The effect of intellectual capital on firm performance: an investigation of Iran insurance companies

Purpose - The purpose of this paper is to analyze the role of intellectual capital (IC) and its relationship with financial performance of Iran insurance companies during the period 2005-2007. Design/methodology/approach - In total, 39 insurance companies were selected as the sample. Regression model (partial least squares) has been applied to examine the relationship between IC and companies' return on assets ratio (ROA). Findings - The results of the research revealed that value added intellectual capital and its components have a significant positive relationship with companies' profitability. Practical implications - The VAIC (TM) method could be an important means for many decision makers to integrate IC in their decision-making process, which allows insurance companies to benchmark themselves according to the IC efficiencies and develop strategies to enhance their company's performance. Originality/value - This is the first research, which has used the data on value added recently calculated and published by Iran insurance firms in the "Value Added Scoreboard".