Intellectual capital in the quoted Turkish ITC sector Fethi Calisir, Cigdem Altin Gumussoy, A. Elvan Bayraktarog ˘lu and Ece Deniz Department of Industrial Engineering, Istanbul Technical University, Istanbul, Turkey Abstract Purpose – The purpose of this paper is to apply Value Added Intellectual Coefficient (VAICe) of Pulic to compare quoted information technology and communication companies on the Istanbul Stock Exchange (ISE), in terms of intellectual capital efficiency. This study also examines VAICe, and its components’ impact on company performance. Design/methodology/approach – Multiple regression analysis was employed to identify the variables that significantly contribute to the company performance. Data required to calculate VAICe and its components were obtained from the 2005-2007 annual reports and balance sheets of the companies. Findings – As a whole, all the companies had a relatively higher human capital efficiency than structural and capital efficiencies. In 2007, Turkcell was the most efficient company based on VAICe assessment, while Link Bilgisayar and Plastikkart were the least efficient companies. Additionally, the results of the study revealed that factors such as human capital efficiency, firm leverage, and firm size, predicted profitability well. Among them, human capital efficiency had the highest impact. In addition, capital employed efficiency was found to be a significant predictor of both productivity and return on equity, and the only determinant of market valuation was the firm size. Practical implications – This study allowed ITC companies to benchmark themselves according to the intellectual capital efficiencies and develop strategies to enhance their company’s performance. Originality/value – This study is the first that measures intellectual capital performance and its impact on the company performance of the quoted information technology and communication companies on the ISE. Keywords Company performance, Intellectual capital, Turkey Paper type Research paper 1. Introduction Traditional accounting systems do not fully reflect the success of a company. Each company’s unique knowledge, skills, values, and solutions can be transformed into value in the market, which may in turn affect the competitive advantage, and increase the productivity and market value (Pulic, 2002). These intangible assets define intellectual capital (Yalama and Coskun, 2007). Intellectual capital is an “intellectual material, knowledge, information, intellectual property, and experience that can be put to create wealth” (Stewart, 1997). Several successful companies realize the importance of investing in intellectual capital for their business, to create high value products and services (Chang, 2007) from the company’s physical assets (Wang, 2006). However, establishing an evaluation system, which also focuses on value creation and not only on cost, is a challenge for many companies (Pulic, 2000). Several methods have been developed to measure intellectual capital, such as, market capitalization approach, direct intellectual capital The current issue and full text archive of this journal is available at www.emeraldinsight.com/1469-1930.htm Turkish ITC sector 537 Journal of Intellectual Capital Vol. 11 No. 4, 2010 pp. 537-553 q Emerald Group Publishing Limited 1469-1930 DOI 10.1108/14691931011085678