Business strategy, bank operation, and the role of intellectual capital development

Business strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital developmentBusiness strategy, bank operation, and the role of intellectual capital development

MINISTRY OF EDUCATION AND TRAININGSTATE BANK OF VIETNAMHO CHI MINH UNIVERSITY OF BANKING

CHI HUU LU

BUSINESS STRATEGY, BANK OPERATION, AND THEROLE OF INTELLECTUAL CAPITAL DEVELOPMENT

DOCTORAL DISSERTATION

Ho Chi Minh City, 4/2024

MINISTRY OF EDUCATION AND TRAININGSTATE BANK OF VIETNAM

HO CHI MINH UNIVERSITY OF BANKING

CHI HUU LU

BUSINESS STRATEGY, BANK OPERATION, AND THEROLE OF INTELLECTUAL CAPITAL DEVELOPMENT

I declare that the dissertation entitled “Business Strategy, Bank Operation, and the Role of Intellectual Capital Development” is being written by myself under the orientations and navigations of the academic supervisor – Dr Thich Van Nguyen, and is my own work, which is not being submitted to every application for a specific degree before Any citation in the dissertation has always been stated enough in the whole work and the references section.

Ho Chi Minh City, April 2024 Signature

First and foremost, I would like to thank the Ho Chi Minh University of Banking (HUB) in general and the Faculty of Postgraduate Education in particular due to the valuable knowledge that I gain from participating in the doctorate program In fact, such knowledge has played a crucial role in assisting me to complete required thesis in the effective ways.

At the same time, I would like to thank my academic supervisor - Dr Thich Van Nguyen - who has given the insightful recommendations, considerations, and navigations that contribute to the significant improvement in the quality of my completed dissertation It is not exaggeration to say that the precious chance to cooperate with him has become one of the most useful times to assist me in further achieving new academic skills and horizons on my own research path.

What is more, I would like to thank other colleagues who always support me even if in the toughest circumstances It can be said that becoming a minor member of the second family

- the Institute of Scientific Research and Banking Technology, Ho Chi Minh University of Banking – provides a window of opportunity for me to not only be buried the academic environment but also reach more accomplishments on the career avenue.

Last but not least, I would like to thank all members of my own family for their considerable sacrifices In fact, it seems that without their endeavors, I do have not enough time to learn and pursue my dreams on the academic path Thanks to their motivations and incentives, I could confront and overcome the challenging situations in daily life and reap rich harvest of knowledge.

To end up, it is hoped that all the best would come to my own lecturers, colleagues, friends, and family God will always be here to bless all of you.

Leaning especially on and taking advantage of intellectual resources has been recognized as the effectual strategy to stay ahead of the curve in the business market nowadays, which has witnessed a surge in increasingly fierce competitiveness Unsurprisingly, many academicians have been enchanted to delve deep into the role of intellectual capital in business operations of not only the firm industry, but also the banking sector With that in mind, the current study conducted is to explore the relationship between intellectual capital and financial intermediation activities as well as non-interest incomes of banks Based on the data set of 26 commercial banks in Vietnam during the 2006-2020 period, the regression results can be summarized as follows First, there is a positive association between intellectual capital efficiency (measured by VAIC model) and these business activities of banks Second, when performing the VAIC-separated model, the evidence indicates that while capital employed efficiency becomes the most important component to foster financial intermediation activities, structural capital efficiency plays a crucial role in propelling non- interest incomes It should be noted that the aforementioned findings still withstand a battery of the robustness tests applied At the same time, the current analysis finds that smaller banks seemingly harness these resources in fueling financial intermediation activities more effectively than their counterparts, by contrast, larger banks tend to take advantage of intellectual capital more effectually Besides, other bank-specific characteristics and country- specific conditions such as the capital ratio, total assets, earnings, and GDP growth also play a certain role in the main concerns of the research It is believed that the empirical findings may have significant contributions to shed new light on the existing theories such as the resources-based, the knowledge-led, and the IC-rooted views, and, to some extent, provide some helpful implications for not only managers, decision-makers of banks, but also national authorities as well as policy-makers in Vietnam Eventually, it is hoped that the research may become an important catalyst for stimulating more works carried out in this field in the coming years.

1.1.Research motivation and context 1

1.2.Main purposes of the dissertation 3

1.2.1.General purposes 3

1.2.2.Specific purposes 4

1.3.Research objectives and scope of the dissertation 5

1.4.Methodology of the dissertation 6

1.5.Key contributions of the dissertation 8

1.6.Structure of the dissertation 9

CHAPTER 2 THEORETICAL BACKGROUND AND LITERATURE REVIEW 13

2.1.Concepts of intellectual capital 13

2.2.Determination of the role of intellectual capital in business strategy development 18

2.3.Measure methods of intellectual capital efficiency 21

2.4.Theoretical background of intellectual capital 25

2.5.Related empirical studies in the banking industry 28

2.6.Hypotheses development 57

CHAPTER 3 METHODOLOGY 64

3.1.VAIC measurement methodology 64

3.1.1.Calculation of VAIC model 64

3.1.2.Merits and demerits of VAIC model 69

3.2.Data and Variables 74

3.2.1.Sample data 74

3.2.2.Employed variables 76

3.3.Empirical Regression Models 81

3.4.Descriptive statistics and correlations analysis 85

3.4.1.Context of the Vietnamese banking system during the research period 85

3.4.2.Descriptive statistics and correlations 88

3.5.Research procedure 94

CHAPTER 4 EMPIRICAL FINDINGS AND DISCUSSIONS 98

4.1.Financial intermediation of banks and the role of intellectual capital 98

4.1.1.Main results 98

4.1.2.Robustness tests 104

4.1.3.Effect of bank size 113

4.1.4.Discussion of the findings 116

4.2.Non-interest incomes of banks and the role of intellectual capital 118

4.2.1 Main results 119

4.2.2.Robustness tests 124

4.2.3.Effect of bank size 133

4.2.4.Discussion of the findings 136

CHAPTER 5 CONCLUSIONS AND IMPLICATIONS 140

5.1.Conclusions 140

5.2.Practical implications 143

LIST OF TABLES

Table 2.1 Some definitions of IC and its components 15

Table 2.2 Some measure methods of intellectual capital efficiency 22

Table 2.3 The summary of related studies on the role of IC in the existing literature 34

Table 3.1 Variables definitions 79

Table 3.2 Variables descriptive statistics 88

Table 3.3 Correlation matrix 91

Table 4.1 Baseline multivariate analysis 102

Table 4.2 Robustness tests 107

Table 4.3 GMM approach 111

Table 4.4 The role of bank size .115

Table 4.5 Baseline multivariate analysis 121

Table 4.6 Robustness tests 127

Table 4.7 GMM approach 131

Table 4.8 The role of bank size .134

LIST OF FIGURES

ingredients of IC .14

Figure 2.2 The role of IC in business strategy map 20

Figure 2.3 The illustration of the ways IC fuels financial intermediation activities and

non-interest incomes of banks 28

Figure 3.1 The major resources in promoting value-added creation 65

Figure 3.2 The ways to construct the VAIC calculation 69

Figure 3.3 The economic backdrop of Vietnam 85

CHAPTER 1 INTRODUCTION1.1 Research motivation and context

It could be said that today’s world has faced increasing threats of the poly-crisis such as the disruption of the global supply chain, soaring energy prices and inflation rates, and geopolitical risk (Lu & Luong, 2022; Phan et al., 2022b; Yusoff et al., 2019) This prospect underscores that most organizations have to find effective ways to sustain their buoyant markets In this case, tapping into knowledge-based resources can be seen as an essential preparedness to open new roads for modern companies because it assists an organization in achieving competitive advantage and stable development (Alvino et al., 2020; Suciu & Năsulea, 2019) This assertion is also true in the banking industry, which usually depends much on intellectual resources rather than physical capital to provide suitable products and services to fulfill the changing needs of their customers and succeed in competitiveness (Adesina, 2019) To some extent, intellectual capital (IC) may be an effective signal to evaluate the degree of banks’ performance compared with their rivals (Meles et al., 2016; Stewert, 1999).

Unsurprisingly, scholars and regulators have recently paid much attention to implementing IC in banking operations While the number of studies in this field has focused mainly on the correlation between IC and banks' productivity (e.g., Alhassan & Asare, 2016; Yalama, 2013; and among others), IC and one’s profitability (e.g., Le & Nguyen, 2020; Poh et al., 2018; and among others), IC and ones’ risks (e.g., Dalwai et al., 2021; Nguyen et al., 2021; and among others), or technical, allocative and cost efficiencies (e.g., Adesina, 2019; Le et al., 2022), the aspect of financial intermediation in the banking system as well as the link between IC and one of the most critical aspects in banking operations, namely total non- interest incomes, seem to remain an undiscovered area.

With that in mind, this research is to tackle the key issue of whether the implementation of IC has fostered the financial intermediation and total non-interest incomes in the banking system or not In this sense, Vietnam may provide one of the ideal countries for finding a clear answer and filling this vital gap in the literature for the following reasons.

Vietnam's economic growth has witnessed a fast pace in the ASEAN region, and it is hoped that this country will be the next tiger in Asia (Le, 2021; Le & Nguyen, 2020).

According to the statistics from World Bank Data, from 2006 to 2019, the GDP growth of Vietnam nearly stood at an average of around 6.5% before dropping to about 2.9% in 2020 due to the adverse consequences of COVID-19 Notwithstanding, since the financial market seems to remain undeveloped, sustainable economic growth and development have relied mainly on the effective operations of the banking system, which is also deemed as the backbone of the Vietnamese economy (e.g., Le et al., 2022; Le & Nguyen, 2020; Phan et al., 2022b).

The statistics revealed by World Bank Data illustrate that the economic indicators of domestic credit over the private sphere supported by banks jumped from about 65% to over 116% during the 2006-2020 period This remarkable escalation means that the development of the banking sector plays an imperative role in ensuring and fostering the growth of the Vietnamese economy Therefore, growing financial intermediation activities have become one of the significant factors in ensuring sufficient economic resources and sustaining the developing economy Additionally, the Vietnamese banking market may become fiercely competitive, resulting from the appearance of foreign banks, followed by participating in the World Trade Organization in 2007 (Huynh & Dang, 2021; Le & Nguyen, 2020; Phan et al., 2022a).

Consequently, domestic banks have to find new ways to adapt to changing conditions In this regard, digging more into intellectual resources may be an underlying business strategy to thrive in their business activities Indeed, it is witnessing an increasing evolution from the traditional paradigm of strategy to the knowledge-based paradigm, which deems IC as the driving force of sustainable value creation and sustainable competitive advantage (Alvino et al., 2020; Khan et al., 2019; Marr & Roos, 2012) In this case, the business strategy construction of Vietnamese banks is not the exception, and hence, managers and decision- makers in domestic banks cannot ignore IC perspective in both building their business strategy and managing business operations.

On the other hand, as Greenbaum et al (2019) implied, banks traditionally act as financial producers and servicers; they are regularly forced to provide up-to-date products to satisfy their customers' demands, by which they can flourish in today's economic climate Such this scenario underlines the primary driver of IC in generating effective remedies for these requirements In short, discovering the link between IC and financial intermediation in the

banking industry would be a requisite study for not only the Vietnamese banking sector but also other emerging countries where the sound operations of banks are seen as the prerequisite for economic development.

In addition, the dissertation opts for non-interest incomes as the key objective to explore the effect of IC on the business operations of banks for some main reasons First and foremost, the transformation from traditional incomes into non-interest incomes, including commissions, fees, and trading incomes, is seen as one of the essential strategies driving the operations of banks in the modern economy these days (Bian et al., 2015) Indeed, the shift towards non-traditional sources of income could bring certain benefits for banks, from reducing risk and funding costs (Tran, 2020) to enhancing profitability (Mostak Ahamed, 2017).

At the same time, such this orientation has required banks to possess necessary capabilities of technology, expertise, and human resource (Mostak Ahamed, 2017) In this vein, the emergence of IC would become the bridge to fill these preconditions In addition, to deal with the aftermath of the global financial crisis, operations of the banking industry in particular and the financial system, in general, have been constrained by tighter regulations because such financial deregulation may encourage banks to join more casino-style gambling, leading to growing instability (Tran, 2020) Hence, banks have to navigate their business strategies beyond traditional activities to achieve higher profitability This situation highlights the vital role of both IC and non-interest incomes in banks; thus, discovering the correlation between these factors would provide a major insight into banking operations, especially in emerging markets where the banking system is considered the backbone of the economy.

Taken together, it is hoped that the dissertation, namely “Business strategy, bank

operation, and the role of intellectual capital development” will may shed more light on the

role of IC in both financial intermediation and non-interest income activities and provide valuable helpfulness for not only academicians but also policy-makers in the banking sector.

1.2 Main purposes of the dissertation1.2.1 General purposes

In general, the dissertation is to conduct an empirical investigation into the role of intellectual capital in financial intermediation and non-interest income activities of

Vietnamese domestic banks In this regard, the study will point out the theoretical background to advocate these main concerns before performing an empirical analysis By leaning on the findings, the dissertation is also expected to provide useful implications for managers and decision-makers of Vietnamese banks.

1.2.2 Specific purposes

In particular, the major purposes of the current study are to focus mainly on some key aspects as follows:

First, one of the scientific endeavors of the dissertation is to construct the theoretical foundation that demystifies the pivotal role of IC in business operations as well as strategies of banks.

Next, the present study aims to determine the association between IC efficiency and financial intermediation activities as well as IC efficiency and non-interest incomes based on the context of the Vietnamese banking industry.

Moreover, other effort of the writer is to explore the extent to which the different components of IC exert both financial intermediation activities and non-interest incomes of the Vietnamese commercial banks.

Eventually, by leaning on the empirical findings, the present research endeavored to propound some major implications under both theoretical and practical views for not only academicians but also policy-makers as well as banking leaders.

In other words, as stated early, the current dissertation carried out is to answer the following straightforward questions of:

(i) How does the theoretical background advocate the relationship between IC efficiency and financial intermediation activities as well as non-interest incomes?

(ii) Whether does intellectual capital play a crucial role in fueling non-interest income activities of Vietnamese domestic banks or not?

(iii) Which components of intellectual capital play a crucial role in fueling the non- interest incomes of Vietnamese domestic banks?

(iv) Whether does intellectual capital play a key role in fostering the activities of financial intermediation of Vietnamese domestic banks or not?

(v) Which components of intellectual capital play a key role in fostering the activities of financial intermediation of Vietnamese domestic banks?

To reach clear explanations for these major concerns, the dissertation would perform an empirical investigation to find out the evidence In particular, the author would examine the impact of intellectual capital on total non-interest incomes as well as on financial intermediation activities of banks Due to the importance of these business operations, the findings in the dissertation would provide the implications for multi-stakeholders in Vietnam and, perhaps, other emerging countries, especially against the backdrop of increasingly fierce competition resulting from the technological era.

1.3 Research objectives and scope of the dissertation

For the research objectives of the dissertation, as mentioned previously, the study

would emphasize the role of intellectual capital in business operations of commercial banks, particularly the non-interest incomes and financial intermediation activities in Vietnam These research objectives are selected as the chief purposes of the dissertation since they may play an essential role in building business strategies of local banks as well as the growth of economy in Vietnam these days.

First of all, as an emerging country, the economic growth in Vietnam nearly depends on the expansion and sustainable development of the banking system Hence, the evaluation of the impact of intellectual capital on the financial intermediation of domestic banks would provide a deep insight into one of the main engines for the expansion of banking activities and economic growth in Vietnam.

In addition, the transformation from traditional incomes such as lending interests into non-traditional incomes may become one of crucial business strategies of banks against the backdrop of increasingly competitive market resulting from the emergence of foreign banks, rapid changes in technological innovation, tightening regulations, and so on Therefore, the investigation into the role of intellectual capital in these operating aspects of banks may bring beneficial values to bank managers Taken together, these reasons have necessitated conducting the research to point out the correlations between implementing IC and both non- interest incomes and financial intermediation strategies of domestic banks in Vietnam.

In this regard, the research scope of this this study would focus on some main items as follows:

For the space scope of the thesis, the author would concentrate on the business

operations of domestic banks in Vietnam The financial information of each bank would be gathered from the audited financial statements and the notes to the financial statements There are some main reasons why the research has focused mainly on commercial banks in Vietnam to carry out the empirical investigation First, it allows the current analysis to achieve a relatively homogenous research sample (Adesina, 2019) At the same time, it is argued that compared with commercial banks, joint-venture and foreign-controlled ones seemingly account for a relatively small proportion (Huynh & Dang, 2021) Meanwhile, the business operations of non-profit banks seemingly differ from commercial banks (Huynh & Dang, 2021) Taken together, the current research will pay special attention to commercial banks to conduct the empirical analysis.

For the time scope of the thesis, the author would select the study period spanning

from 2006 to 2020 The period is chosen because it has witnessed many changes in the banking system in Vietnam, including regulations, structures, the emergence of foreign banks, and technology-based orientations (e.g., Huynh & Dang, 2021; Le & Nguyen, 2020; Phan et al., 2022a; Phan et al., 2022b; Tran, 2022) At the same time, many prominent events have emerged during the same period in the Vietnamese economy (see the detailed analysis in Chapter 3) Thus, to some extent, the findings would draw the general picture of the role of IC in banking operations, specifically non-interest incomes and financial intermediation activities.

1.4 Methodology of the dissertation

In order to tackle the aforementioned concerns and achieve the research objectives, the current research has opted for the quantitative methodology to figure out the extent to which IC efficiency as well as its elements exert the financial intermediation activities and total non- interest incomes of banks.

More specifically, the study utilizes the database of 26 domestic banks in Vietnam during the 2006-2020 period Also, many different regression approaches are performed, including OLS, Fixed-time effect, and GMM estimation, as well as controlling specific characteristics

of banks and macro conditions These approaches are still important because they can help to ensure that the research findings withstand various robustness tests conducted It is true that the empirical results of the dissertation still survive after the robustness test stages are being employed, meaning that the findings are quite feasible and plausible Also, the research sample divided into different subsamples based on the bank size will be examined to provide an understanding of the role of IC in both large banks and small ones.

At the same time, the dissertation utilizes the prior findings of previous authors in the existing literature to calculate the main explanatory variables including IC efficiency and its ingredients as well as to build the empirical models Accordingly, to estimate the IC efficiency of domestic banks, following many extant studies (for example: Adesina, 2019; Le et al., 2022; Nguyen et al., 2021; Ozkan et al., 2017; Poh et al., 2018, and among others), the study employs VAIC model (the value-added intellectual coefficient model) propounded and developed by Pulic (1998, 2000, 2004) At the same time, VAIC is being separated into three main ingredients being capital employed efficiency (CEE), human capital efficiency (HCE), and structure capital efficiency (SCE) to evaluate the impacts of these components Additionally, the pros and cons of this approach are analyzed clearly and the reasons why the dissertation has chosen this model in Chapter 3, besides these limitations are also stated in the final chapter as one of the research gaps and research directions in the future.

Furthermore, the dissertation also controls a variety of variables including bank-specific characteristics and macroeconomic conditions Adding these variables into the analysis model may give a deeper insight into the research findings and, to some extent, they can play a part role in reexamining the results These variables consist of bank size, capital ratio, loan loss reserve ratio, income ratio, GDP growth ratio, and inflation ratio, which have been used by many financial studies in the recent years (e.g., Adesina, 2019; Le & Nguyen, 2020; Nazir et al., 2021; Tran et al., 2021; and among others).

Besides, regarding the first dependent variable, financial intermediation in banks, although there are certain debates on measuring financial intermediation, the ratio of total loans to total deposits is still popular in the banking literature (Boďa & Zimková, 2021) Some existing views scrutinize that macroprudential policies should be built around this

“descriptive indicator” (Satria et al., 2016; Van den End, 2016) In this research, this

indicator will be used as the first dependent variable in the analysis models In addition, regarding the

second dependent variable, the current study will use the (natural logarithm of) total non-interest incomes (NII) of banks to estimate non-non-interest incomes of banks, which may mirror most of the non-interest sources of income of banks, from relevant fees and commissions to trading securities, in a direct and absolute way (Phan et al., 2022a; Phan et al., 2022b) Hence, this indicator will be applied as the second dependent variable in the analysis models.

1.5 Key contributions of the dissertation

The research is anticipated to contribute to the knowledge gap in this field in the following ways.

i) Regarding the theoretical view, first and foremost, to the best of the writers' horizon, the research can be seen as the first empirical investigation into the correlation between IC and banks' financial intermediation as well as the non-interest incomes, at least in the Vietnamese context and perhaps, other developing countries Indeed, the vast majority of related papers emphasize the connection between IC and some business aspects such as productivity, profitability, risk-taking, or technical, allocative, and cost efficiencies (Adesina, 2019; Le et al., 2022; Le & Nguyen, 2020; Meles et al., 2016; and among others), the research makes a difference to the extant studies by digging more into the influence of IC on increasing financial intermediation activities and non- interest incomes in the banking sector.

ii) Moreover, most studies in this area mainly take the context of the industrialized countries to perform, notably US and China which are considered the most influential economies globally (Alvino et al., 2020) Hence, by conducting an investigation in Vietnam, which has been seen as a pivotal part of the Southeast Asia region and the Asia region as a whole, the study will bring more profound insight into the driver of IC in rebuilding business strategies of domestic banks to not only economists but also decision-makers in developing economies.

iii) In addition, as the research conducted by Poh et al (2018) indicated, different results when investigating the impact of IC in the banking industry may come from various measures of banking performance and periods chosen By selecting financial intermediation activities and non-interest incomes as the main research objectives along with the period covering from 2006 to 2020, the author would dig more into the impact of IC on various dimensions of business operations in banks, and therefore, the

author adds more illumination to prior findings such as Le et al (2022); Le & Nguyen (2020); Nguyen et al (2021); Poh et al (2018) and among others.

iv) Besides, the findings of the dissertation also give helpful evidence to shed new light on some important theories such as the resource-based theory, the intellectual capital theory and the knowledge-based theory that underscore a crucial aspect of implementing IC in business management of enterprises these days to stay ahead of the curve in the increasingly intensive competition In other words, the results in the research will contribute to the profound understanding about various theoretical studies in the IC field such as Dierickx & Cool (1989); Harris (2000); Khalique et al (2013); Penrose & Penrose (2009) and among others.

v) Under other related angle, the dissertation conducted is to respond to the previous calls of Alvino et al (2020); Suciu & Năsulea (2019); Vătămănescu et al (2019) who assert that the urgent need to explore more impacts of IC on different aspects in business operations of modern enterprises Because the center role of IC is increasingly recognized in both academic and practical perspectives, the empirical examination of the study will provide the compelling evidence in advocating this assertation.

vi) Last but not least, because the transformation from traditional incomes to non-traditional activities is seen as the necessary step in constructing business strategies, and implementation of IC may be the key to opening up new roads for domestic banks in the coming future, the findings would provide certain implications for scholars and regulators in Vietnam and perhaps in other developing markets On the other hand, while the expansion of financial intermediation activities can be seen as the key of banking operations, supporting the allocation of the economic resources and fueling the economic growth of Vietnam, based on the findings, the study will provide productive implications for managers in navigating and expanding these activities.

1.6 Structure of the dissertation

As mentioned before, this chapter focuses on some main points including the motivations, the research objectives, the research questions, the approached methodology, and the key contributions of the dissertation In the following chapters, the current study will detail these contents In general, the outline of the study can be summarized as follows.

Chapter 2, namely ‘Theoretical background and literature review’, will first provide the

concepts and the measure methods of intellectual capital The mentioned information is quite important because it helps to shed light on the ethos, the definition, and the value embedded into IC that many theorists have endeavored to discover At the same time, it shows clearly the ways numerous methods developed are to offer a precise quantification of IC performance in the extant literature After that, this chapter also analyzes the theoretical background and the relevant studies in the banking industry, which in turn will assist to develop the related hypotheses Basically, this chapter is expected to create the important backbone to gain more knowledge about the research trend in the concerned field as well as indicate the research gap that the dissertation can extend and fulfill At the same time, it can give a strong theoretical background that helps to verify the main concerns of the study and validate the research orientation as well as performed approaches.

Chapter 3, namely ‘Methodology’, will depict the detailed approaches to address the key

issues of the dissertation Accordingly, the chapter first discusses the methodology of the VAIC model and illustrates its detailed calculation as well as the computation of its components Also, the pros and cons of this approach are also analyzed Since this model is being applied in the study as the main explanatory variable to evaluate the role of IC efficiency or value-added creation in banking business operations, analyzing this information will help to provide a deeper insight into how VAIC still stands out in the existing literature compared with other measures proposed, why it is being opted for as the prevalent means to estimate IC efficiency by enormous academicians, although it obtains a variety of drawbacks, and how to formulate its components Afterward, this chapter will give information in a minute way about the data collected, the variables employed, the empirical models performed, and the various stages in performing robustness tests Besides, the backdrop of the research period is also underlined to emphasize the reasons why it is chosen and so important before analyzing descriptive statistics and correlation between employed variables.

Chapter 4, namely ‘Empirical findings and discussions’, will illustrate the empirical

results of the dissertation based on the methodology presented in the previous chapter By comparing with theoretical views and other empirical studies, the chapter will not only delineate the main findings but also give detailed explanations about the role of IC in the

banking operations of domestic banks It can be said that the results illustrated in the chapter will provide a clear answer to the aforementioned research questions.

Chapter 5, namely ‘Conclusions and implications’, will summarize the general findings

of the dissertation based on the results analyzed in the previous chapter At the same time, by relying on these conclusions, the chapter will propose some main implications under both theoretical as well as practical perspectives which may be helpful for both managers, decision- makers, and researchers in Vietnam and perhaps other emerging countries Besides, the chapter highlights some drawbacks of the dissertation and suggests a variety of future research directions Generally, it is hoped that future scholars can fulfill these limitations as well as pay new paths in this research area.

Brief Summary of Chapter 1

In Chapter 1, the current research has drawn the whole picture of the dissertation in which the research orientation and navigation underlined are to provide a concrete background for reaching a detailed explanation of the chief concerns In this light, the chapter may help readers understand the main purposes, the research objectives, the context, and the research questions that the dissertation will concentrate on It can be said that the first chapter will provide the first key to open the next doors throughout the current study The next chapters will detail the following steps to achieve a clear answer about the research objectives.

CHAPTER 2 THEORETICAL BACKGROUND ANDLITERATURE REVIEW

2.1 Concepts of intellectual capital

In today's world, economists tend to have a general consensus on the central role of intellectual capital in supporting organizations to gain competitiveness and achieve sustainable growth, especially against the backdrop of a fiercely competitive business environment, rapid changes in technological innovations, and global challenges (e.g., Khan et al., 2019; Kweh et al., 2022; Suciu & Năsulea, 2019; Vătămănescu et al., 2019) In the early stage, the definition of IC has been paid special attention by many economists worldwide According to Khalique et al (2013), the first interpretation is produced by Jon Kenneth Galbraith in 1969 However, Harris (2000) suggests that Schultz was the first economist who introduced the clarification of IC and the economic values of IC in 1963.

Even though there are certain debates about the definitions, classifications of IC, and the measures of IC in the existing literature, it is widely recognized that in the knowledge-based era, IC is deemed as the indispensable ingredient in the business strategies of any organization Indeed, although there are certain differences between researchers in interpreting IC in literature, in general, IC is seen as one of the intangible assets to fuel the operations of companies (Ghosh & Mondal, 2009; Mondal & Ghosh, 2012), as one of the main resources to enhance competitive advantage, firm value, the confidence of stakeholders, and sustain economic growth (Caputo et al., 2016; Jardon & Martínez-Cobas, 2019), as one of the reliable sources to ensure prosperity and well-being of individuals, corporations, and countries (Alvino et al., 2020; Suciu and Năsulea, 2019).

At the same time, IC has regularly included three main components: human capital, structural capital, and relational capital (Adesina, 2019; Le & Nguyen, 2020; Meles et al., 2016; Ozkan et al., 2017; Poh et al., 2018) Accordingly, the interpretation of human capital usually involves the competence of people in an organization, such as skills, experiences, knowledge, and so on Meanwhile, the definition of structural capital is related to a firm’s fabric, business strategies, policies, and so on By contrast, the last component, relation capital, also named capital employed, closely involves extrinsic factors, including clients, suppliers, and relevant stakeholders.

Figure 2.1 below presents the heart role of value creation that is blended from three classifications including human capital, structural capital, and relational capital together Besides, Table 2.1 illustrates a variety of definitions related to intellectual capital and its components in the existing literature.

Source: Based on the prior studies conducted by Edvinsson & Malone (1997); Harris,(2000); Stewart & Ruckdeschel (1998)

Figure 2.1 The illustration of the value-added creation springing from the three mainingredients of IC

As Figure 2.1 illustrates, the value creation is of the interested concern of enterprises, being the blended and integrated relationships and close connections between three major intangible assets: human capital, relational capital, and structural capital In this light, the more interconnected between these elements, the more maximized value space (Pew Tan et al., 2008) According to Edvinsson & Malone (1997), the firm value only results from the

whole combination of all three elements, meaning that by concentrating on one or two of these elements and neglecting the rest of them, a firm cannot optimize the value-added assets.

Hence, it is argued that these factors or intellectual resources can be seen as the underlying preconditions and foundations that are essential to perform business and gain competitive leverage (Harris, 2000).

Table 2.1 Some definitions of IC and its components

Intellectual capital is deemed as the non-physical appearance However, it could bring certain values to a firm Intellectual capital obtains valuable substances such as experiences, knowledge, IP (intellectual property), and information A company could harness these valuable materials to build wealth and propensity.

Intellectual capital has been knowledge that, in turn, could be transformed into the profitability of an organization Intellectual capital can be seen as a new resource which assist firms in reaching new achievements on business path Intellectual capital has been the discrepancy between a company's market and book values At the same time, intellectual capital is the resource that will assist a company to sustain competitive advantages.

Intellectual capital is depicted as intangible or non-physical assets that a company can gain value and advantageous competition from these resources.

Intellectual capital is seen as an invisible activity consisting of the capability of individuals in learning, namely the human capital, an organizational culture known as the structured capital, and the interactions with extrinsic factors named the relation capital.

8 Zéghal & Maaloul (2010)

Intellectual capital is defined as the total of all knowledge that an organization can harness effectively in performing business operations to value-added creation.

Intellectual capital is one of the important sources that may enhance the competitiveness of a company and the

confidence of multi-stakeholders.

Human capital is the distinctive characteristic that individuals or/and teams possess, and it is deemed as intangible assets of an organization By tapping into this factor, any company could gain advantages of

The interpretation of human capital is related to the capabilities of employees in solving many problems in enormous circumstances that would ultimately generate tangible as well as intangible assets of companies.

Human capital can be deemed as the most important element of IC, supporting the performance, efficiency, and

capability of companies.

Structural capital is something owned by a company in general Specifically, it is related to data, patents, policy, invention, strategy, and technology From this author's perspective, structure capital is the backbone of IC that would ensure the smoothness of knowledge transmission within a company.

Structural capital would be held in companies even when their staff leave home.

Structural capital is being controlled by companies, consisting of information technology, culture, innovation, optimized process, and relevant explicit knowledge.

Relational capital is identified as the value stemming from individuals and organizations that have relations with a company in selling and buying In other words, this factor is

usually related to multi-stakeholders such as customers, suppliers, and other relevant stakeholders.

Relational capital, also named capital employed, can be defined as the connection between companies and their multiple stake-holders.

et al (2011)

Relational capital is considered the sum of resources (both extant and potential), springing from the relational networks of individuals and organizations as a whole.

Relational capital is the combined relationships with the external world that would comprise clients, financial institutions, stakeholders, and other agents.

Năsulea (2019)

Human capital is the factor reflecting the capabilities of individuals in a company It regularly consists of the skills, experiences, and knowledge of all people in an organization.

Structural capital is the factor that emphasizes intrinsic knowledge such as policy, strategy, and structure of a company.

Relational capital is the factor related to a firm's extrinsic relationships, such as clients and stakeholders.

Source: The author collects from the extant literature

In short, it is an undeniable fact that operating in the technology-led and knowledge-based era, most organizations cannot neglect the role of intellectual resources in constructing business strategies, especially when the competitiveness has been souring and the uncertainty has become more unpredictable This argument is reflected in the scientific endeavors of scholars to codify the role of IC throughout the existing literature.

Indeed, based on the existing definitions in the literature and to the limited abilities of the author, it can be concluded that there are the great efforts to identify the concept of IC, however having certain differences in interpreting IC’s definition as well as its elements, depending on the different disciplines and various angles, such as finance and accounting,

economics and strategies, marketing and communication, and so on (Le et al., 2022; Le & Nguyen, 2020) Furthermore, reaching a whole consensus on IC’s interpretation tends to be the inconclusive debate in the extant literature (Bayraktaroglu et al., 2019; Nazir et al., 2021).

Similarly, the definitions of IC’s elements, and perhaps their names, have been still different, but many existing studies have classified IC into three main categories consisting of human capital, structural capital, and relational capital, also called physical capital or capital employed (e.g., Andriessen & Tissen, 2000; Nielsen et al., 2006; G Roos & Roos, 1997; Stewart & Ruckdeschel, 1998; Sveiby, 1997; and among others) Accordingly, human capital is mostly involved the intellectual prowess of individuals in an organization and it can be lost when employees leave companies In contrast to this element, structural capital is mainly engaged with policies, strategies, cultural aspects, possessed by firms Meanwhile, contrary to the first two elements, relational capital is totally related to the external factors such as multiple stake-holders.

2.2 Determination of the role of intellectual capital in business strategydevelopment

Historically and conventionally, both academicians and managers have endeavored to find out a clear reason why some businesses perform better while others do not The evident answer to this question may provide the key to opening new paths in managing the business strategy of firms (G Roos, 2005) Based on the theory of business strategy in the extant literature, the aim of this subsection is to highlight the vital role of IC in constructing business strategy of firm industry in general and banking industry in particular.

First of all, it is necessary to understand the meaning of “strategy” that a business leans on Theoretically, G Roos (2005) has identified “strategy” is seen as a series of approaches that assist businesses in accomplishing specific goals This author also underscores that the formulation of strategy will be depend specifically on the inventiveness coming from the human mind, while the action of strategy is to reach the strategic compromise between business goals and environmental requirements, suggesting that selling products and services has to meet demands of end-users Previously, Andrews (1997) considers that strategy of corporate can be seen as a mechanism of decision-making that helps to clarify the purposes, policies, as well as plans by which companies can reach their business goals From the view

of this author, strategy brings significant contributions (both economic and non-economic values) to multiple stakeholders.

Now, a question is that why the level of profitability tends to be different between companies, regardless of whether they operate in a same area Looking carefully at the wave of business strategy development, it is argued that there are generally two main perspectives by which strategy may rely on (Marr & Roos, 2012) Accordingly, the first perspective is to focus mainly on the power of market, while the second one is to emphasize the efficiency of internal resources.

The former view of business strategy, namely “the paradigm of market power”, is seen

as the conventional strategy model leaning specifically on the power of market From this perspective, benefits a firm achieves may spring from the interaction of five major forces including the level of power that buyers have, the level of substitutes for both products and services, the level of power that suppliers possess, the capacity of entry into market, and the level of existing competition (Porter, 1980) These forces are stronger meaning that the profitability of a company will be lower (Marr & Roos, 2012; G Roos, 2005) The main argument of this view is that the fundamental difference in benefits of companies may come from the ability of barriers construction, also named “mobility barriers”, which will assist successful companies in protecting from imitation of their strategic models (Caves & Porter, 1977; Hatten & Hatten, 1987; Marr & Roos, 2012) In this light, the issue that may occur is how to create a set of forces to construct these barriers Rexhepi et al (2013) suggest that the answer may result from harnessing the intellectual capital of an enterprise when building business strategy, especially in industries relying much on this capacity such as educational and financial institutions.

The latter view of business strategy is known as “the paradigm of resource-based model” is proposed and developed by some resource-rooted theorists such as Penrose & Penrose (2009); Wernerfelt (1984) This paradigm explains that the distinction of profitability may originate from the valuable resources that companies possess and the way they employ these resources Also, from this view, both resources and capacities are deemed as “the strategic assets” of enterprises The more strategic assets applied to a huge number of products and services, the higher benefits an organization can achieve (Prahalad & Hamel, 2009) However, it is argued that these resources and capacities cannot themselves produce value-added

creation (Penrose & Penrose, 2009), hence, to create value, they have to be embedded into the both products and services that companies offer (Marr & Roos, 2012; G Roos et al., 2001) Such this sense has underscored the center role of IC in business strategy, because by leaning especially on IC view, the resources can be used effectively and companies can determine the way to which value-added creation (G Roos, 2005; G Roos et al., 2001).

To illustrate this issue clearly, it should take the business operations of banks as a typical example G Roos (2005) describes banks serve as conduits between clientele who needs financial support and a group of customers can fulfill this financial gap In this vein, banks have to organize the cash flow appropriately to balance demands of both types of these customers To perform this task well, banks have to transform various kinds of intellectual resources into effective remedies and solutions that will satisfy their clients G Roos (2005) also concludes that possessing valuable resources is not yet enough, instead, banks have to put these resources to value-added creation.

Source: Based on the strategy map constructed by (Kaplan & Norton, 2000, 2004)

Figure 2.2 The role of IC in business strategy map

As Figure 2.2 illustrates above, the strategy map developed by (Kaplan & Norton, 2000, 2004) has depicted the causal connection between IC drivers and the performance of organizations, indicating the fundamental role of IC in constructing business strategy In other words, the strategy map shows clearly the way by which IC can drive organizational objectives and outcomes of organizations These authors believe that by understanding the readiness of strategic assets, decision-makers can constitute strategic objectives In short, it is clear that by using intellectual capital, the resources of organizations can be transferred into the end products and services which, in turn, will distribute organizational values (Marr & Roos, 2012).

In conclusion, along with the dramatic changes in business conditions, the strategy construction of an organization has to be adapted to suit the market needs, and the business perception of the pivotal role of IC in driving value-added creation also grows gradually (Marr & Roos, 2012; G Roos et al., 2001) Indeed, approaching business strategy has evolved from the conventional paradigm to strategic assets model, in which, IC has emerged as the key engine for performance outcomes, strategic objectives, and sustainable value-added creations of most companies (Alvino et al., 2020) Therefore, leaders and managers in banks cannot neglect this pivotal factor in their business strategy construction.

2.3 Measure methods of intellectual capital efficiency

In tandem with the persistent attempt to explain the concept and the strategic vehicle of IC as discussed above, it is also witnessed the numerous academicians have put their continuous energies into seeking out clearly the effective measure of IC efficiency It can be said that due to the core role of IC in companies' business strategies and operations, its measurement has attracted many researchers in the financial sector and the existing literature as a whole.

The urgent need to measure IC efficiency also originates from the realistic business strategies of firms that desire to manage IC in effective ways and disclosure this information frequently because, as the assertion of Bayraktaroglu et al (2019), managers only manage and control anything that they entirely measure In other words, “when you can measure what you are speaking about and express it in numbers, you know something about it” (Liebowitz & Suen, 2000) These arguments have underscored the pivotal part of measuring IC in

business strategies of enterprises, leading to the fervent desires for conducting and propounding the effective measurement of IC in numerous disciplines.

In this vein, various measures have been invented and developed in the extant literature throughout the recent decades In fact, over 42 methods have been developed to estimate intangible assets in the preceding literature and this figure may likely arise (Nazir et al., 2021) Some emblematic methods may include Tobin's Q ratio, the economic value-added indicator, the intellectual capital index, the inclusive value methodology, VAIC model, adjusted/modified/extended-VAIC model and among others.

Table 2.2 below states a variety of the typical measure methods of intellectual capital efficiency in the extant literature.

Table 2.2 Some measure methods of intellectual capital efficiency

SerialNo.

The author(s)The name of propounded measure

Stewart & Ruckdeschel 5

María Viedma Marti (2001, 13

The intellectual capital benchmarking system

16 Bounfour (2003) The intellectual capital dynamic value (IC-dVAL approach) Vishnu & Gupta (2015)

The extended (or additional) VAIC model

Source: The author collects from the extant literature

In the early stage, K.-E Sveiby & Lloyd (2010) and Luthy (1998) categorize the intangible measurement methods into the major four categories including ‘direct intellectual capital methods’, ‘market capitalization methods’, ‘ROA methods’, and ‘scorecard methods’ These categories can be summarized as follows.

The first category is directly connected with the aspect of “dollar value” coming from intangible resources, which is estimated by codifying its elements The second involves the calculation of IC’s value through computing the difference between the market capitalization and the book value of the equity The third uses the ROA indicator to calculate the average annual earning springing from intangible assets The final is related to many indices developed from various components of IC to estimate IC’s value, but this approach does not evaluate the economic aspects like the first category.

Meanwhile, according to Bayraktaroglu et al (2019) and Pew Tan et al (2008), the existing methods of IC measurement can be classified into the two major kinds consisting of the non-financial calculation or “non-dollar valuation” and the financial calculation or “dollar valuation” These both approaches have naturally embraced both merits and demerits As the given names of these categories suggest, while the former does not estimate the dollar valuation of IC, the latter gives the estimation of the dollar valuation.

Some methods in the former group may include the Skandia intellectual capital navigator, intellectual capital index, balanced scorecard, and among others In this line, Kaplan & Norton (1996) can be seen as the typical pioneers trying to propose the IC measurement The authors develop the balanced scorecard as the model to formulate IC, allowing managers to manage the cause-and-effect connections between intangible assets and business performance through the four views: customer, internal process, finance, and learning & growing.

Even though this model seems to be in line with the firm-specific view, it may not be applied in general because it may not evaluate the financial value of the intellectual resources (Pew Tan et al., 2008) Hence, many methods have attempted to address this limitation, and among different measures are being proposed Among of them, most scholars readily consent that Skandia intellectual capital navigator is deemed as the measurement that provide a wide range of aspects to formulate IC, especially the role of customer relationships in the value- added creation (Bontis, 2001) Accordingly, this approach embraces around 112 indices reflected in five angles: customer, finance, human, process, renewal and development However, this method does not evaluate dollar values of IC.

To sum up, the non-financial perspective allows researchers and managers to determine the what type of IC components and their impacts on business operations of firms, but it does not help to formulate the economic values of intangible assets (Bayraktaroglu et al., 2019).

On the other hand, the financial perspective such as the economic value added, Tobin’s Q, VAIC model, and extended-VAIC model, has focused mainly on the economic value of intangible assets that an organization owns, hence it enables both scholars and business leaders to evaluate IC’s performance and compare it to rivals (Bayraktaroglu et al., 2019).

For instance, the economic value added capturing many variables including financial plan, performance, budget, shareholder communication, and incentive compensation emphasizes the maximation of earnings over costs However, one of this method’s drawbacks is that it leans much on historical expenses that does not capture immediately the current market value (Bontis, 2001; Pew Tan et al., 2008).

Another compelling method is the value-added intellectual coefficient (VAIC) model of Pulic (1998, 2000), which is seen as a relatively simple to calculate and is widely used in the preceding literature (Adesina, 2019; Nazir et al., 2021) As a claim by Poh et al (2018), the

value-added intellectual coefficient model (VAIC) is suitable for the banking and financial sector and other industries.

This method was created and developed by Pulic (1998, 2000, 2004), and utilized in a wide range of studies on the role of intellectual capital in the banking industry and other disciplines (e.g., Adesina, 2019; Le & Nguyen, 2020; Meles et al., 2016; Nazir et al., 2021; Ozkan et al., 2017; Poh et al., 2018; Yalama, 2013; and among others) This model would consist of three main components: capital employed efficiency (CEE), human capital efficiency (HCE), and structure capital efficiency (SCE) This approach reflects the creation of value in each money a company spends and the efficiency of intellectual capital utilized Therefore, a higher value of VAIC means that using a firm's resources becomes better effective.

In this study, the author would utilize VAIC model to measure IC efficiency in banks and acting as the main explanatory variable in the analysis models For calculation, the detailed explanation would be stated in the methodology chapter Along with that, this chapter also acknowledges the drawbacks of VAIC model and gives detailed explanations about some main reasons why this research has chosen this model as measure of IC efficiency In addition, the study will state these limitations as the research gap that future academicians can fulfill in the years coming ahead.

In the next subsections, the study will provide theoretical background of intellectual capital before some empirical studies related to IC’s role in the extant literature are reviewed.

2.4 Theoretical background of intellectual capital

There are some potential theories which could interpret the connection between IC and financial intermediation and non-interest incomes in banks.

Based on the assumption that knowledge embedded in individuals is considered an asset of organizations, the human capital theory developed by Edvinsson & Malone (1997); Stewert (1999) suggests that any company should explore this intangible resource to create and acquire competitive leverage in the market The underlying assumption of this theory is that by tapping into the knowledge embedded into each individual and team, organizations can harness these assets and transform them into advantageous competition in the today’s economy (Stewart & Ruckdeschel, 1998).

According to Harris (2000), the knowledge can be divided into two major types including tacit term and explicit term In terms of the tacit knowledge which is considered the most significant type, Harris states that it may consist of experiences, beliefs, perceptions, learning and similar items that are being embedded into employees and are not spoken.

By contrast, the explicit knowledge is appeared clearly and accessible to anyone in firms, which includes procedures, guides, policies written down Allee (1997) asserts that nearly 90% of knowledge owned by firms may spring from the tacit knowledge, therefore to harness intellectual resources effectively, firms need to transform this type of knowledge into the explicit one In other worlds, an increase in the rate of the explicit knowledge is quite the important issue when exploring intellectual capital.

On the other hand, the systems theory considers that each individual has to interact with general processes and businesses to meet the consistent goals of an organization (Heylighen & Joslyn, 1992) In this vein, IC would become an appropriate environment to ensure constant information flows within the organization and customer communication (Harris, 2000) Relying on this knowledge-sharing mechanism, managers could enhance and even adjust the orientation as well as navigation of business plans to satisfy the demands of their clientele (Harris, 2000).

In other words, each knowledge of each member in a company will emerge as the heart of knowledge for relevant others because individuals become a pivotal part of strategic role in value-added creation (Senge, 1991) More clearly, Harris depicts that the systems approach deems the human capital and systems as two interconnected and integrated entities which serve as the foundation for the performance enhancement of a company.

Taken together, implementing IC may assist banks to achieve higher competitiveness and, therefore, achieve an increase in financial intermediation.

To identify clearly the intended correlation between IC and financial intermediation as well as non-interest incomes, relying on the models constructed by Edvinsson & Malone (1997) and Suciu & Năsulea (2019), the study would reconstruct these models to draw the possible illustration of these relations in Figure 2.2.

As this picture illustrates, through three main ingredients: human capital, structural capital, and relational capital, IC would have certain influences on financial intermediation activities in several channels as follows.

First, it is clear that as the human theory has indicated, by tapping into the tacit knowledge of employees, any organization may transfer these implicit resources into the innovative capital that is eventually harnessed to accomplish competitive advantages in markets Second, the structural capital would fuel competitiveness through the channel of social capital Indeed, Suciu & Năsulea (2019) argue that in the digital, innovative, and knowledge-based era, structural capital would assist enterprises to build evolutionary adaptations to meet current challenges Such new adjustments could enhance and strengthen the process capital of companies, and therefore, they could achieve substantial improvement in competitive abilities.

To explain the last channel, these authors assert that increasingly interacting with multi-stakeholders and facing differences in culture, each organization nowadays has to possess a deeper understanding of the fundamentals of the culture of excellence By relying much on the intangible resource, namely IC, enterprises could construct or re-construct the solid foundation, which would help them explore multi-dimensions of cultures, societies, and environments This improved backbone would bring sustainable development and competitiveness to modern firms.

In short, based on these channels, it is indisputable that IC and its components are expected to provide competitive advantages for companies Thus, the activities of financial intermediation and non-interest income would be fueled by these precious resources in the today’s modern world.