INTELLECTUAL CAPITAL, R&D AND SUSTAINABLE FINANCIAL PERFORMANCE: MODERATING ROLE OF FIRM CHARACTERISTICS IN AN EMERGING MARKET
DOI:
https://doi.org/10.33736/ijbs.9563.2025Keywords:
Intellectual capital, R&D investment, sustainable financial performance, chemical and pharmaceutical firms, firm characteristicsAbstract
Intellectual capital (IC) is a crucial driver of sustainable financial performance, particularly in the chemical and pharmaceutical industries. This study uses panel data from Vietnamese firms between 2017 and 2022 to investigate how IC and research and development (R&D) investment influence firm sustainability in an emerging market. This research, compared with previous studies, confirms the positive impact of IC and R&D on short- and long-term financial stability and also highlights the moderating role of firm characteristics. Specifically, firm size and growth rate enhance the benefits of R&D investment, whilst older firms exhibit a diminishing effect, potentially owing to reduced adaptability or innovation capacity. By emphasising the relationship amongst R&D, IC and firm characteristics, this study offers fresh insights into maximising financial sustainability in dynamic markets. Findings provide a foundation for future research and practical strategies to foster long-term competitiveness in emerging economies.
References
Abdi, Y., Li, X., & Càmara-Turull, X. (2022). Exploring the impact of sustainability (ESG) disclosure on firm value and financial performance (FP) in airline industry: the moderating role of size and age. Environment, Development and Sustainability, 24(4), 5052-5079.
https://doi.org/10.1007/s10668-021-01649-w
Ahmad, F. (2024). The relationship between intellectual capital, financial stability, firm performance, market value, and bankruptcy risk: Empirical evidence from Pakistan. Journal of the Knowledge Economy, 1-49.
https://doi.org/10.1007/s13132-024-02055-z
Alam, A., Uddin, M., Yazdifar, H., Shafique, S., & Lartey, T. (2020). R&D investment, firm performance and moderating role of system and safeguard: Evidence from emerging markets. Journal of Business Research, 106, 94-105. AlMomani, K. M. D. K., AlWadi, B. M., & Al-Wadi, S. (2023, May). The Nexus of Intellectual Capital and Firm Performance: Evidence from Jordanian Pharmaceutical Companies. In Conference on Sustainability and Cutting-Edge Business Technologies (pp. 173-185). Cham: Springer Nature Switzerland.
https://doi.org/10.1016/j.jbusres.2019.09.018
Alrabei, A. M., Al-Othman, L. N., Abutaber, T. A., Alathamneh, M. S., Almomani, T. M., Qeshta, M. H., & Amareen, S. A. M. (2023). Nexus between Intellectual Capital and Financial Performance Sustainability: Evidence from Listed Jordanian Firms. Applied Mathematics & Information Sciences, 17(5), 881-888.
https://doi.org/10.18576/amis/170514
Alvino, F., Di Vaio, A., Hassan, R., & Palladino, R. (2021). Intellectual capital and sustainable development: A systematic literature review. Journal of Intellectual Capital, 22(1), 76-94.
https://doi.org/10.1108/JIC-11-2019-0259
Ameer, R., & Othman, R. (2012). Sustainability practices and corporate financial performance: A study based on the top global corporations. Journal of Business Ethics, 108, 61-79.
https://doi.org/10.1007/s10551-011-1063-y
Amin, S., Usman, M., Sohail, N., & Aslam, S. (2018). Relationship between intellectual capital and financial performance: The moderating role of knowledge assets. Pakistan Journal of Commerce and Social Sciences (PJCSS), 12(2), 521-547.
Amit, R., & Schoemaker, P. J. H. (1993). Strategic assets and organizational rent. Strategic Management Journal, 14(1), 33-46.
https://doi.org/10.1002/smj.4250140105
Bontis, N., Ciambotti, M., Palazzi, F., & Sgro, F. (2018). Intellectual capital and financial performance in social cooperative enterprises. Journal of Intellectual Capital, 19(4), 712-731.
https://doi.org/10.1108/JIC-03-2017-0049
Bulitia, G., Wanjala, J. W., & Mwangi, G. W. (2018). Knowledge management as a tool for employee retention in Saccos. International Journal of Innovative Research and Advanced Studies (IJIRAS), 5(3), 160-167.
Castro, J. P. G., Ramírez, D. F. D., & Escobar, J. M. (2021). The relationship between intellectual capital and financial performance in Colombian listed banking entities. Asia Pacific Management Review, 26(4), 237-247.
https://doi.org/10.1016/j.apmrv.2021.03.002
Chen, H., & Rahman, M. J. (2023). Intellectual capital and financial performance: evidence from Chinese retail firms. International Journal of Learning and Intellectual Capital, 20(4), 394-409.
https://doi.org/10.1504/IJLIC.2023.132171
Chen, T. chun, Guo, D. Q., Chen, H. M., & Wei, T. ti. (2019). Effects of R&D intensity on firm performance in Taiwan's semiconductor industry. Economic Research-Ekonomska Istraživanja, 32(1), 2377-2392. https://doi.org/10.1080/1331677X.2019.1642776
https://doi.org/10.1080/1331677X.2019.1642776
Ching, H. Y., Gerab, F., & Toste, T. H. (2017). The quality of sustainability reports and corporate financial performance: Evidence from Brazilian listed companies. Sage Open, 7(2), 1-9.
https://doi.org/10.1177/2158244017712027
Chowdhury, L. A. M., Rana, T., & Azim, M. I. (2019). Intellectual capital efficiency and organisational performance: In the context of the pharmaceutical industry in Bangladesh. Journal of Intellectual Capital, 20(6), 784-806.
https://doi.org/10.1108/JIC-10-2018-0171
Chowdhury, P., Lau, K. H., & Pittayachawan, S. (2019). Operational supply risk mitigation of SME and its impact on operational performance: a social capital perspective. International Journal of Operations & Production Management, 39(4), 478-502.
https://doi.org/10.1108/IJOPM-09-2017-0561
Coad, A., Segarra, A., Teruel, M., 2013. Like milk or wine: does firm performance improve with age?. Structural Change and Economic Dynamics, 24, 173-189.
https://doi.org/10.1016/j.strueco.2012.07.002
Coad, A., Segarra, A., & Teruel, M. (2016). Innovation and firm growth: does firm age play a role?. Research policy, 45(2), 387-400.
https://doi.org/10.1016/j.respol.2015.10.015
Edvinsson, L., & Sullivan, P. (1996). Developing a model for managing intellectual capital. European Management Journal, 14(4), 356-364. https://doi.org/10.1016/0263-2373(96)00022-9. Elmahgop, F. O. (2024). Intellectual Capital and Bank Stability in Saudi Arabia: Navigating the Dynamics in a Transforming Economy. Sustainability, 16(10), 4226.
https://doi.org/10.3390/su16104226
Farrar, D. E., & Glauber, R. R. (1967). Multicollinearity in Regression Analysis: The Problem Revisited. The Review of Economics and Statistics, 49(1), 92-107. https://doi.org/10.2307/1937887.
https://doi.org/10.2307/1937887
Festa, G., Rossi, M., Kolte, A., & Marinelli, L. (2020). The contribution of intellectual capital to financial stability in Indian pharmaceutical companies. Journal of Intellectual Capital, 22(2), 337-359.
https://doi.org/10.1108/JIC-03-2020-0091
Gao, Q., Xu, J., Tao, Z., Liu, L., & Wu, C. (2020). Exploration and analysis on the psychological capital of entrepreneurship and the deviant innovation behavior of employees. Frontiers in Psychology, 11, 1880.
https://doi.org/10.3389/fpsyg.2020.01880
Ge, F., & Xu, J. (2021). Does intellectual capital investment enhance firm performance? Evidence from pharmaceutical sector in China. Technology Analysis & Strategic Management, 33(9), 1006-1021.
https://doi.org/10.1080/09537325.2020.1862414
Gleißner, W., Günther, T., & Walkshäusl, C. (2022). Financial sustainability: measurement and empirical evidence. Journal of Business Economics, 92(3), 467-516.
https://doi.org/10.1007/s11573-022-01081-0
Grant, R. M. (1996). Toward a knowledge‐based theory of the firm. Strategic Management Journal, 17(S2), 109-122.
https://doi.org/10.1002/smj.4250171110
Guliyev, T., & Muzaffarov, M. (2024). Deciphering Sustainable Growth: The Influence of Corporate Financial Metrics on SGR and Stock Returns. WSB Journal of Business and Finance, 58(1), 114-121. https://doi.org/10.2478/wsbjbf-2024-0011
https://doi.org/10.2478/wsbjbf-2024-0011
Hai, N. C., Chuong, H. N., & Trung, T. (2022). Linkages and development of local industrial space: Research in the key economic region of Southern Vietnam. Cogent Economics & Finance, 10(1), 2109273.
https://doi.org/10.1080/23322039.2022.2109273
He, D.-S., Liu, T.-W., & Lin, Y.-Y. (2024). Efficiency evaluation of intellectual capital for value creation: a case study of the semiconductor industry in Taiwan. Journal of Intellectual Capital, 25(4), 744-774.
https://doi.org/10.1108/JIC-11-2023-0259
Hutauruk, M. R. (2024). The effect of R&D expenditures on firm value with firm size moderation in an Indonesia palm oil company. Cogent Business & Management, 11(1). https://doi.org/10.1080/23311975.2024.2317448
https://doi.org/10.1080/23311975.2024.2317448
Kweh, Q. L., Ting, I. W. K., Hanh, L. T. M., & Zhang, C. (2019). Intellectual capital, governmental presence, and firm performance of publicly listed companies in Malaysia. International Journal of Learning and Intellectual Capital, 16(2), 193-211.
https://doi.org/10.1504/IJLIC.2019.098932
Luu, D. H. (2021). The impact of capital structure on firm value: A case study in Vietnam. The Journal of Asian Finance, Economics and Business, 8(5), 287-292.
Ma, Z., Novoselov, K. E., Stice, D., & Zhang, Y. (2022). Firm innovation and covenant tightness. Review of Accounting Studies, 29(1), 151-193. https://doi.org/10.1007/s11142-022-09712-1
https://doi.org/10.1007/s11142-022-09712-1
Martínez‐Ferrero, J., & Frias‐Aceituno, J. V. (2015). Relationship between sustainable development and financial performance: international empirical research. Business Strategy and the Environment, 24(1), 20-39.
https://doi.org/10.1002/bse.1803
Meles, A., Salerno, D., Sampagnaro, G., Verdoliva, V., & Zhang, J. (2023). The influence of green innovation on defaultrisk: Evidence from Europe. International Review of Economics & Finance, 84, 692-710. https://doi.org/10.1016/j.iref.2022.11.036
https://doi.org/10.1016/j.iref.2022.11.036
Mollah, M. A. S., & Rouf, M. A. (2022). The impact of intellectual capital on commercial banks' performance: evidence from Bangladesh. Journal of Money and Business, 2(1), 82-93. Muhammad, H., Migliori, S., & Consorti, A. (2022). Corporate governance and R&D investment: does firm size matter? Technology Analysis & Strategic Management, 36(3), 518-532. https://doi.org/10.1080/09537325.2022.2042508
https://doi.org/10.1080/09537325.2022.2042508
Nguyen, P.-H., Nguyen, L.-A. T., Nguyen, T.-H. T., & Vu, T.-G. (2024). Exploring Complexities of Innovation Capability in Vietnam's IT Firms: Insights from An Integrated MCDM Model-based Grey Theory. Journal of Open Innovation: Technology, Market, and Complexity, 10(3), 1-17.
https://doi.org/10.1016/j.joitmc.2024.100328
Nimtrakoon, S. (2015). The relationship between intellectual capital, firms' market value and financial performance: Empirical evidence from the ASEAN. Journal of Intellectual Capital, 16(3), 587-618.
https://doi.org/10.1108/JIC-09-2014-0104
Patel, P. C., Guedes, M. J., Pagano, M. S., & Olson, G. T. (2020). Industry profitability matters: The value of sustainable growth rate and distance from bankruptcy as enablers of venture survival. Journal of Business Research, 114, 80-92.
https://doi.org/10.1016/j.jbusres.2020.04.004
Pham, T. T. T., Nguyen, T. V. H., Nguyen, S. K., & Nguyen, H. T. H. (2023). Does planned innovation promote financial access? Evidence from Vietnamese SMEs. Eurasian Business Review, 13(2), 281-307.
https://doi.org/10.1007/s40821-023-00238-3
Penrose, E. T. (2009). The Theory of the Growth of the Firm. Oxford university press.
Pulic, A. (1998). Measuring the performance of intellectual potential in the onowledge economy. The 2nd" World Congress on the Management of Intellectual Capital", disk.
Pulic, A. (2000). VAICTM-an accounting tool for IC management. International Journal of Technology Management, 20(5-8), 702-714.
https://doi.org/10.1504/IJTM.2000.002891
Pulic, A. (2004). Intellectual capital-does it create or destroy value? Measuring Business Excellence, 8(1), 62-68.
https://doi.org/10.1108/13683040410524757
Rafiq, S., Salim, R., & Smyth, R. (2016). The moderating role of firm age in the relationship between R&D expenditure and financial performance: Evidence from Chinese and US mining firms. Economic Modelling, 56, 122-132.
https://doi.org/10.1016/j.econmod.2016.04.003
Santis, P., Albuquerque, A., & Lizarelli, F. (2016). Do sustainable companies have a better financial performance? A study on Brazilian public companies. Journal of Cleaner Production, 133, 735-745.
https://doi.org/10.1016/j.jclepro.2016.05.180
Shih, K., Chang, C., & Lin, B. (2010). Assessing knowledge creation and intellectual capital in banking industry. Journal of Intellectual Capital, 11(1), 74-89.
https://doi.org/10.1108/14691931011013343
Shiva, S. (2019). The Moderating Role of Institutional Quality, Leverage and Size in the Relationship between R&D Investments and Firm Value. MSc International Financial Management, Faculty of Economics and Business,University of Groningen, 1-75. http://www.diva-portal.se/smash/get/diva2:1289114/Fulltext01.pdfShun-Yu
Smith, A. (1776). An Inquiry into The Nature and Causes of The Wealth of Nations: Volume One. London: printed for W. Strahan; and T. Cadell, 1776.
https://doi.org/10.1093/oseo/instance.00043218
Soewarno, N., & Tjahjadi, B. (2020). Measures that matter: an empirical investigation of intellectual capital and financial performance of banking firms in Indonesia. Journal of Intellectual Capital, 21(6), 1085-1106.
https://doi.org/10.1108/JIC-09-2019-0225
Stewart, T. A. (2010). Intellectual Capital: The New Wealth of Organization. Crown Currency.
Stewart, T., & Capital, I. (1997). The new wealth of organizations. Nicholas Brealey, London.
Thayaraj, M. S., & Karunarathne, W. (2021). The impact of sustainability reporting on firms' financial performance. Journal of Business and Technology, 5(2), 51-73.
https://doi.org/10.4038/jbt.v5i2.33
Thang, P. D., & Phong, H. N. (2023). Study on the impact of the pharmaceutical industry on economic development and investment opportunities in Vietnam. International Journal of Health & Medical Sciences, 6(2), 99-110. https://doi.org/10.21744/ijhms.v6n2.2127. Ting, I. W. K., Asif, J., Kweh, Q. L., & Tebourbi, I. (2023). Intellectual capital and firm performance: the moderating effect of controlling shareholders in Malaysia. International Journal of Learning and Intellectual Capital, 20(2), 166-192.
https://doi.org/10.21744/ijhms.v6n2.2127
Tiwari, R. (2022). Nexus between intellectual capital and profitability with interaction effects: panel data evidence from the Indian healthcare industry. Journal of Intellectual Capital, 23(3), 588-616.
https://doi.org/10.1108/JIC-05-2020-0137
Tran, Quang Phu (2023). Opportunities and barriers in innovation activities of small and medium enterprises. Finance magazine issue 2, July 2023. [Vietnamese name: Cơ hội và rào cản trong hoạt động đổi mới sáng tạo của doanh nghiệp nhỏ và vừa. Tạp chí tài chính kỳ 2 tháng 7/2023].
Ullah, H., Wang, Z., Mohsin, M., Jiang, W., & Abbas, H. (2022). Multidimensional perspective of green financial innovation between green intellectual capital on sustainable business: the case of Pakistan. Environmental Science and Pollution Research, 29(4), 5552-5568.
https://doi.org/10.1007/s11356-021-15919-7
Vu, Q., & Tran, T. Q. (2021). Government financial support and firm productivity in Vietnam. Finance research letters, 40, 101667.
https://doi.org/10.1016/j.frl.2020.101667
World Bank (2016). Vietnam overview. http://www.worldbank.org/en/country/vietnam/overview
Welly, Y., Ikhsan, A., & Situmeang, C. (2021). The effect of capital employed, human capital and structural capital on financial performance on the consumer goods sector period 2015-2019. International Journal of Trends in Accounting Research, 2(1), 72-86.
Wernerfelt, B. (1984). A resource‐based view of the firm. Strategic Management Journal, 5(2), 171-180.
https://doi.org/10.1002/smj.4250050207
Wernerfelt, B. (1995). Resource-based strategy in a stochastic model. In Resource-Based and evolutionary theories of the firm: towards a synthesis (pp. 133-145). Springer.
https://doi.org/10.1007/978-1-4615-2201-0_6
Xi, M., Fang, W., & Feng, T. (2023). Green intellectual capital and green supply chain integration: the mediating role of supply chain transformational leadership. Journal of Intellectual Capital, 24(4), 877-899.
https://doi.org/10.1108/JIC-12-2021-0333
Xu, J., & Li, J. (2022). The interrelationship between intellectual capital and firm performance: evidence from China's manufacturing sector. Journal of Intellectual Capital, 23(2), 313-341.
https://doi.org/10.1108/JIC-08-2019-0189
Xu, J., & Liu, F. (2021). Nexus between intellectual capital and financial performance: An investigation of Chinese manufacturing industry. Journal of Business Economics and Management, 22(1), 217-235.
https://doi.org/10.3846/jbem.2020.13888
Xu, J., Shang, Y., Yu, W., & Liu, F. (2019). Intellectual capital, technological innovation and firm performance: Evidence from China's manufacturing sector. Sustainability, 11(19), 5328.
https://doi.org/10.3390/su11195328
Xu, & Liu, F. (2020). The impact of intellectual capital on firm performance: A modified and extended VAIC model. Journal of Competitiveness, 12(1), 161-176.
https://doi.org/10.7441/joc.2010.01.10
Xu, & Wang, B. (2018). Intellectual capital, financial performance and companies' sustainable growth: Evidence from the Korean manufacturing industry. Sustainability, 10(12), 1-15.
https://doi.org/10.3390/su10020001
Xu, X. L., Li, J., Wu, D., & Zhang, X. (2021). The intellectual capital efficiency and corporate sustainable growth nexus: Comparison from agriculture, tourism and renewable energy sector. Environment, Development and Sustainability, 1-19.
https://doi.org/10.1007/s10668-021-01319-x
Xu, X., & Liu, C. K. (2019). How to keep renewable energy enterprises to reach economic sustainable performance: from the views of intellectual capital and life cycle. Energy, Sustainability and Society, 9, 1-10.
https://doi.org/10.1186/s13705-019-0187-2
Yıldırım, D. (2020). Relationship between R&D Investment and Firm Value from R&D Intensity, Firm Size and Risk Perspectives: Evidence from Turkey. Book: Researches on Financial Performance, 79-97. Youndt, M. A., Subramaniam, M., & Snell, S. A. (2004). Intellectual capital profiles: An examination of investments and returns. Journal of Management Studies, 41(2), 335-361.
https://doi.org/10.1111/j.1467-6486.2004.00435.x
Zaighum, I., Abbas, Q., Batool, K., Bano, S., & Sajjad, S. M. (2024). Intellectual capital and firm risk: evidence from an emerging economy. Global Knowledge, Memory and Communication, Vol. ahead-of-print, No. ahead-of-print.
https://doi.org/10.1108/GKMC-08-2023-0267
Zhang, L., Yu, Q., Jin, Z., & Xu, J. (2021). Do intellectual capital elements spur firm performance? Evidence from the textile and apparel industry in China. Mathematical Problems in Engineering, 2021(1), 1-12, 7332885.
https://doi.org/10.1155/2021/7332885
Zhu, H., Zhang, Z., Huang, Y., & Mao, W. (2021). Quantile heterogeneous impact of R&D on firm growth in Chinese manufacture: how ownership, firm size and sectors matter? Applied Economics, 53(28), 3267-3287. https://doi.org/10.1080/00036846.2021.1873235
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 UNIMAS Publisher
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Copyright Transfer Statement for Journal
1) In signing this statement, the author(s) grant UNIMAS Publisher an exclusive license to publish their original research papers. The author(s) also grant UNIMAS Publisher permission to reproduce, recreate, translate, extract or summarize, and to distribute and display in any forms, formats, and media. The author(s) can reuse their papers in their future printed work without first requiring permission from UNIMAS Publisher, provided that the author(s) acknowledge and reference publication in the Journal.
2) For open access articles, the author(s) agree that their articles published under UNIMAS Publisher are distributed under the terms of the CC-BY-NC-SA (Creative Commons Attribution-Non Commercial-Share Alike 4.0 International License) which permits unrestricted use, distribution, and reproduction in any medium, for non-commercial purposes, provided the original work of the author(s) is properly cited.
3) For subscription articles, the author(s) agree that UNIMAS Publisher holds copyright, or an exclusive license to publish. Readers or users may view, download, print, and copy the content, for academic purposes, subject to the following conditions of use: (a) any reuse of materials is subject to permission from UNIMAS Publisher; (b) archived materials may only be used for academic research; (c) archived materials may not be used for commercial purposes, which include but not limited to monetary compensation by means of sale, resale, license, transfer of copyright, loan, etc.; and (d) archived materials may not be re-published in any part, either in print or online.
4) The author(s) is/are responsible to ensure his or her or their submitted work is original and does not infringe any existing copyright, trademark, patent, statutory right, or propriety right of others. Corresponding author(s) has (have) obtained permission from all co-authors prior to submission to the journal. Upon submission of the manuscript, the author(s) agree that no similar work has been or will be submitted or published elsewhere in any language. If submitted manuscript includes materials from others, the authors have obtained the permission from the copyright owners.
5) In signing this statement, the author(s) declare(s) that the researches in which they have conducted are in compliance with the current laws of the respective country and UNIMAS Journal Publication Ethics Policy. Any experimentation or research involving human or the use of animal samples must obtain approval from Human or Animal Ethics Committee in their respective institutions. The author(s) agree and understand that UNIMAS Publisher is not responsible for any compensational claims or failure caused by the author(s) in fulfilling the above-mentioned requirements. The author(s) must accept the responsibility for releasing their materials upon request by Chief Editor or UNIMAS Publisher.
6) The author(s) should have participated sufficiently in the work and ensured the appropriateness of the content of the article. The author(s) should also agree that he or she has no commercial attachments (e.g. patent or license arrangement, equity interest, consultancies, etc.) that might pose any conflict of interest with the submitted manuscript. The author(s) also agree to make any relevant materials and data available upon request by the editor or UNIMAS Publisher.
