Intellectual Capital and Its Effects on The Performance of Firms, Sectors and Nations

Intellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and NationsIntellectual Capital and Its Effects on The Performance of Firms, Sectors and Nations

MINISTRY OF EDUCATION AND TRAINING HO CHIMINH CITY OPEN UNIVERSITY

TRAN PHU NGOC

INTELLECTUAL CAPITAL AND ITS EFFECTS ON THEPERFORMANCE OF FIRMS, SECTORS AND NATIONS

DOCTORAL DISSERTATION IN BUSINESS ADMINISTRATION

HO CHI MINH CITY – 2024

MINISTRY OF EDUCATION AND TRAINING HO CHIMINH CITY OPEN UNIVERSITY

TRAN PHU NGOC

INTELLECTUAL CAPITAL AND ITS EFFECTS ON THEPERFORMANCE OF FIRMS, SECTORS AND NATIONS

DOCTORAL DISSERTATION IN BUSINESS ADMINISTRATION

1 Dr Vo Hong Duc

2 Dr Van Thi HongLoan

HO CHI MINH CITY – 2024

Ho Chi Minhcity,July,2024

Tran Phu Ngoc

This thesis would not have been possible without the support of my principalsupervisor, Dr Vo Hong Duc I am profoundly grateful to Dr Duc for his dedication,invaluable guidance, scholarly support, and generous commitment of time throughoutthis process Without his assistance, this thesis would not have come to fruition.

I also wish to express my gratitude to Dr Van Thi Hong Loan for her insightfulcomments and for inspiring me to complete this work.

Special thanks go to my friends at The CBER – Research Centre in Business,Economics&ResourcesatHoChiMinhCityOpenUniversity,HoMinhChi,andTran

Icouldnothavecompletedthisjourneywithouttheloveandencouragementofmyfamily andfriends I am deeply appreciative of my late father, who believed in my potential, andmy mother, who is always proud of myachievements.

Lastly, I extend my heartfelt thanks to my wife, Huyen Co, for her patience andsupport in making this dream a reality.

I dedicate this thesis to my beloved daughter, Kha Han, whose inspiration andcourage helped me overcome all hardships throughout this journey.

In a knowledge-based economy, firms put great effort into remainingcompetitive.Various economic sectors have also adopted strategies to demonstrate resilience in a competitive environment Nationsare no exception In the era of economic integration, countries have to utilize all available resources to achieve sustainablenational performance and development While tangible assets are limited and their use is at thelimit,theroleofintangibleassetshasbecomeimportant.Intellectualcapital,considered a criticalasset, refers to the intangible assets contributing to value creation for firms, sectors, andnations Intellectual capital includes three distinct components: human, structural, andrelational The important role of intellectual capital in driving performance is crucial.Accumulating and using intellectual capital efficiently provide significant effects andimplications for the success of firms, sectors, andnations.

Previous research has focused on understanding the role of intellectual capital at afirm level However, there is no well-established and generally agreed-upon approachfor measuring intellectual capital at a sector or national level As such, this dissertationaims to achieve two objectives The first objective is to measure intellectual capital atthree levels: firm, sector, and nation The second objective is to examine the impact ofintellectual capital on the firm performance, sectors' performance, and the country'sgrowth The findings from this dissertation are crucial for policymakers, practitioners,and executives to consider the roles of intellectual capital to maximize the benefits ofthis important asset.

Specific tasks from the first research objective – measuring intellectual capital –canbesummarizedasfollows.First,dataaremanuallycollectedfromtheannualreports of 150 firmslisted in Vietnam from 2011 to 2018 These firms are classified intotwocategories: financialfirms and non-financial firms This dissertation subsequently uses the modified value-added intellectual coefficient (MVAIC) method to compare the differences regardingthe intellectual capital level between financial and non-financial firms in Vietnam.Second, a new sectoral intellectual capital index is developed tomeasuretheintellectualcapitallevelacross12sectorsinVietnamfrom2011to2018.

Third, data from 104 nations from 2000 to 2018 are collected to construct a new indexof national intellectual capital (INIC).

In addition, the following tasks are conducted to achieve the second researchobjective – examining the effects of intellectual capital on a firm's performance (at afirm level) and sector's performance (at the sector's level) and economic performance(at a nation's level) This study employs the generalized method of moments (GMM)estimation technique to investigate how intellectual capital affects financial and non-financial firms' performance The dynamic common correlated effects (DCCE)estimation method is used to examine the effects of intellectual capital on the sector'sperformance Finally, this dissertation examines the impacts of intellectual capital oneconomic performance across nations using DCCE method.

The main results from this dissertation can be summarized as follows.First, a

significant difference in intellectual capital level between financial and non-financialfirms in Vietnam The empirical results indicate that intellectual capital positivelyaffectsfirmperformanceinVietnam.Thesefindingsimplythatnon-financialfirmswill need to

invest in building their intellectual capital to increase their competitive advantage.Second,

intellectual capital at the sector's level has been found to improve the performance ofsectors in Vietnam over the last decade, especially during the COVID-19 pandemic,which has put sectors under severe pressure These findings highlight the need forimproving intellectual capital efficiency at the sectoral level to remain competitive and

prepare for future adverse events.Third, the intellectual capital level varies

significantly across countries and Vietnam, from the current standing regardingintellectual capital ranking compared with other countries, has a significant task toimprove intellectual capital for the nation Finally, the empirical results confirm thatintellectual capital at the national level supports GDP per capita – an indicator of acountry's economicperformance.

The contributions of this dissertation to the existing literatureonintellectualcapital, its measurement and its effects on performance are

threefold.First, the study examines the differences in intellectual capital level between

the financial and non- financial in Vietnam and the impact of intellectual capital on

firm performance Thefindingsprovidevaluablemanagerialimplicationsforpractitionersandfirmexecutives.

Second, this dissertation pioneers the development of indices for measuringintellectual

capital for sectors and nations These indices can be used to examine the effects of

author'sknowledge,thisdissertationisthefirsttomeasureintellectualcapitalforfirms, sectors,and nations in Vietnam and consider its effects on performance in the Vietnamese contextin the same place.

2.6.1 Intellectual capital andfirm’sperformance 50

2.6.2 Intellectual capital andsectorperformance 55

2.6.3 Intellectual capital andnationalperformance 57

2.7 Summary 60

CHAPTER3 METHODOLOGY 61

3.1 Data 61

3.2 Researchmethods 63

3.2.1 Assess the impact of intellectual capital onfirmperformance 63

3.2.2 Assess the impact of intellectual capital on the performance of sectorandnation 66

3.3 Variables: definitionsandmeasurements 72

3.3.1 Measuring intellectual capital atfirmlevel 72

4.1 An intellectual capital level for Vietnameselistedfirms 81

4.2 An intellectual capital across sectorsinVietnam 83

4.3 Measuring national intellectual capital: a tale oftwoindices 86

4.4 A national intellectual capitalacrossnations 88

4.4.1 National intellectual capitalbyregion 88

4.4.2 National intellectual capitalbyincome 90

4.5 Summary 96

CHAPTER5 EMPIRICAL RESULTS ON THE EFFECTS OF INTELLECTUALCAPITAL ON PERFORMANCE OF FIRM, SECTOR ANDNATION 99

5.1 Intellectual capital andfirmperformance 99

5.1.1 Correlation analysis 99

5.1.2 Autocorrelation andheteroskedasticitytests 102

5.1.3 Theeffectsofintellectualcapitalonfirm’sperformanceusingpaneldataestimation: generalized method ofmoments(GMM) 102

5.2 Intellectual capital and financial performanceacrosssectors 105

5.2.1 Thedescriptivestatistics 105

5.2.2 The cross-sectionaldependencetest 107

5.2.3 The slopehomogeneity test 107

5.2.4 The panel unitroottest 107

5.2.5 The panelcointegrationtest 108

5.2.6 The effects of intellectual capital on financial performance acrosssectors using Dynamic common correlatedeffectstechnique 108

5.2.7 The causality relationship flows between sectoral intellectual

capital,sector performance andothervariables 109

5.3 Intellectual capital andnationalperformance 111

5.3.1 The cross-sectionaldependencetest 113

5.3.2 The slopehomogeneity test 113

5.3.3 The panel unitroottest 113

5.3.4 The panelcointegrationtest 113

5.3.5 Theeffectsofnationalintellectualcapitalonnationalperformanceusingthe dynamic commoncorrelatedeffects 114

5.3.6 The causality relationship flows between national intellectual capital,national performance and othermacroeconomicvariables 115

6.2.1 Measuringintellectualcapital 124

6.2.2 Theeffectsofintellectualcapitalontheperformanceoffirm,sectorandnation1286.3 Limitations and suggestions forfutureresearch 131

LIST OF ACRONYMS

ASEAN Association of Southeast Asian Nations

CE Domestic credit to the private sector by banks

INIC Index of national intellectual capital

LEV The ratio between total debt and total assets of firmsMVAIC Modified value-added intellectual coefficient

SICI Sectoral intellectual capital indexSIZE The natural logarithm of the total assets

LIST OF FIGURES

Figure1.1 Real GDP growth trends: Vietnam, ASEAN, andtheWorld 2

Figure1.2 Infrastructure spending, GDP growth rate, and business environmentfactors 3

Figure1.3 Global competitiveness and technologicalreadinessranking 3

Figure1.4 Researchprocess 13

Figure1.5 Researchframework 16

Figure2.1 Saint-Onge’smodel 21

Figure2.2 Sveiby’smodel 23

Figure2.3 Skandia intellectual capitalvalue scheme 24

Figure2.4 Sullivan’s approach to visualizeintellectualcapital 25

Figure2.5 Thebalancedscorecard 31

Figure2.6 Brooking’s intellectual capitalmeasurementmodel 32

Figure2.7 Intangible assetsmonitorexample 33

Figure2.8 Skandianavigator 34

Figure2.9 TheDuPontmodel 47

Figure3.1 Number oflistedfirms 62

Figure4.1 Sectoral intellectual capital index in2011-2018period 85

Figure4.2 An index of national intellectual capital: Lin, Edvinsson, Chen andBeding (2014) index versustheINIC 87

Figure4.3 National intellectual capital across yearsby region 89

Figure4.4 National intellectual capital across yearsbyincome 91

Figure4.5 Accumulation of national intellectual capital across years in somecountries 92

Figure4.6 Accumulation of national intellectual capital across years in Group ofSeven 93

Figure4.7 Accumulation of national intellectual capital across years in Top 109 3Figure4.8 The accumulation of national intellectual capital for the Asia-Pacificcountries for almost two decades, from 2000to2018 95

Figure4.9 National intellectual capital aroundtheglobe 96

Figure5.1 The causality relationship flows between sectoral intellectual

capital,sector performance andothervariables 111Figure5.2 The causality relationship flows between national intellectual

capital,national performance and othermacroeconomicvariables 117

LIST OF TABLES

Table2.1 Summary - Sectoral intellectualcapitalmeasurements 39

Table2.2 Summary - National intellectual capital(NIC)measurements 45

Table2.3 Summary - Intellectual capital andfirmperformance 54

Table2.4 Summary - Intellectual capital andsectorperformance 56

Table2.5 Summary - Intellectual capital andnational performance 59

Table3.1 Three components, and their proxies, of the new index of nationalintellectualcapital(INIC) 79

Table4.1 Descriptive statistics of thefullsample 82

Table4.2 Descriptive statistics for financial firms andnon-financialfirms 83

Table4.3 National intellectual capitalbyregion 89

Table4.4 National intellectual capitalbyincome 90

Table5.1 Regression models 99

Table5.2 The pairwise correlation coefficients and the variance inflation factor(VIF)amongvariables 101

Table5.3 Empirical results usingGMMestimations 104

Table5.4 Regression models 105

Empiricalresults-Table5.11 The causality relationship flows between national intellectual capital,national performance and othermacroeconomicvariables 116

LIST OF PUBLISHED PAPERS

1 Vo, D H., & Tran, N P (2024) Does national intellectual capital matter for

economic growth in the Asia–Pacific economies?.Journal ofIntellectualCapital,25(2/3), 253-274.

2 Vo, D H., & Tran, N P (2024) Sectoral Intellectual Capital and Sector

PerformanceinanEmergingMarket.MontenegrinJournalofEconomics,20(2),

3 Vo, D.H., Van, L.T.-H., Hoang, H.T.-T., & Tran N.P (2023) Theinterrelationship between intellectual capital, corporate governance and

corporate social responsibility.Social Responsibility Journal, 19(6),1023-1036.

4 Vo, D.H., & Tran, N.P (2023) Measuring national intellectual capital and its

effect on country’s competitiveness.Competitiveness Review,33(4),820-839.

5 Tran,N.P.,&Vo,D.H.(2022).Dobanksaccumulateahigherlevelofintellectual capital?

Evidence from an emerging market.Journal of Intellectual Capital,23(2),439-457.

6 Tran,N.P.,Dinh,C.T.H.,Hoang,H.T.T.,&Vo,D.H.(2022).IntellectualCapital and FirmPerformance in Vietnam: The Moderating Role of Corporate Social

Responsibility.Sustainability, 14, 12763.https://doi.org/10.3390/su141912763 7 Van, L.T.-H., Vo, D.H., Hoang, H.T.-T., & Tran N.P (2022) Does Corporate

Governance Moderate the Relationship between Intellectual Capital and Firm’s

Performance?.Knowledge and Process Management,29(4),333-342.

8 Vo, D.H., & Tran, N.P (2021) Measuring national intellectual capital: a novel

approach.Journal of Intellectual Capital, 23(4),799-815.

9 Vo, D.H., & Tran, N.P (2021) Intellectual capital and bank performance in

Vietnam.Managerial Finance,47(8),1094-1106.

10 Tran, N.P., Van, L.T.-H., & Vo, D.H (2020) The nexus between corporate

-650.

toexaminethedynamicsofthisroleandthecontributionsofintellectualcapitaltofirm’s performance.Inkinen (2015) demonstrates that firms can benefit from a variety of intellectual capital profiles Thismeans that some businesses require high levels of overall intellectual capital to achieve impressiveperformance, while others can still achieve positive results with relatively low structural or relationalcapital In addition, the impact of intellectual capital on a firm performance primarily stems from itscombinations,interactionsandmediatingeffects.Furthermore,thereissubstantialproof highlighting theimportant connection between intellectual capital and a firm's innovation performance (Song,2022; Inkinen, 2015) Various studies have been conducted to examine the effects of intellectual

focusonfinancialfirms(Harisetal.,2019;FirerandWilliams,2003)andmanufacturing firms (Xu andWang, 2019) Xu and Li (2019) find a difference in intellectual capital efficiency between high-tech

Theimpactsofintellectualcapitalonfirm’sperformanceintheemergingmarketsinthe Asian regionhas been examined in previous studies (Indonesia, Soetanto and Liem,2019;Thailand,TranandVo,2018;Malaysia,Goh,2005).Inparticular,Soetantoand

WorldASEAN 5

Liem (2019) argue that intellectual capital affects the market-to-book value of theknowledge-based sectors, which have intensively used technology and/or humancapital.InastudyonThailand’sbankingsector,TranandVo(2018)concludethatbank profitabilityis driven mainly by the efficiency of capital employed Goh (2005) asserts that banks haveaccumulated a lower level of structural capital efficiency than human capitalefficiency.

emergedasacountrywithremarkablenationalperformanceanddevelopment.Inrecent years,leaders in the miracle of national performance among ASEAN members have been emergingmarkets, such as Vietnam (OECD, 2018) Figure 1.1 indicates that the pattern of real growth inthe gross domestic product (GDP) in Vietnam is stable and higher than that of other emergingcountries, such as Indonesia, Malaysia, the Philippines, and Thailand Since 2000, Vietnam'sGDP per capita has grown by 6.4 percent annually—one of the fastest rates in the world(Trieu, 2019) In addition, Vietnam has closely integrated into the regional and worldeconomy, with strong trade commitments, such as the European-Vietnam Free TradeAgreement, the ComprehensiveandProgressiveAgreementforTrans-PacificPartnership,theVietnam- Eurasian Economic Union Free Trade Agreement, and theASEAN–Hong Kong,China Free Trade Agreement, to name afew.

ASEAN 5: Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.

Figure1.1 Real GDP growth trends: Vietnam, ASEAN, and theWorld1

In addition, as shown in Figure 1.2, Vietnam has increased its investment ininfrastructure to bridge the gap with other ASEAN member countries Vietnam’sspending on infrastructure represents the second fastest among the ASEAN members,11.5percent,whichisalmostdoubledtherateofGDPgrowthfortheperiod2012-2016 However, thebusiness environment in Vietnam is still maturing The gaps in the institutional qualityundermine investors’ confidence Figure 1.2 also indicates that satisfaction with the investmentenvironment is still lower in Vietnam than in other emerging markets inAsia.

Figure 1.2 Infrastructure spending, GDP growth rate, and business environment factors2

Moreover, based on the 2017-2018 global competitiveness index, Vietnam laggedbehind that of other ASEAN members, such as Malaysia, Indonesia, and Thailand.Vietnam has a competitive advantage from its relatively low labor costs However, itslow technology readiness (in the technology readiness ranking, as presented in Figure1.3) poses a disadvantage for Vietnam in technological innovation and automation.

Country Global Competitiveness Index,institutions pillar ranking,2017-2018

Economist Intelligence Unittechnological readiness ranking, 2018-

Source: PwC (2018); Economist Intelligence Unit(2018).

Figure 1.3 Global competitiveness and technological readiness ranking

On the above observations, The Vietnamese firms are facing great opportunitiesand challenges For example, the ongoing Covid-19 pandemic worldwide puts firms ina new state, a new environment The Vietnamese firms have faced new challenges thathave never occurred in the past Therefore, The Vietnamese firms need to be flexibleintheir production plans, business strategies and images and branding The diversified knowledge-based economy plays an important role in allareas of life and society and gradually replaces the industrial economy, which only focuses on production and consumption In order to meetthe important requirements of the knowledge-based economy, firms need to thoroughly utilize the value from intellectual capital – animportantintangibleasset.Thedevelopmentoftheknowledge-basedeconomyenhances

theroleofintellectualcapitalinbusinessesandsocietyandpushesittoanewlevel.This practice requiresfirms to use and implement appropriate and flexible policies to utilize the value of resources,which are considered intangible, from firms including skills, knowledge, innovation, andrelationship withcustomers.

Edvinsson and Malone (1997) consider that intellectual capital includes two maincategories: human capital and structural capital Pulic (1998) introduces a value-addedintellectual coefficient (VAIC) model to measure intellectual capital efficiency Thismodel separates intellectual capital into three components, including (i) human capital,(ii) structural capital and (iii) capital employed Other studies such as Nimtrakoon(2015); Vishnu and Gupta (2014); and Nazari and Herremans (2007) also propose amodified value-added intellectual coefficient (MVAIC) model The MVAIC modelhasbeen widely used in measuring intellectual capital efficiency at firms’ level (Bayraktaroglu et al., 2019; Xu and Wang, 2019;Chen et al.,2015).

In addition, the strategy of spreading knowledge of firms is not only forthemselves, but also extends to the sector, region and country (Pedro et al., 2018).Medina et al (2007) argue that policymakers can identify solutions to enhance theintangible resources of the sector or region through the analysis of their intellectualcapitalinordertoachieveasustainablegrowth.Marcin(2013)presentscountriesaround

such,i t i s i m p o r t a n t a n d n e c e s s a r y t o d e v e l o p a n e w s e c t o r a l i n t e l l e c t u al c a p i t a l i n

accordance with the sectors’ development theories (Pedro et al., 2018) Doing so willpromotethemanagementofintangibleresourcesinsectors.However,amethodologytomeasureand evaluate the efficiency of the sectoral intellectual capital has been largely ignoredin previousstudies.

Moreover,atthenationallevel,nowidelyusedorhighlyrecognizedmethodshave been used tomeasure intellectual capital across nations A limited number of studies (Lin, 2018; Kapyla et al.,2012; Lin and Edvinsson, 2011; Schneider, 2007;Andriessen and Stam, 2005; and Bontis, 2004) with the

capitalhavebeenconducted.However,themeasurementsofnationalintellectualcapital adopted inthose studies are very impractical to be widely implemented across nations due to theunavailability of required data and/or an excessive usage of judgements LinandEdvinsson(2011)paperisapioneeringstudyinmeasuringintellectualcapitalacross countries Thismethod is impractical to be implemented for other nations outside theintendedsamples.Assuch,differentapproachesinmeasuringintellectualcapitalacross

sectors,particularlyacrossnations,areexpectedtoproperlymeasureintellectualcapital acrosssectors and nations for comparison purposes (Salonius and Lonnqvist,2012).

Inthepastthreedecades,thefinancialsectorhasplayedacrucialroleinVietnam's nationalperformance and development In the context of deepening an integration oftheVietnameseeconomyintotheworldeconomy,thefinancialsectorshouldeffectively utilize bothtangible and intangible resources, especially intellectual capital The operations of financial firms aredirectly related to intellectual capital because they are knowledge-based companies (Buallay et al.,2020) In addition, Firer and Williams (2003) emphasize that financial firms have higher intellectualcapital efficiency than other sectors Employees of financial firms exhibit a higher homogeneity ofskills and knowledge (Kubo and Saka, 2002) Financial firms operating in a highly regulatedenvironment tend to be more compliant in meeting regulatory expectations while non-financialfirmsarenot.Assuch,thesedifferencesresultinadifferentlevelofintellectual capitalacrosssectors.

To the best of my knowledge, contributions of intellectual capital to firm’sperformance with a focus on the differences between financial and non-financial firmshave largely been ignored in previous studies, particularly in emerging markets such as

Vietnam As such, a study directly targeting an emerging market like Vietnam offerscrucial implications for the intellectual capital community including firms’ executives,academics and policymakers This study examines the differences in intellectualcapitalefficiencybetweenfinancialandnon-financialfirmsinVietnamandthecontributionof intellectualcapital to firm’s performance This dissertation extends the existing literature by developinga new sectoral intellectual capital index (SICI) which can be used to measure a different levelof intellectual capital across sectors This study uniquely and strikingly extends the current

measurementbydevelopinganewindexofnationalintellectualcapital(INIC)whichis hardlyseen in previous studies In addition, the effects of intellectual capital on the performance offirms, sectors and nations areinvestigated.

1.3.1Intellectual capital and its effects to firm’s performance: financialfirmsversus non-financialfirms

Variousstudieshavealsobeenconductedtoexaminetheeffectsandcontributions ofintellectual capital on the financial performance of non-financial firms Different modelsare used to calculate the level of intellectual capital, such as the VAIC model (Hoang et al.,2020a; Ghosh and Modal, 2009; Kamath, 2008) and the MVAIC model (Soetanto andLiem, 2019; Sardo and Serrasqueiro, 2017) Previous studies have used differenteconometric techniques, such as OLS techniques (Chan, 2009; Ghosh and Mondal, 2009;Firer and Williams, 2003) and GMM techniques (Soetanto and Liem,2019;SardoandSerrasqueiro,2017).Thefindingsinpreviousstudiesconfirmapositive relationshipbetween intellectual capital and firm performance (Soetanto and Liem, 2019; Li and Zhao, 2018;Sardo and Serrasqueiro, 2017; Ghosh and Mondal, 2009) However, other studies confirm a negativerelationship between intellectual capital and firm performance (Britto et al., 2014; Morariu, 2014).

Williams(2003)alsorevealaninsignificantrelationshipbetweenintellectualcapitaland firmperformance Maali et al (2021) explore the links between corporate governanceandsustainabilityperformanceusingthecorporatesocialresponsibilityof300UKfirms from 2005 to2017 They state that corporate governance has a positive impact on

sustainabilityp e r f o r m a n c e I n a d d i t i o n , c o r p o r a t e s o c i a l r e s p o n s i b i l i t y pl a y s a f u l l y

mediate role in the relationship between corporate governance and sustainabilityperformance in UK firms Soetanto and Liem (2019) state that capital employedefficiencyandstructuralcapitalefficiencycontributetofirmwealth.Inthispaper,when the sampleis divided into industries based on whether they are high-level knowledge- based (those with theintensive use of technology and human capital) and low-level-knowledgebased,theresultsindicatethatcapitalemployedhasapositiveeffectonfirm

performance in those that are high-level-knowledgebased.

My literature review indicates that the contributions of intellectual capital to firmperformance with a focus on the financial and non-financial sectors have largelyoverlooked in Vietnam The financial sector plays the role of providing financialservices to people and businesses This segment includes banks, securities, financial,real estate and insurance firms The main players in Vietnam's financial sector beingbanks and financial institutions (Zhang et al., 2021) The financial firm plays animportantroleinnationalperformanceinVietnambyfacilitatingfinancialtransactions.

(Trieu,2019).ThebankingsysteminVietnamplaysaleadingroleinVietnam'snational performance,so the focus on banking becomes important in this study Buallay et al (2020) consider banksknowledge-intensive firms The most important financial firm assets are in the form ofintellectual capital A financial firm’s activities are mainly related to intellectual capital, such

firmemployeesexhibitgreaterhomogeneitythanemployeesinothersectors(Kuboand Saka,2002) Moreover, it has been argued that banking has accumulated higher levels ofintellectual capital than other sectors (Firer and Williams, 2003) The current literatureconsiders that staff identity is important because intellectual capital is one ofthekeymeasuresforassessingthecompetenceofemployees.Inaddition,financialfirms operating in aheavily regulated environment, whereas non-financial firms are not,resultinga different levels ofintellectual capital efficiency However, to the best of myknowledge,theimpactofintellectualcapitalontheperformanceoffirmwithafocuson thedifferences between financial and non-financial firms has been overlooked in intellectualcapital literature, particularly in emerging markets such asVietnam.

Ali et al (2022) argue that intellectual capital consists of three main components:humancapital,structuralcapitalandrelationalcapital.Humancapitalcontributestofirm

performance through the competence and creativity of employees, allowing them toidentify,createnewknowledgeandsolveproblems(XuandLi,2019).Structuralcapital includesprocedures and processes, human resource policies and guidelines for labor management practices suchas recruitment, task management, patents, intellectual property (Sardo and Serrasqueiro, 2017) Humancapital utilizes structural capital to increase firm performance (Soetanto and Liem, 2019) Relationalcapital encompasses the relationships with stakeholders that allow for certain behaviors and sustainablerelationships (Tran and Vo, 2018) Relational capital facilitates accessing, processing,synthesizing,andexchangingknowledgewithinandacrosscorporateinfluencesonfirm performance(Maali et al., 2021).

1.3.2Sectoralintellectual capital and its effects to performance acrosssectors

Liuetal.(2021)statethatintellectualcapitalplaystheimportantroleofintangible assets, ithelps to exploit important knowledge that affects the innovation ability of firms, sectorsand regions Marcin (2013) emphasizes that intellectual capitalisa fundamental resourcefor value creation at the sectoral, regional and nationallevels.

Vietnamhasachievedrapidnationalperformanceandsustainabledevelopmentgoalsin the last10 years (Baum, 2020) These achievements of Vietnam are based on broad- based economicreforms and national development strategies, focusing on five main sectors: education, health,

NguyenandGregar(2018)emphasizetheroleofknowledgemanagementininnovation ofVietnamese firms Besides, Nguyen et al (2021) also affirm that intellectual capital has apositive influence on firm’s performance in Vietnam Dutt (1990) asserts that imbalancebetween sectors can slow down economic development In particular, the coronaviruspandemic affects the economies of countries around the world in a"K-shaped recovery".The characteristic of this type of recovery is that some sectors will improve, whileothers will continue to decline (Nikkei, 2021) Hence, it is necessary tomeasureandevaluatetheefficiencyofintellectualcapitalacrosssectorsinVietnamand otheremergingmarkets.

Previous studies have measured intellectual capital in the firm level (Phusavat etal., 2011; Hoang et al., 2020b) and national level (Lin and Edvinsson, 2011; Bontis,

2004) In addition, measuring intellectual capital at the regional level has also beenconsidered in previous studies, such as regional level in France (Edvinsson andBounfour, 2004); 29 provinces and cities of China (Xia and Niu, 2010); 8 Russianfederal districts (Markhaichuk and Zhuckovskaya, 2019) Besides, various regionalintellectual capital measurements have been introduced, such as intellectual capitaldynamic value (Edvinsson and Bounfour, 2004), principal components analysis andcluster analysis (Xia and Niu, 2010); data envelopment analysis (Nitkiewicz et al.,2014); multiple-criteria decision-making (Liu et al., 2021).

However, the issue of measuring intellectual capital at the sector level has beenlargely ignored in previous studies Based on the modified value-added coefficient(MVAIC) model, this study proposes a sectoral intellectual capital index (SICI) byexamining the intellectual capital efficiency of each firm in the sector In addition, theauthor uses total assets as a weight to construct the intellectual capital index of thesector Moreover, this dissertation examines the impact of intellectual capital on sectorperformance in Vietnam.

1.3.3Nationalintellectual capital and its effects to nationalperformance

The Asia-Pacific region is considered the fastest-growing region globally,contributing two-thirds of the global growth The region includes China and Japan,twoof the world's three largest economies (Business Insider, 2020) In addition, the region is also home to some of the fastest-

economicprospectsoftheAsiaPacificregion,leadingtoshocksindomesticsupplyand demand inJapan and South Korea, as well as weakening the demand from external markets such as theUS and Europe Based on the report, economies in the region are suffering the double effect ofweakening demand and a supply reduction Countries in the Asia Pacific region are graduallychanging new production methods and new customer approaches The role of intangible

technologiesandonlinesalesservices,hasgraduallyassertedtheimportanceofcreating and maintaininga competitive advantage In particular, Stahle et al (2015) state thatconductingmoredetailedanalyzesoftheroleofnationalintellectualcapitalindifferent economieswould also add value to intellectual capitalliterature.

Classifying intellectual capital into three distinct levels — firm, sector, and nation— ensures a comprehensive and multidimensional approach to research (Svarc et al.,2021) Rather than solely focusing on intellectual capital at the enterprise level, thisdissertation delves deeper into measuring intellectual capital across all three levels togain a nuanced understanding of its significance and impact on performance Thisclassification and measurement framework offers flexibility and applicability acrossvarious contexts, allowing for tailored research and theoretical methods at each level,ranging from the specific context of individual firm to the broader scope of sector andnation.

Byexaminingintellectualcapitalmanagementstrategiesandmeasuresatthefirm, sector,and nation levels, this dissertation aims to provide specific and practical recommendationsfor businesses and policymakers This approach enables the identification of trends andchallenges in intellectual capital management and development at each level, facilitating adeeper understanding of potential issues and opportunities for businesses and the economyas a whole Ultimately, this dissertation contributes to informed decision-making and policyformulation by shedding light on the dynamics of intellectual capital across different levelsofanalysis.

Understanding the impact of national intellectual capital on national performanceis essential for businesses to navigate the complexities of the global businessenvironment effectively (Lin, 2018) Research into national intellectual capital yieldsvaluable insights that can inform strategic management decisions and guide businessactions in an increasingly competitive landscape The findings of this dissertation candirectly inform business management and development practices, providing actionableintelligence for administrators and governments to formulate policies aimed atoptimizing the utilization of intangible assets, particularly intellectual capital.

As the knowledge economy continues to evolve, research on national intellectualcapital occupies a crucial position within the realm of modern business administrationand economics (Svarc et al., 2021) This dissertation not only informs current businesspractices but also shapes future trends and forecasts in firm strategy development andcorporate governance By shedding light on the dynamics of intellectual capital, thisdissertation field contributes to a deeper understanding of the factors driving national

performance and innovation, thereby facilitating informed decision-making at both organizational and governmentallevels.

This study has the overarching objective of measuring intellectual capital at thefirm,sectorandnationlevels.Inaddition,thisdissertationalsoexaminestheimpactsofintellectual capital on the performance of firms and sectors; and on national performance, whichis effectively the economic performance of thecountries.

The objectives of this study are summarized as follows:

1) Tomeasureintellectualcapitalforfirms,sectorsandnations.Specifically, I use the

modified value-added intellectual coefficient (MVAIC) model to measure intellectualcapital of financial and non-financial firms in Vietnam Ialsoexaminethedifferenceinintellectualcapitalofthesetwogroupsoffirms: financialversus non-financial firms Furthermore, I develop a new sectoralintellectualcapitalindex(SICI)tomeasuretheintellectualcapitalof12sectors in Vietnam Inaddition, I extend the existing literature by developing a new index of national intellectualcapital (INIC) to measure intellectual capitalatthe nation’s level I then use this newlydeveloped INIC index to measure a degree of intellectual capital for 104countries globally.

2) To examine the effects of intellectual capital on the performance offirms,

and sectors, and nations.This dissertation employs a measured level of intellectual

capital at firms, sectors, and nations’ levels to investigate theeffectsofintellectualcapitalontheperformanceoffirms,sectorsandnations.

Variouseconometricmethodsareutilizedtoensurethevalidityandrobustness of thefindings when examining these effects Drawing on a comprehensive review of previousresearch, performance at the firm and sector levels is assessed using return on total assetsand return on equity metrics In addition, national performance is measured using GDPper capita By employing these metrics and methodologies, this dissertation aims toprovide at h o r o u g h

analysis of the relationship between intellectual capital and performance across multiple levels of analysis.

In achieving the research objectives, this dissertation attempts to answer thefollowing research questions:

1) Whatarethedifferencesinintellectualcapitallevelbetweenfinancialandnon-financialfirms in Vietnam? And what are potential advancements in measuringintellectual capital at the sectors and nations’levels?

2) What are the effects of intellectual capital on the performance of firms andsectors in Vietnam; and on performance ofnations?

1.6Researchsubject and scope

Measuring intellectual capital and the effects of intellectual capital on theperformance of firms, sectors and nations are the subjects of the dissertation.

For a research scope for firms and sectors, the research scope covers 150 listedfirmsontheVietnam’sstockmarketintheperiod2011-2018.Forthenations,thescope of the studycovers 104 countries in the 2000-2018period.

1.7Contributions of thestudy

This study contributes to the existing literature on intellectual capital in thefollowing respects.

- First, this dissertation investigates the differences in intellectual capital

efficiency between the financial and non-financial sectors in Vietnam Theeffects of intellectual capital on firm’s performance in Vietnam are thenexamined Vietnam is an emerging market in the Southeast Asia, one of themost dynamic economies in the region and the world Managerialimplications are important for the intellectual capital community, includingacademics, policymakers, and practitioners This dissertation provides thebridge to fill the currentgap.

- Second,thisstudyextendsthecurrentliteraturebydevelopinganewmeasure

anewsectoralintellectualcapital

ofintellectualcapitalatthesectorlevel-Conclusions and implicationsAnalyze and interpret data

- Third, a new index of the national intellectual capital (INIC), one of the first

of its kind, is developed to measure the different levels of intellectual capitalacross nations globally This new index includes the following fundamentalattributes: (i) simplicity - a new index should be simple to calculate; (ii)quantification – a new index should be easily quantifiable without usingjudgments; (iii) market relevance – a new index should be able to reflect theprevailingmarketandeconomyconditions;and(iv)internationalcomparison

– a new index should be practically implemented for comparison purposesacross countries regardless of the level of national performance anddevelopment.

1.8Researchframework andsteps

Based on the theoretical foundations and empirical research conducted in relationto the field of study, the analytical framework is proposed Research data will becollected and analysis will be performed The research process is describedspecificallyasfollows:

Source: Author'ssyntheticFigure1.4 Research process

 First,researchneedstoconductarigoroustheoreticaloverviewtofind(i)the theory ofintellectual capital and its measurements; factors affecttheperformance of firms,sectors and nations (ii) variables commonly used in research models in theworld, and (iii) research gapsacademic.

 After identifying the above factors, the second step of the study is todetermine the data set to be used to ensure the feasibility of the project.Research to collect annual data on intellectual capital at firm,sectorandnation These figures are publicly announced in the annual reportsof the firms In addition, the data on the new national intellectual capitalindex is extracted from the source of the World BankDevelopmentIndicators.

 Third,thisstudyusespaneldatatoconductthestudy.Withthedatacollected andthrough the theoretical review, this study intends to use econometric methodssuitable for the data set in order to solve potential problems (unit root,autocorrelation…), to obtain the best estimateresults.

 Fourth,afterachievingtheexperimentalresults,theresearchneedstoexplain, discusstheresults.

 Last but not least, the study concludes on intellectual capital measurementsand the effects on performance of firms, sectors and nation Along with that,the study proposes solutions to promote efficiency in the use of intellectualcapital, contributing to increase the efficiency of firm, sectors andcountries.The core of this research is intellectual capital As shown in Figure 1.4, I considerintellectualcapitalfromtwoperspectives:measuringintellectualcapitalandexamining the effectof intellectual capital on performance In addition, this dissertation also considers at all 3 levels:firm, sector andnation.

 For the measure of intellectual capital: I use the structural model and theMVAICmethodtomeasureintellectualcapitalatthefirmlevel,andcompare thedifference in intellectual capital between financial and non-financial firms At thesectoral and national level, I propose new intellectual capital measurement, namelysectoral intellectual capital index (SICI) and index of national intellectualcapital(INIC).

 For examining the effects of intellectual capital on performance, thisdissertation uses two common measures, return on assets (ROA) and returnonequity(ROE),tomeasureperformanceatthefirmandsectorlevels.Asfor

thecountrylevel,IuseGDPpercapitaasameasureofnationalperformance.

16Modified value-added

intellectualcoefficient (MVAIC)

- Return on assets(ROA)- Return on equity(ROE)The effects of intellectual capital on performance

Intellectual capital measurements

National levelSector level

Firm levelIntellectual capital

Source: Author'ssyntheticFigure1.5 Researchframework

Economic growthIndex of national

intellectual capital (INIC)

- Return on assets(ROA)- Return on equity(ROE)Sectoral intellectual

capital index (SICI)

1.9Theoutline of thedissertation

This dissertation is structured into six chapters to present a comprehensivesummary of relevant literature and empirical evidence in response to the above-mentioned research questions Each of the chapters is as follows.

Chapter 5

Empirical results relating to the effects of intellectual capital on the performanceof firms, sectors and nations are presented and discussed in this chapter.

Chapter 6

Chapter 6 presents a summary of key findings and conclusions of this study Thischapter presents the main findings and the contributions of this study The potentialareas for further research are also discussed.

In Chapter 1, the author primarily outlines the overarching research objectives ofthe study, encompassing the measurement of intellectual capital across enterprise,industry, and national strata Furthermore, this dissertation delves into the analysis ofhow intellectual capital influences the performance of individual firms and sectors, aswell as its impact on overall national performance Chapter 1 alsoidentifiesande x p o u n d s u p o n t h e r e s e a r c h g a p , w h i c h s e r v e s a s

e n g a g e m e n t withthisdissertation.Moreover,thischapterelucidatestheresearch'sfocalsubject and its scope, research inquiries, contributions to the field, and delineates theproceduralstepsofthestudy.Subsequently,thesucceedingChapter2embarksuponan extensiveliteraturereview.

CHAPTER 2LITERATURE REVIEW

In this chapter, an exposition is undertaken to provide a comprehensive survey ofintellectualcapitalquantificationacrossthedimensionsofindividualfirms,sectors,and nationalcontexts Moreover, the fundamental theories underpinning the relationship intellectual capital andthe performance of firm, sector and nation are comprehensively expounded upon and examined.

2.1Definitions andclassifications

The concept of intellectual capital is first mentioned by Senior (1836).Intellectualcapital is described as an important resource in creating a firm wealth, but it is notrecordedonthebalancesheet(XuandLiu,2020).Alietal.(2022)arguethatintellectual capital is a value notonly in terms of monetary returns but also in terms of environmental, social and economic issues.Intellectual capital is the sum total of all employee competencies and skills that create company

2020).Thedefinitionofintellectualcapitalcoversdifferentlevels,includingfirm,sector PierreandAudet(2011)suggestthatthereisconsensusonthesignificant contribution of intellectualcapital to value creation, but there is no generally accepted definition of intellectual capital.

intangiblevaluecreatedforpeople.Sullivan(2000)statesthatintellectualcapital,which is considered asknowledge of the company, could be converted into tangible profits Bontis and Fitz-enz (2002)

experience,intellectualliterature,intellectualproperty,andinformationthatcanbeused to create valueand to increase competitiveness In addition, Sardo and Serrasqueiro (2017) argue that intellectualcapital is about the hidden value of a firm However, currently available definitions of intellectualcapital refer to an intangible nature of capital based on implicit knowledge, and its ability to create

2014;Roosetal.,1997;Stewart,1997;Brooking,1996;EdvinssonandSullivan,1996) Thedifference between the market value and the book value of a firm has beenconsideredt h e m o s t o b v i o u s i n d i c a t o r o f i n t e l l e c t u a l c a p i t a l b e c a u s e t h i sd i f f e r e n c e

represents the economic value of intangible capital (Maditinos et al., 2011) In thefollowing section, I will present several models of intellectual capital classification.

Westberg and Sullivan (1998) point out that Saint-Onge's model explores thetangible and intangible role of knowledge in different types of intellectual capital andhow these factors are valued Saint-Onge's contributions, particularly through his workin the late 1990s and early 2000s, have provided a comprehensive approach toidentifying and leveraging intellectual capital to enhance organizational performance.Thismodelunderscorestheimportanceofknowledgeandrelationshipsindrivingvalue

creationwithinorganizations(Pulic,1998).Saint-Onge’smodelcategorizesintellectual capital intothree primary components, each highlighting different dimensions of intangible assets Humancapital refers to the collective skills, expertise, and competencies of employees This componentemphasizes the value that individuals bring through their knowledge, innovation, and ability to

capitalencompassesthesupportiveinfrastructure,processes,databases,andintellectual propertythat facilitate an organization’s operations It includes organizational culture, routines, andprocedures that enhance efficiency and productivity Relational capital involves therelationships an organization maintains with external stakeholders, including customers,suppliers, partners, and communities (Bontis, 1998) This component focuses on the value

organization’sreputationandbrand.Theintegrationofthesecomponentsisakeyaspect of Onge’s model, advocating for a synergistic effect that enhances overall organizationalperformance By recognizing the interplay between human, structural, and relational capital,organizations can better understand how to leverage these assets for sustained competitiveadvantage This integrated approach ensures that investments in one area (e.g., trainingemployees) are supported by improvements in other areas (e.g., enhancing IT systems and

modelisparticularlyinfluentialinthefieldofknowledgemanagement.Byemphasizing theimportance of human and structural capital, the model provides a framework for capturing,sharing, and utilizing organizational knowledge effectively This approachhelpsorganizationstofosteracultureofcontinuouslearningandinnovation.Instrategic

management, the model aids in identifying key intellectual capital assets that can be

leveraged to achieve strategic goals By focusing on the holistic view of intellectualcapital,managerscandevelopstrategiesthatalignwiththeorganization’sstrengthsand address itsweaknesses This alignment ensures that resources are allocated efficiently to support long-term growth and sustainability (Gates and Langevin, 2010).Traditional performance measurementsystems often overlook the value of intangible assets Saint- Onge’s model addresses this gap by providing astructured approach to evaluate intellectual capital This includes assessing the impact of human skills, organizationalprocesses, and external relationships on overall performance Such comprehensivemeasurementallowsforbetterdecision-makingandenhancestransparencyinreporting

While Saint-Onge’s model offers a robust framework for understandingintellectual capital, it has faced some criticisms Quantifying intangible assets likehumanskillsandrelationalcapitalcanbesubjectiveandcomplex,makingitdifficultto

implement the model effectively Integrating Saint-Onge’s model with traditionalfinancial metrics can be challenging, potentially leading to inconsistencies inreporting.Additionally, the rapidly changing business environment means that the componentsof intellectual capital can evolve quickly,requiring continuous updates and adaptations to the model (Pulic,1998).

Source: Westberg and Sullivan(1998)Figure 2.1 Saint-Onge’s model

Sveiby (1997) considers that employees are important actors and their actionswillcreatetheassetsandstructureofthebusiness,whethertangibleorintangible.Introduced in the late 1990s,Sveiby’s model emphasizes the importance of knowledge and competence in driving organizationalperformance and innovation This model is instrumental in highlighting the critical role of intangibleassets, often overlooked in traditional accounting and management practices As presented inSveiby’s model categorizes intellectual capital into three main components: individual competence,internal structure, and external structure Individual competence refers to theknowledge,skills,andexperiencepossessedbyemployees.Itunderscoresthevaluethat individualsbring to the organization through their expertise and ability to solve problems and innovate.Internal structure encompasses the internal capabilities of the organization, including processes,databases, organizational culture, and intellectual property This component represents the

enhancetheproductivityofemployees.Externalstructureinvolvestherelationshipsand networks anorganization maintains with external stakeholders, such as customers, suppliers, partners, and thebroader community This aspect of the model highlightsthe importance of reputation, brand, and customerloyalty in contributing to organizational value ( Li and Zhao,2018).

OneofthekeystrengthsofSveiby’smodelisitsemphasisonthedynamicinterplay between thesecomponents By recognizing that intellectual capital is not static but constantly evolving, Sveiby’s modelencourages organizations to continually invest in and develop their intangible assets For example,improving individual competence through training and development can enhance the internal structureby fostering innovation and efficiency Similarly, strong external relationships can lead to increasedcustomer loyalty and better market positioning, which, in turn, supports overall organizational growth(Sardo and Serrasqueiro,2017).

In practical applications, Sveiby’s model is particularly valuable for strategicmanagement and knowledge management In strategic management, the model helpsorganizations identify and leverage their intellectual capital to achieve competitiveadvantages.Byfocusingontheholisticviewofintangibleassets,managerscandevelop