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2.1. Basic Theory
Basic Theory contains theories used by researchers to analyze the results of
research. The theories used in this study include resource-based theory
2.1.1 Resource-Based Theory
The company in doing production activities will utilize the resources as input.
The quality of the input will directly affect the quality of the output. Resources or
input and internal capabilities will determine the strategic choices which will
determine the strategic choices that will be used by the company in achieving its
business objectives.
Resource-Based Theory discusses the resources owned by enterprises and
how companies can maximize process. Unique and inimitable resources become one
of the new superior resources owned by the company. Assumptions of resource-based
theory is how companies can utilize the resources and manage a valuable resource to
achieve a competitive advantage and can create added value for the company.
Valuable resources must meet the criteria VRIN in order to provide a
sustainable benefit for the company (Madhani, 2009). There are four criteria of
VRIN, such as:

1. Valuable (V): resources will be valuable if it can provide strategic value for
company . this criteria help the company to take advantage of market
opportunities and avoid the company from the threat of the market.
2. Rare (R): Scarcity portrait that the source of the company to be hard to find
and obtained by the company's competitors.
3. Imperferct Imitability (I): resources owned by a competitor, so that competing
companies cannot reproduce or make imitation of resources
4. Non-substitution (N): Non substitution means that resources cannot be
replaced with other alternative power sources.
Through this explanation by Resource-Based Theory, intellectual capital
meets the criteria as a unique resource and can be used as a social value for the
company. The Company has an obligation to maximize, manage and utilize its
intellectual capital. The added value that is created will give special characteristics to
the company in business competition.
2.1.2 Intellectual Capital Understanding Intellctual Capital
In recent year, intellectual capital is become the attention of the company.
Intellectual capital is referred to as a determining factor in the success of the strategy
in order to achieve a competitive advantage. Because intellectual capital has

advantages, which can create value added for the company. This given unique added
value to the company so the company are able to compete with other companies.
The definitions of the intellectual capital which generally accepted has not
been determined until now (Ze'ghal and Maaloul, 2010). The concept of intellectual
capital are likely still new. A clear and understandable explanation of definition of
intellectual capital needed by management of company in order to understand
intellectual capital.
Definition which explained by Organisation for Economic Coperration and
Development (OECD, 1999) and Edvinson and Malone (1997) in Ulum (2008)
describes the intellectual capital as an economic value of two categories of intangible
assets are: (1) organizational (structural) capital; (2) human capital.
Society of Management Accountants Canada (SMAC) in Iswati and Anshori
(2007) explains that Intellectual capital is described as items of knowledge held by
individuals then incorporated into the company to obtain the gain benefits in the
Intellectual capital is also a group of assets of knowledge which is used as an
attribute of the organization and has contributed significantly to improve the
competitive position by adding value for interested parties (Marr and schiuma, 2001
in Solikhah et al, 2010)

From the definitions above, it can be concluded that the intellectual capital are
an important attribute in organizations which obtained from the combination of the
three essential elements. There are human capital company, structural capital, and
customer capital. The third important element have connection with the knowledge
and technology so it can create an added value for the company. This added value
gives special characteristics to the company so the company can achieve competitive
advantage. Components of Intellectual Capital
Some experts have argued that there are elements in the intellectual capital,
but in the end there are only three elements that are often used in various studies.
Bontis et al. (2000) explains that there are three elements that create the intellectual
capital, such as:
1. Human Capital
2. Structural capital
3. Customer capital Human Capital
The existence of human capital is essential, especially in the knowledge-based
industry. Human capital as a source of innovation and development for the
sustainability of the company's life. Human Capital described as capability of
company employees to perform tasks in order to achieve the objectives of the

company (Hariyanto et al., 2013). Stewart (1997) and Edvinsson and Malone (1997)
in Zeghal and Maaloul (2010) can interpret human capital as the knowledge,
qualifications, and abilities of employees
The characteristics that can be measured in this capital are training program ,
experience, recruitment, learning programs, individual potential and personality
(Brinker, 2000). If companies can manage to improve the performance of human
capital better , then the better the performance of the intellectual capital in the
company Structural Capital
Structural capital is the knowledge created by the company and cannot be
separated from the company (Joshi et al., 2010). Structural capital described all nonhuman knowledge within the company such as hardware, software, databases,
organizational structure, patent, trademark and all about the company's ability to
support employee productivity (Hariyanto et al., 2013). Measurement of Intellectual Capital
Methods of measurement latest intellectual capital has been widely used by
many previous researchers (Joshi et al., 2010; Kamath, 2007; Saleh et al., 2008)
which is the method VAIC . This method was developed by Ante Pulic (2004), by
combining three important components companies (human capital, customer capital
and structural capital) in calculating the intellectual capital of the company. This

research use VAIC to measure the performance of intellectual capital because this
method measure intellectual capital using the company's main resource (human
capital, structural capital, and capital employed). Value Added Intellectual Coefficient (VAIC )
Pulic (1998,2004) has developed a method to measure the ability of the
company in presenting information on value creation efficiency of tangible assets and
intangible assets owned by the company (Ulum,2008). There are several reasons that
this research use VAIC method:

VAIC provides basic measurement standards and consistent. The data

are available on the company's financial statements , so that will be more
effective to compare in sample in various industry sectors (Pulic, 1999)


The data used is derived from information which has been audited so
that the calculation can be considered objectively and can be
diversification (Pulic, 1998.2000)

This model starts with the company's ability to create value added. Value
added is the most objective indicator to assess the success of a company and shows
the ability to create value (Pulic, 2008), which is calculated as the difference between
output and input (Pulic, 1999). The output (OUT) describes income earned from the
sale of the entire product or service being sold. Input (IN) describe all the loads used
by companies in obtaining income (Ulum, 2008). This model emphasizes that the
burden of labor is not counted as a cost but as an asset. That is because a key aspect

of this model is to treat labor as an entity of value creation (Tan et al., 2007). The
higher the coefficient VAIC , the more efficiently the company uses its intellectual
capital (Pulic, 2000)
This method is very easy and very possible because this constructed from the
existing accounts in the financial statements, there are the balance sheet and income
statement (Purwanto, 2011). The advantages of the use of this method according to
Joshi et al., (2010), among others:
1. Results from these methods can be easily quantified and no need to describe it
2. Can be applied to any kind of company sizes ranging from small companies to
large enterprises
3. Can improve the utility of traditional financial report by combining the
performance of intellectual capital.
4. This method is simple and very easy to calculate, especially for calculations
and derivations
5. The results are easy to understand by anyone who still have very basic
understanding of accounting information
6. Results from these methods can be used for comparison of the different
entities in terms of size and industry

7. This method is in accordance with the measuring intellectual capital from a

variety of organizations
VAIC is the sum of:
1. Capital Employee Efficiency (CEE)
Capital Employee Efficiency (CEE) is an indicator of the efficiency of the value
added of capital employed. CEE is calculated by dividing the VA and CE. VA
calculated from the reduction of expenditures (OUT) and revenue (IN) company.
Intellectual capital cannot create their own value and thus require their physical and
financial capital to put into account intellectual capital. This is done to obtain a
thorough view of the efficiency of those resources in creating value
2. Human Capital Efficiency (HCE)
Human Capital Efficiency (HCE) is used as an indicator of the efficiency of the added
value of human capital, as seen from the total salaries and wages of employees of a
company HCE describe how much value added (VA) can be generated with the cost
spent on labor (Ulum, 2008). VAIC doesnt describe expenses for employees as an
expense but is treated as an investment. HCE is calculated from the division between
VA and HC
3. Structural Capital Efficiency (SCE)

Structural Capital Efficiency (SCE) are used as indicators of the efficiency of the
value-added of the capital structure of the company. SCE is calculated by dividing the
SC with VA. SC represents the difference between the value added by the HC. SCE
shows how much value creation generated by SC
2.1.3. Barrier to entry
Barriers to entry of new competitors is barriers which made for preventing the
entry of potential competitors (Porter, 2008). The entry of potential competitors in an
industry other than to bring and increase the capacity of the new product, also aim to
seize and market share, as well as trying to take over a great resource owned by the
company competitors. According with Hitt et al. (2001) the entry of new competitors
is become disadvantage because new competitor often have the potential to threaten
companies because they bring additional production capacity. The threat of entry of
new competitors in an industry is clearly there and it depends on the barriers to entry
of new competitors that exist.
There are six sources of barriers to entry of new competitors that proposed by
Porter (2008), namely: (1) Economies of scale; (2) Product Differentiation; (3)
Prerequisites Capital; (4) Losses Cost Remove From Size; (5) access to distribution
channels and (6) Government Policy. Meanwhile, according to Morvan, (1991) in
Depoer, (2000) the source of barriers to entry of new competitors, namely: regulatory,
product differentiation strategy, and the objective conditions for establishing the
processes of production and / or sales. The first two obstacles which are not visible in

the annual report, while the category of third hurdle is the amount of investment
required to enter a sector (ie, total fixed assets). This amount represents the financial
input necessary to be competitive as a company that is well established in certain
sectors. These inputs increase as well as the quantity that would be produced if the
company wants competitive, and increases if a particular business is capital-oriented.
2.1.4 Efficiency
Efficiency can be defined as the ratio between the output (output) and the
input (input). A company can be said to be efficient if (Hansen and Mowen, 2007:
1. Using less input to produce the same output
2. Using the same input to produce more output.
3. Using fewer inputs to produce more output.
Efficiency can be viewed from two aspects, in terms of output and input
(Syamsul, 2007: 6). Efficiency in terms of output that is set output to be achieved,
then set the maximum number of inputs to be used. Maximum number of inputs is
normal limits of knowledge to produce output. If the number of inputs that are used
less than specified, it qualify as efficient. But if the input is used more, it qualify as
In terms of input efficiency means the set input first then set the minimum
output to be achieved. If the output achieved was below the minimum output is set, it

can qualify as inefficient. If the outputs are achieved exactly the same as the
minimum result,it can be qualified as normal. But if the output is achieved over the
set minimum output, it qualified efficient. If the input is greater than the predefined
maximum input, means it is not efficient.
2.1.5. Firm Size
Size describe a large company or a small company that can be viewed from
the value of equity, value of sales or total assets of the company (Riyanto, 2008). The
greater the total assets, the greater the size of a company. The larger the company, the
higher the demand for the company to open in conveying information about the
activities of the company (Nugroho, 2012). One of them is about the performance of
intellectual capital.
The size of the company used as a variable with the assumption that large
companies usually conduct business activities with large quantities and have a
business unit that variety, in which each business unit is having success factor in
creating long-term value (Purnomosidhi, 2006). By maximizing the full potential of
the company, both employees (human capital), physical assets (physical capital), as
well as structural capital, good management can create added value for companies
which then can maximize the company's financial performance. (Ulum, 2009).
Companies that have a large amount of assets and sufficient funds can make
investments in the form of intellectual capital. With these investments, the company

can manage and perform maintenance for maximum performance in order to optimize
intellectual capital performance.

Previous Studies
Research on intellectual capital have been done by previous researchers.

There are several previous studies are:

Firer and William (2003) in a study entitled "Intellectual Capital and
traditional measures of corporate performance". This study used a sample of 75
financial statements of South African public company listed on the Johannesburg
Stock Exchange (JSE). This study aimed to investigate the relationship between the
efficiency of value added (VA) with component company resources (physical capital,
human capital and structural capital) and three-dimensional performance of the
company (profitability, productivity, and market valuation).
Iswati and Anshori (2007) in his research entitled "The Influence of
Intellectual Capital to Financial Performance at Insurance Companies in the Jakarta
Stock Exchange (JSE)". Results from this study showed that intellectual capital has a
positive relationship with financial performance. The aim of the study was to
investigate whether there was an effect of intellectual capital on the financial
performance of insurers. Data taken from the Indonesian Capital Market Directory
2005 issued by the Jakarta Stock Exchange (JSE).
Ulum (2008) also tested the performance of intellectual capital in the banking
sector in Indonesia in 2004 - 2006. The results of these studies is that there is a shift in

the performance of banks in Indonesia from 2004-2006 were reviewed from the
perspective of its IC. In 2004 and 2006, the overall performance of the banking
company in Indonesia in the category of "good performers" with a score of VAIC
2:07. Whereas in 2005, the performance dropped to "common performance" with a
score of VAIC 1.95. Research also shows that the overall relative owned banks are
more extravagant in using wealth as compared to private banks, including the
management of labor.
Nugroho (2012) in penelitiaanya entitled "Factors Memperngerahi Intellectual
Capitak Disclosure (ICD)". The study aimed to analyze the effect of firm size, firm
age, independent commissioners, keverage and concentration of ownership of the
intellectual capital disclosure (ICD). Sample used was the financial statements and
annual report of companies listed on the Stock Exchange in 2010. The results that firm
size, firm age, leverage, independent directors and the concentration of ownership has
no effect on intellectual capital disclosure.
Joshi et al, (2010) examined the performance of intellectual capital by using a
sample of 11 banking firm in Australia. The research goal is to discuss the relationship
VAIC and firm size (as measured from the total assets, total employment, and total
shareholders' equity) of the banking companies in Australia during 2005-2007. The
results showed that the bank had total assets, total employees and total shareholders'
equity slightly performance VAIC produces the most good, namely Elder Rural
Bank. Instead, the bank had total assets, total employees and total shareholders' equity
of large quantities of VAIC did not produce a good performance.

Zeghal and Maaloul (2010) in his research entitled "Analysing value added as
an indicator of intellectual capital and its consequences on company performance".
The aim of the study was to analyze the role of value added (VA) as an indicator of
intellectual capital (IC) and its influence on economic performance, financial, and
market shares. Zegah and Maaloul use until the 300 companies in the UK over than
2005 and is divided into three industry groups: traditional high technology, and
services. Research produced findings that a significant positi relationship VAIC (value
added intellectual capital coefficient) on economic performance (OI / S) and ROA but
significantly positive only on the performance of the stock market (MB) for the hightech industry.
Mavridis (2004) with the title "The intellectual capital Japannese performance
of the banking sector". Mavridis using a sample banking company in Japan during the
period 1 April to 31 March 2001. The objective of the research adalh to analyze
intellectual capital or HC and CA of the Japanese banking sector and discuss the
performance of the banking system. His findings show that sebagain intellectual
performance resulting from the HC.
Kamath (2007) also conduct research related to the performance of
intellectual capital. Kamath used a sample of 98 banks in India during 2000-2004. The
study aimed to analyze the VAIC in measuring the performance of 'value-added' the
banking company in India. Research results show that the performance of intellectual
capital of foreign banks in India better than domestic banks.

Bannany (2008) with the title "a study of determinants intelligent capital in
banks performance: UK case '. Bananny took samples from banks in the United
Kingdom. The purpose of this study for Investigating determinants of intellectual
capital performance of UK banks from 1999 to 2005. Result indicate that bank
profitability and risk banks are important. This study shows that information
technology system, bank efficiency, barriers to entry and efficiency of investment in
intellectual capital have significant impact.
Results from previous studies are summarized and presented in table 2.1 as
Table 2.1
Previous Research Summary
No. Researcher Variables Research Method
Research Result
Firer and Dependent:
Profitability (ROA),
negative with ATO (p
Productivity (ATO),
significant positive
valuation (MB)
MB (p <0.01): and
not significant with
CEE, and SCE)

significant negative
correlation with the
ATO (p <0.01) and
significant influence
with ROA and MB

SCE does not have

significant influence

Firm size, leverage,
ROE, Industry type

Sri Iswati



with ROA, ATO and

Regression IC has a positive relationship
with financial performance
(with p <0.05)

Intellectual Capital
model of

Intellectual capital
disclosure (ICD)
Independent: The
size of the company,
firm age, leverage,
directors, and the

There is a shift in the

performance of the
bank - a bank in
Indonesia dar year
2004-2006, which is
viewed from the
perspective of its IC

In 2004 and 2006, the

bank's performance
in the category of
good performers

State-owned banks
are relatively more
extravagant in using
his wealth
Firm size, firm age,
directors, and the
ownership has no
effect on intellectual
capital disclosure

Joshi et Dependent:
al (2010)

VAIC Comparison
Independent: The methods with
size of the company methods
(total assets, equity, VAIC
employees, equity)

and anis


ROA, Multiple

VAIC is a great
performance generated by
the banking company in
Australia is banking that
have total assets, total
employees, and the amount
of equity that is little that
Elders Rural Bank

There is a positive
relationship between
performance, kinrja
financial and stock
market performance

VACA a positive
performance, and the
performance of the
stock market
resulting from HC

Independent: Vain,
Control: The size of
the company and



VAIC Multiple





Capital, Multiple


Barriers to entry, Regression
Technology system,

Dilaporakan VAIC
highest value of
7.48 obtained by
IC performance of foreign
banks in India better than
the domestic bank
system, bank efficiency,
efficiency of investment in
intellectual capital have


significant impact.

Source: Secondary Data processed, 2015
Differences in current research with previous studies (Joshi et al., 2010) and
(Bannany, 2008) is located on the type of data and research samples. The sample used
in this study of the banking sector companies listed on the stock exchanges of
Indonesia 2010-2013. The data sample used is a banking company's financial
statements in 2010-2013.
3. Conceptual Framework
This study describe the framework influence of barrier to entry,bank
efficiency,the amount of employee, and firm size on the performance of intellectual
capital as follows:
Independent Variables

Barrier to Entry (X1)

Bank Efficiency(X2)
The amount of
employee (X3)

Firm Size (X4)

Dependent Variable
Intellectual Capital
Performance (VAIC)

Figure 2.1
Conceptual Framework



Barrier to entry to the performance of Intellectual Capital

Barriers to entry of new competitors is made barriers to prevent the entry of

potential competitors (Porter,2008). A heavy barrier to entry are able to reduce value
added so

it can decreased intellectual performance which can give special

characteristic in firm ,
According to (Depoer, 2000) an investment required to enter a business sector.
The availability of capital investment in large numbers would intellectual capital
performance more optimal. Based on the description above, the first hypothesis to be
tested in this study is
H 1: Barrier to entry negatively affect the performance of intellectual capital
2.4.2 Efficiency Bank on the performance of intellectual capital
Bank efficiency is the role of human capital in the company6to reduce
production costs (cost benefit) and differentiate their products (gain competitive
advantage) which is reflected in the increasing market share of the company

(Bannany, 2008). The more efficient performance reflected the better performance in
firm. So, Firm can gain competitive advantage in market which allow maximizing
value added. Based on the description above, the second hypothesis to be tested in
this study is
H 2: Barrier to entry a positive effect on the performance of intellectual capital

Total amount of employee companies on the performance of intellectual

The company's ability to create added value is directly related to the

company's workforce. As in the study Kamath (2007), the banking firm in the
category of "best-performing" is a company that successfully uses less labor and
utilize their maximum. Research Joshi et al., (2010) found that the performance of
VAIC is the best result of banks that have less employee ( elders rural banks ) that
only have 310 employee. This indicates that the large amount of labor that would
make burden to the company. Some large workforce will affect the value of HCE
companies that will make Nikai VAIC is also declining. Based on the description
above, the third hypothesis to be tested in this study are:


The number of workers a negative effect on the performance of

intellectual capital
2.4.4 The size of the company against the performance of intellectual capital

The size of the company described the large or small the companies involved
from the amount of equity value, or the total value of sales of corporate assets
(Riyanto, 2008: 313). The amount of total assets owned by the company reflected the
size of company. The large size of companies can be use to provide added value to
the company so that it can improve the performance of intellectual capital that will
provide for the company's special characteristics.
The amount of the larger size of the company described the company's funds
to be invested in the form of intellectual capital (Putri, 2013). The availability of
funds in large numbers would make the management and maintenance of intellectual
capital more optimal. Based on the description above, the fourth hypothesis to be
tested in this study are:


The size of the company a positive effect on the performance of intellectual