Investigating intellectual capital: The role of intellectual property rights reform

Abstract

We investigate the impact of intellectual capital (IC) on firm performance (FP). This study contributes to the literature on IC by extending the IC components and exploring the moderating effect of intellectual property right (IPR) reform on the IC–FP association. An analysis of a dataset of non-financial enterprises with 6,303 firm-year observations collected from ASEAN member countries from 2009 to 2019 reveals thatFP is positively related to IC and IC components. Human capital is found to be the leading element because it exerts direct as well as indirect influences on FP. On the other hand, IPR determines both significance and the strength of the relationship between IP and FP.

Keywords:

• firm performance
• value-added intellectual coefficient (VAIC)
• intellectual capital
• intellectual capital right reform
• sustainable competitive advantage

PUBLIC INTEREST STATEMENT

In the world of hyper-competition, firms invariably keep making huge attempts to diagnose the sources of competitive advantage. The study highlights the enormous importance of human capital in creating sustainable advantage by continuously improving key business processes and accelerating innovativeness. Consequently, the firm possesses a highly competitive value proposition to the target customer. The findings of the study support the relation between human capital and firm performance. Additionally, firms that operate in knowledge-intensive industries and primarily hinge on intellectual property to create competitive advantage demand a well-developed system of intellectual property rights to keep their advantage sources from being imitated by rivals. Accordingly, nations in the transformation process to the knowledge-based development stage should acknowledge importance of intellectual property rights to improve their business environment.

Acknowledgements

We sincerely appreciate the editors and the two anonymous reviewers who reviewed our manuscript for their helpful comments. We are grateful to Professor John Dumay for the excellent suggestions in a deep discussion at the Macquarie University. We also thank the conference participants at the 16th International Conference on Intellectual Capital, Knowledge Management and Organisational Learning (ICICKM 2019) hosted in Australia in 2019 and the International SOB Conference hosted in Vietnam in 2020. Any errors or omissions are solely our responsibility. This research was funded by the University of Economics Ho Chi Minh City (UEH), Vietnam.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the University of Economics Ho Chi Minh City [2021-07-28-0491].

Notes on contributors

Minh H. Do

Minh H. Do is currently a lecturer in business strategy at the Department of Planning, Investment, and Development; School of Economics; University of Economics Ho Chi Minh City (UEH). He holds an M.A. in development economics. His research interests include entrepreneurship, knowledge management, and economic growth.

Vo Thanh Tam

Vo Thanh Tam is currently a vice head of the Department of Human Resource Management, School of Economics, UEH. He holds an M.Sc. in Public Policy from the Fulbright Economics Teaching Program and a B.A. in Human Resource Management. His research interests are public policy, demography and development, development economics, and human capital.

Nguyen Kim-Duc

Nguyen Kim-Duc is currently a Director at the Centre for Economics, Law, and Governance and a lecturer at the Department of Valuation, UEH. He is also a valuer licensed by the Ministry of Finance and a professional advisor to many valuation firms in Vietnam. He holds an M.Sc. degree in Finance and two separate B.A. degrees in Audit and Valuation. His main research interests include valuations of businesses and intangible assets, asset pricing, and business valuation modeling.