Abstract:
Value Added Intellectual Coefficient (VAIC) method has become the most efficient
method for measuring intellectual capital (IC). However, there are inconsistencies in the
mechanism of adopting the VAIC method to measure IC, thus questioning the robustness of
established relationships between IC and firm performance. Therefore, this study attempts to
examine the diversity in estimates of the impact of IC on firm performance as a result of
adopting the VAIC method in a diverse manner. The study also proposes a modification to the
basic VAIC method to eliminate its key limitation. Findings of the study indicate that there are
differences in the estimates of the impact of IC on firm performance as a result of varied VAIC
adoptions. The proposed modification to the basic VAIC method incorporates theoretically
agreed value compositions of IC (human capital, structural capital and relational capital)
replacing traditional value compositions (human capital and structural capital) in the basic
VAIC
