The Impact of Value Added of Intellectual Capital to Firms Profitability and Productivity

The changes in business environment which lead by globalization have force the companies to enhance their competitiveness. Previous researches have found that intellectual capital (IC), as one of intangible assets, enable the companies to have value added for profit creation. This research will examine the value added of intellectual capital to firms’ profitability, Asset Turnover ratio (ATO) and employee productivity. The object of this research is banking companies listed in
Indonesian Stock Exchange (IDX) over the period of 2007 to 2011. The banking firm is a unique industry since, as a service industry this sector has high dependency on the intellectuality of its human resources. Using regression analysis, this study has found that value added intellectual capital (VAIC(TM))is important in developing firm’s profitability and employee productivity. The
insignificant influence of intellectual capital is found its relationship to assets turnover. Capital employed efficieny, as the variable of VAIC, is the most consistent variable in influencing profitability, employee productivity and assets turnover.