Intellectual capital is seen as a vital strategic asset in the 21st century that contributes to firm performance and value creation. In the new “knowledge-based” economy, which began to develop in the 1990s, intellectual capital rather than physical capital has emerged as a significant factor in terms of potential future performance and success of a firm. Unlike financial and physical assets, intangible assets are difficult to imitate by competitors, making them a source of strong competitive advantage.
Researches on intellectual capital have begun to develop on the basis of the significant difference between firms’ market value and book value. In this process, it has been realized that traditional financial reporting, which includes only the value of tangible assets and ignores intangible assets, is not sufficient to predict the real value of firms. Nowadays, it is thought that a company’s intellectual capital is the source of the difference between market value and book value. Effective management of intellectual capital can provide more competitive advantage to a modern company by increasing the efficiency of creating value through knowledge, organization techniques, professional skills, customer relationships and experience. The company can protect and enhance its profitability by creating knowledge base and transforming information into a company resource. Therefore, intellectual capital has become one of the most important factors in establishing competitive competencies and in achieving corporate success for all companies, especially in information-intensive firms.
Intellectual capital have emphasized the limits of financial measurement systems that can not be fully assessed for intangible resources and can not overcome the challenges of managing these occuring new assets. Traditional financial performance measures are concentrated only on the financial aspects of the firm and therefore are insufficient to measure performance in a multidimensional manner. Measuring the benefit from intellectual capital, such as employee and management effectiveness and customer relationships, is quite difficult and measuring intellectual capital with traditional performance measures may not be appropriate for knowledge-based firms where competitive advantage is driven by intellectual capital. However, the use of traditional performance measures may lead investors and other stakeholders of companies whose intellectual capital investments are at a high level to make incorrect and ineffective decisions.
It is accepted that the intellectual capital is the most important institutional entity that plays a role in owning and maintaining high financial performance because it represents resources based on knowledge and knowledge based resources and applications realized to develop them. Intellectual capital actually constitutes the roots of a company’s future competitive strength and funding for growth, as well as all the factors of production that do not appear in the traditional balance sheet but determine the long-term profitability of a firm. The purpose of this study is to examine the relationship between intellectual capital and financial performance. For this purpose, data belonging to 10 commercial banks that traded on Borsa Istanbul (BIST) in Turkey were used. Commercial banks were selected as observation units for this study. Because they are information-intensive service providers, the creation of value or operational activity must be more dependent on the intellectual capital of the intangible assets than the physical assets and employees must be more identical and consistent in terms of intellect than any other service sector in the economy.
Commercial banks play a role in strengthening economic growth by firms and individuals through lending and are of great importance to the economy in Turkey. Therefore, the results of the study provide findings that will be of interest to researchers, investors, managers and other stakeholders and also increase the possibility that future research will be expanded by various approaches. The study consists of five parts. Following the introduction, the literature review in the second part, the hypothesis of the research in the third part, the data set, method and findings of the research in the fourth part are given. In the conclusion, a general evaluation is made on the findings.PDF