A study on intellectual capital and firm performance in biotech companies

This article attempts to understand the influence of intellectual capital on the performance of biotech firms. It provides an integrated framework to clarify the inter-relationship between compensation scheme, human capital and financial performance of listed biotech firms. The sample studied includes 279 biotech firms listed in the US market for the period 1994 to 2005. The results show that the association between patents and Research and Development (R&D) expenditure is found to be positive, although the increase in patents did not significantly improve the accounting performance. The quality of human capital, measured by several factors, is expected to play a positive role in technology innovations and financial performance.