The purpose of this article is to investigate the impact of intellectual capital (IC) and its components on the financial performance and market valuation of Information Technology industry in India over the period of 2003–2011. The Value Added Intellectual Coefficient (VAIC) method is used for evaluation of intellectual capital of 22 Information Technology (IT) companies listed in BSE 500. The required data are obtained from the Prowess, a Centre for Monitoring Indian Economy (CMIE) database, empirical analysis is conducted using correlation and regression models are constructed to test the hypotheses. The results showed that the relationships between the performance of a company IC’s and conventional performance indicators are varied and indicate that profitability and intellectual capital are positively associated, whereas no significant relationship is observed between intellectual capital with productivity and market valuation but capital employed efficiency (CEE) which is one of the component of VAIC found significant positive association with productivity and market valuation. The study may serve as a useful input for academician and managers, so that they make proper utilisation of the IC resources in enhancing the value creation capabilities of the companies.
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