Unveiling intellectual capital efficiency with firm level data: a non-parametric synthesis

The paper aims to measure intellectual capital efficiency by introducing a non-parametric composite index method that allows for internal weight assignment using a specialized data analysis technique known as the benefit-of-the-doubt approach, an extension of data envelopment analysis. The study uses sample data of 641 publicly listed firms to evaluate intellectual capital efficiency. The study first ranks four crucial dimensions of intellectual capital including human, structural, relational, and innovation capital, in percentile form, followed by applying the benefit-of-doubt approach to calculate the index. The findings suggest that this method surpasses traditional methodologies in assessing intellectual capital efficiency, offering a unique ability to allocate weights to dimensions internally and gauge overall efficiency accurately. This innovative approach provides valuable insights for managers, strategists, and policymakers, enabling them to identify firms’ core strengths in leveraging intellectual capital, assess each dimension’s performance, and devise targeted strategies to bolster strengths and improve weaker areas effectively.