators of firm's size, intangibility, profitability, productivity and financial structure.…”

“…In the previous section we have highlighted how in the extant literature economic performances, capitalization and capital structure are correlated with the creation, measurement or evaluation of IC. Recent studies demonstrated that firm performance has a significant positive association with qualitative disclosures (Dharni and Jameel, 2021). Furthermore, a positive correlation between disclosure and size had already been found in the literature (Dhar et al ., 2022),…”

Intellectual Capital and Firm Performance Correlation: The Mediation Role of Innovation Capability in Malaysian Manufacturing SMEs Perspective

“…Over the last two decades, the impact of intellectual capital on the firm performance emerged as a recurring theme in economic growth research, particularly in the context of SMEs. Nonetheless, few studies were conducted to address the important function of intellectual capital on firm performance in the manufacturing sector [20], especially those operating in Malaysia [21]. Table 1 summarizes the findings of the past studies conducted to examine the impact of intellectual capital on firm performance in manufacturing sector in different countries, including Malaysia.…”