Narrow Results

Intellectual capital (IC) has been proposed as an essential factor for organizational survival and maintenance of competitive strength. However, there has been very limited consensus on what encompasses IC and how it can best be conceptualized and measured. Further, very little empirical work has specifically examined the relationship between IC and financial performance. Given these shortcomings, this paper focuses first on the impact IC has on performance and secondly on the role strategic alliances may have on this relationship.

While we argue that IC will impact performance, we anticipate this relationship will be moderated by strategic alliances and other inter-firm collaborations. Findings reveal interesting relationships that suggest further effort should be placed on the conceptualization and measurement of IC, specifically regarding its relationship to firm performance.

This chapter examines the value relevance of earnings in high- and low-technology industries, a topic about which unresolved questions remain. The focus is on high-tech firms, given assertions that financial reporting is least effective for their industries. It is found that adjusting for expense mismatching is more effective in low-tech industries, while diversifying noise in high-tech industries substantially increases the association of earnings and stock returns. The value relevance of earnings for either type is indistinguishable when noise and expense mismatching are jointly controlled. It is thus concluded that noise arising from uncertainty of realizing future R&D benefits is the main factor explaining the weaker association of earnings and stock returns for high-tech firms.