Using GRA and MPI to Assess of Intellectual Capital Management for
Taiwanese Pharmaceutical Industry
Chia-Nan Wang, Yao-Lang Chang, Qi-Heng Huang
Department of Industrial Engineering and Management
National Kaohsiung University of Applied Sciences, Kaohsiung, Taiwan (cn. wang@cc.kuas.edu.tw)
Abstract -Fast technology evolution is considered as the most important factor for economic growth. The management of technology is one of very essential issues for outstanding enterprises. Technology is the core of intellectual capital (lC). Most of the studies regarding Ie were focusing on the contents and measurement. This study will be more directing at how to utilize Ie more effectively in order to improve the performance of enterprises. GRA and Malmquist Productivity Index (MPI) are employed to research the relationship between business performance and management of Ie for Taiwanese pharmaceutical industry. The research results show that 7 companies have better business performance due to more superior Ie management; however, other 5 companies have room for improvement. These results should be very valuable for both academic study in future and business enhancement.
Keywords-Malmquist productivity index, grey relational analysis (GRA), intellectual capital (IC)
I. INTRODUCTION
The competition model of business has changed from time to time. The intangible assets of a company are more decisive than the physical assets. These assets are often referred as the intellectual capital. As business shifts from an asset-centric environment to a knowledge-centric environment, the measures of intellectual have received more attention.
In the past, corporate value was primarily measured by physical capital. In addition, traditional accounting is unable to estimate real corporate value accurately due to more and more enterprises would invest resources in intangible asset creation [1]. For example, the Market valuelBook value ratio of the American listed company increased from 0.82 to 1.69 in last twenty years. That indicated around 40% of value not shown on the balance sheet. It's even over 100% for high knowledge-oriented enterprises [2].
This study mainly focuses on using GRA and DEA to probe into Intellectual capital management performance of Taiwan pharmaceutical industry. Every pharmaceutical company certainly has a unique operating model. However, for intellectual capital management ability, if some standards can be identified out of those outperformed companies through certain kind of measurement methods, the results surely can offer other companies for improvement. It is emphasizing again that intellectual capital is an essential strategy; it will help business strengthen self-competitive advantage and promote corporate performance.
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Liang et al. [3] investigate production efficiency in the biotech industry by Data Envelopment Analysis (DEA) before and after integration. In the study the possible integrative targets of a particular Taiwanese biotech company were analyzed. Wu et al. [4] adopted DEA and the Malmquist productivity index to evaluate the impact of intellectual capital on competitive advantage. Take a sample of 39 Taiwanese IC design companies, and adopt ROA method to measure the intellectual capital stocks of Taiwanese IC design companies. Kao et al. [5] use DEA, multi factor analysis, and multivariance analysis to evaluate organizational performance of 60 Taiwanese high technology companies. The study provides observations and findings that focus on three axes: core resources and core competition, the measurement of performance, and relations between resource allocation strategy and performance. Y. Chen et al. [6] develop a DEA non-linear programming model to evaluate the impact of information technology on multiple stages along with information on how to distribute the information technology-related resources so that the efficiency is maximized. It is shown that this non-linear program can be treated as a parametric linear program. It is also shown that if there is only one intermediate measure, then the non-linear DEA model becomes a linear program.
The objective of this study is to establish an assessment model to measure the intellectual capital of Taiwanese pharmaceutical companies. Through the adoption of GRA, we estimate the operational performance rankings of Taiwanese pharmaceutical companies. Through the adoption of Malmquist productivity index (MPI), we estimate the productivity change of Taiwanese pharmaceutical companies and decompose them into two sources of productivity change.
II. PROPOSED METHODOLOGY
This study used GRA and DEA as the foundation and brought up a set of systematic assessment models, following by 4 stages below.
Stage One: Collect the data of pharmaceutical companies 1. Reference to domestic and foreign related literatures on DEA, and then to determine the subject and which approach this paper used.
2. Search pharmaceutical related enterprises to find all potential candidates to be our DMUs list.
3. Collect history data on candidate companies. In summation, this study used companies who are related to pharmacy products as DMUs, which includes
information on this area for academics and practitioners.
2. The operational performance analysis of GRAJMPI as shown in this work, including operational performance rankings, productivity changes, provide meaningful implications intellectual capital management. They are useful benchmarking tool to examine the relative firm progress among competitors. Benchmarking parameter provide a meaningful reference to help firms improve their operating efficiency, speed up management change, set challenging goals, strengthen core competitiveness.
3. The research results suggest that intellectual capital, which comprises human capital, customer capital, and structural capital, is one of the main sources of competitive advantage for firms. This study argues that intellectual capital is a necessary strategic tool for use against competitors. The emphasis on intellectual capital can help firms implement new initiatives for enhancing their performance.
4. Pharmaceutical industry is one of the major industries in Taiwan. Measuring the operational performance of intellectual capital management and competitiveness of pharmaceutical companies will enable such firms to examine whether they have managed these vital intangible assets efficiently. Additionally, Pharmaceutical permISSIOn, intellectual property, particularly patents, and R&D teams, significantly influences the successes and failures of Pharmaceutical industry.
According to the research result and the courses of the research, there are some suggestions for further studies. 1. DEA is a sensitive tool. Before using it, defining DMU
clear and choosing input and output carefully are necessary.
2. More variables of input and output can be discussed such as patent and R&D employees. More different industries can be assessed by this proposed model in the future research.
3. Different DEA models can also be tested to find out some more changes and important issues.
REFERENCES
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[9] Market Observation Posting System of Taiwan Stock Exchange Corporation, world wide web, http:// mops. tse.com.tw/.
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