Intellectual Capital and Value Creation- Is Innovation Capital a Missing Link?

The purpose of the research is to examine the role of innovation capital in the creation of value for business organizations. Taking an intellectual capital (IC) perspective, the paper considers R&D investment and its impacts on the companies’ operating, financial, and market performance. To investigate the different components of intellectual capital using financial measures, a modified Value Added Intellectual Coefficient (VAIC) is used for analysis. Empirical study is conducted on 367 Taiwan semiconductor companies using Pearson correlation and linear multiple regression whereas financial information is generated from a third party database from Taiwan Economic Journal. The result shows that a company’s IC in general has a negative impact on its financial and market performance. However, the association between innovation capital which captured by R&D expenditure efficiency (RDE) and companies’ operating, financial and market performance is significant. The results provide a different perspective apart from extant research.