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 businessorganizations. Taking an intellectual capital (IC) perspective, the paper considers R&D investment and itsimpacts on the companies’ operating, financial, and market performance. To investigate the different componentsof intellectual capital using financial measures, a modified Value Added Intellectual Coefficient (VAICTM) isused for analysis. Empirical study is conducted on 367 Taiwan semiconductor companies using Pearsoncorrelation and linear multiple regression whereas financial information is generated from a third party databasefrom Taiwan Economic Journal. The result shows that a company’s IC in general has a negative impact on itsfinancial and market performance. However, the association between innovation capital which captured by R&Dexpenditure efficiency (RDE) and companies’ operating, financial and market performance is significant. Theresults provide a different perspective apart from extant research.