The study aims to investigate the intellectual capital efficiency (ICE) and value-added intellectual coefficient (VAIC) approaches to evaluate the impact of intellectual capital (IC) on firm performance in the hospitality industry in India.
The study uses audited financial data of 44 firms from hospitality sector in India (2010–2023, 14 years). The study used six hypotheses to test the impact of ICE and VAIC on firm performance. Feasible generalized least squares (FGLS) and the panel-corrected standard errors (PCSE) panel data estimator models were used.
The results indicate that ICE and VAIC are significant drivers of firms’ performance for the hospitality sector in India. Of the various components of IC, human capital (HC) is likely to have a positive effect on firm performance in the hospitality sector. With respect to the efficiencies generated on account of relational capital (RC) and structural capital (SC), relational capital efficiencies (RCEs) were found to have a negative effect, whereas structural capital efficiencies (SCEs) were found to have no effect on profitability.
The findings show a significant path for the policymakers and industry analysts to intervene and formulate contemporary policies. The results of this analysis will also help the firms to understand the root causes of good or bad financial performance and work on them to improve.
The study attempts to bridge an important research gap by examining the interplay of the hospitality industry and ICEs using the economic measures and employs specific forms of panel regression estimation models to provide robustness to the whole data analysis.
