Intellectual capital and financial performance of industrial firms in emerging countries: Empirical evidence from Vietnam

Purpose: This study contributes evidence on the impact of IC and its components for emerging countries, the case of Vietnam. Design/methodology/approach: The research measures the value-added intellectual coefficient and applies the two-step system GMM model for the period 2005-2014. Findings: Findings imply that IC contributes significantly to the industrial firm performance. Industrial firm performance is positively affected by Human capital efficiency (HCE) and Capital Employed Efficiency (CEE). Generally, Structural capital efficiency (SCE) has an insignificant effect on the industrial firm performance. Impact of IC efficiency depends on the internal and external factors. The impacts of IC efficiencies differ among levels of knowledge intensity. Generally, HCE is more important than CEE. The impact of IC on industrial firm outcomes depends on knowledge intensity levels. The more knowledge intensive, the stronger impact of IC is. Only high knowledge intensive firms benefit from all three components of IC efficiency. HCE and CEE are most effective for firms with high knowledge intensity. SCE is strongest for firms at low knowledge intensity. Only CEE contributes to industrial firms at all knowledge intensity levels. HCE is insignificant for firms at low knowledge intensity, while SCE is insignificant for firms at medium level. Research limitations/implications: The paper examines only one variable representing for firm financial performance, ROA. Controlled variables are only at industrial level, not at broader levels, such as provincial or national levels. Originality/value: Investigating IC will contribute to literature of levels of investment in tangible and intangible assets. It helps firm leaders and policymakers to comprehend the significant role of IC as well as the knowledge economy, then properly reallocate intellectual resources. Firm leaders and policymakers should focus on HCE and CEE which driver significantly value added. The findings suggest firm leaders which component of intellectual capital they should invest corresponding to various level of knowledge intensities.