The The measurement of intellectual capital using value added intellectual coefficient (VAIC) and testing the effect on profitability using data envelopment analysis (DEA) aproach: An empirical study on quoted baking sectors in İstanbul stock exchange ma

One of the most important components of new economy is Intellectual Capitalwhich is expressed total knowledge of entity, and knowledge based assets in business.Although it can not be seen in the balanced sheets, it can be defined as a creating competitiveadvantage, futures values and covering up all intangible assets, which is knowledge,information, intellectual property and experience.Until the second half of 20th century, the most important resource of business isthe tangible assets. But nowadays, especially in knowledge based business and service sectorsthe financial asset leave its position to Intellectual Capital.The knowledge, one of the most crucial production factors in nowadays economy, has beenchanging the characteristic of other production factors and importance. For that reason, themanagement of intellectual capital plays important role to increase the power of competitionand the margin of profit for the business. Therefore, for the management, it?s compulsory tomeasure and assess Intellectual Capital.The existence of financial and non financial approaches to measure intellectual capitalhave been insufficient to show the portion of intellectual capital on profitability. Because ofthat, the alternative model is developed. In this model, Value Added Intellectual Capital andData Envelopment Analysis are used. The data for this model is obtained from the financialstatements in Istanbul Stock Exchange Market and the model is tested on quoted banks inIstanbul Stock Exchange Market by using data from 1995 to 2004. In addition to that, threedifferent portfolios are constructed based on three different inputs, intellectual capital, fixedassets, price ratio (P/O) to see affect of intellectual capital on profitability. The returns ofthree different portfolios calculated accordance to the result of Data Envelopment Analysisfrom 1995 to 2004 are compared by using EMS (Efficiency Measurement System) software.As a result, it is found that the effect of intellectual capital on profitability on the bankingsectors in Istanbul Stock Exchange Market is 61, 3% as an average and the portfolio-1 usedintellectual capital as an input provided the highest returns among three portfolios.