Mediating effect of strategic management accounting practices in the relationship between intellectual capital and corporate performance evidence from vietnam

MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS, HO CHI MINH CITY

--------------------------------

TRINH HIEP THIEN

Mediating effect of strategic
management accounting practices in
the relationship between intellectual
capital and corporate performance
Evidence from Vietnam

A dissertation submitted for the Degree of
Doctor of Philosophy in Accounting

May 2019


MEDIATING EFFECT OF STRATEGIC MANAGEMENT
ACCOUNTING PRACTICES IN THE RELATIONSHIP BETWEEN
INTELLECTUAL CAPITAL AND CORPORATE PERFORMANCE
EVIDENCE FROM VIETNAM

Trinh Hiep Thien
MPAcc (University of Sydney), MBA (UEH), BBus (UEH), ACMA, CGMA

A dissertation submitted for the Degree of
Doctor of Philosophy in Accounting

Code: 9.34.03.01

Academic Supervisors:
Dr. Doan Ngoc Que
Dr. Le Dinh Truc

University of Economics, Ho Chi Minh City
May 2019


MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS, HO CHI MINH CITY
Submitted to School of UEH Graduate

Title of dissertation:

Mediating effect of strategic management accounting practices
in the relationship between intellectual capital and corporate
performance – Evidence from Vietnam

Author:

Trinh Hiep Thien

Academic Supervisor: Dr. Doan Ngoc Que
Dr. Le Dinh Truc
Date of Final Defense:
Final Defense Committee:
Jury Composition

Read and Approved by

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First discussant

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Second discussant

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Third discussant

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Member 1

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Member 2

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Secretary

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Defense Committee Chairperson

Accepted by the School and the University in partially fulfillment of the requirements for
the degree of Doctor of Philosophy in Accounting.
_________________
Date

_________________
Date

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Dean of the School of Accounting

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Dean of the School of UEH Graduate

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STATEMENT OF AUTHENTICATION
The work described in this dissertation is original based on raw data collected by me,
except where due acknowledgement is made in the text.
I hereby declare that this material has not previously submitted, either in full or in
part, for a degree at this or any other institution.

Ho Chi Minh City, May 31st, 2019

TRINH HIEP THIEN


TABLE OF CONTENTS
Page
LIST OF TABLES ............................................................................................................. I
LIST OF FIGURES ......................................................................................................... II
LIST OF ABBREVIATIONS ........................................................................................ III
ABSTRACT ..................................................................................................................... IV
INTRODUCTION..............................................................................................................1
1. Background...................................................................................................................1
2. Research questions and research objectives .................................................................3
3. Research object and research scope .............................................................................4
4. Methodology.................................................................................................................5
5. Outline of the dissertation ............................................................................................5
CHAPTER 1: LITERATURE REVIEW ........................................................................7
1.1. Review of international studies of intellectual capital ..............................................7
1.1.1. Stages in developing intellectual capital as a research field ...............................8
1.1.2. Research trends on intellectual capital in the accounting discipline ................10

1.1.3. Research methods used to study intellectual capital .........................................14
1.1.4. Review of studies investigating the relationship between intellectual capital
and corporate performance..........................................................................................16
1.2. Review of international studies of strategic management accounting ....................18
1.2.1. Research on conceptualizing strategic management accounting ......................18
1.2.2. Research on strategic management accounting techniques ..............................20
1.2.3. Research on the relationship between environment, strategy choice and
strategic management accounting practices ................................................................22
1.2.4. Research on strategic management accounting process ...................................22
1.2.5. Review of studies investigating the relationship between strategic management
accounting practices and corporate performance ........................................................24
1.3. Review of studies of intellectual capital and strategic management accounting in
Vietnam ..........................................................................................................................25


1.3.1. Vietnamese context ...........................................................................................25
1.3.2. Research on intellectual capital in Vietnam......................................................27
1.3.3. Research on strategic management accounting in Vietnam .............................28
1.4. Research gaps ..........................................................................................................30
1.4.1. Lack of studies concerning performance implication of intellectual capital in
association with the mediating role of SMA practices ...............................................30
1.4.2. Lack of empirical research concerning the relationship between intellectual
capital and each group of SMA practices ...................................................................31
1.4.3. Lack of Vietnamese empirical studies on intellectual capital and SMA
practices.......................................................................................................................31
SUMMARY OF CHAPTER 1 .......................................................................................33
CHAPTER

2:

THE

CONCEPTS

AND

INTELLECTUAL

CAPITAL

MEASUREMENT MODELS .........................................................................................34
2.1. Definition of intellectual capital ..............................................................................34
2.2. Components of intellectual capital ..........................................................................37
2.2.1. Human capital ...................................................................................................37
2.2.2. Structural capital ...............................................................................................38
2.2.3. Relational capital...............................................................................................39
2.3. Definition of corporate performance .......................................................................41
2.4. Determinants of strategic management accounting practices .................................43
2.5. Intellectual capital measurement models ................................................................46
SUMMARY OF CHAPTER 2 .......................................................................................49
CHAPTER

3:

THEORETICAL

FRAMEWORK

AND

HYPOTHESES

DEVELOPMENT ............................................................................................................50
3.1. Mediating effect of strategic management accounting practices in the relationship
between intellectual capital and corporate performance ................................................50
3.1.1. Human capital, structural capital and relational capital reciprocally affect each
other (H1) .....................................................................................................................51
3.1.2. Intellectual capital impacts on SMA practices (H2) ..........................................52
3.1.2.1. Underlying theoretical framework..............................................................52


3.1.2.2. Hypotheses development (H2) ....................................................................54
3.1.3. Intellectual capital impacts on corporate performance (H3) .............................56
3.1.3.1. Underlying theoretical framework..............................................................56
3.1.3.2. Hypotheses development (H3) ....................................................................57
3.1.4. SMA practices impact on corporate performance (H4).....................................59
3.1.4.1. Underlying theoretical framework..............................................................59
3.1.4.2. Hypothesis development (H4) .....................................................................60
3.1.5. The mediating role of strategic management accounting practices in the
relationship between intellectual capital and corporate performance (H5) .................62
3.2. Associations between intellectual capital components and each group of strategic
management accounting practices ..................................................................................64
3.2.1. Underlying theoretical framework ....................................................................65
3.2.2. Hypotheses development (H6) ..........................................................................66
3.3. Summary of the correlations in the two research models .......................................68
SUMMARY OF CHAPTER 3 .......................................................................................71
CHAPTER 4: RESEARCH METHODOLOGY ..........................................................72
4.1. Selection of an appropriate regression approach .....................................................72
4.2. Research process .....................................................................................................73
4.2.1. Evaluation of reflective measurement scales ....................................................75

4.2.2. Evaluation of formative measurement scales ...................................................77
4.2.3. Evaluation of the fitness of structural model ....................................................78
4.2.4. Evaluation of the significance and the stability of path coefficients ................79
4.3. Unit of analysis and sample size .............................................................................80
4.3.1. Unit of analysis and informants ........................................................................80
4.3.2. Sample size .......................................................................................................81
4.4. Variables measurement ...........................................................................................83
4.4.1. Measures of each component of intellectual capital .........................................83
4.4.1.1. Operationalization of value added (VA) ....................................................84
4.4.1.2. Operationalization of human capital efficiency (HCE) ..............................85


4.4.1.3. Operationalization of structural capital efficiency (SCE) ..........................85
4.4.1.4. Operationalization of relational capital efficiency (RCE) ..........................91
4.4.2. Measures of the variables of strategic management accounting practices .......91
4.4.3. Measures of the variables of corporate performance ........................................92
4.4.4. Measures of control variables ...........................................................................94
SUMMARY OF CHAPTER 4 .......................................................................................96
CHAPTER 5: SAMPLE CHARACTERISTICS AND MEASUREMENT SCALES
ASSESSMENT .................................................................................................................97
5.1. Data collection to construct the variables of SMA practices ..................................97
5.1.1. Questionnaire structure .....................................................................................97
5.1.2. Translating and pilot testing of the questionnaire .............................................98
5.1.3. Main data collection procedure .........................................................................99
5.2. Sample characteristics ...........................................................................................101
5.2.1. Industry type ...................................................................................................101
5.2.2. Organization size and SMA practices type .....................................................102
5.2.3. Respondents’ position type .............................................................................103
5.3. The outcomes of reflective measurement scales assessment ................................104
5.4. The outcomes of formative measurement scales assessment ................................106

5.4.1. Calculation of measurement scale of innovation capital efficiency ...............106
5.4.2. Calculation of measurement scale of organizational capital efficiency .........106
5.4.3. Assessment of formative measurement scales related to the structural capital
efficiency variable .....................................................................................................108
5.5. Calculation of the variable of investment efficiency.............................................110
5.6. Descriptive statistics and collinearity assessment .................................................111
SUMMARY OF CHAPTER 5 .....................................................................................113
CHAPTER 6: DATA ANALYSIS AND DISCUSSION .............................................114
6.1. Evaluation of the fitness of theoretical models .....................................................114
6.2. Empirical results – testing of reciprocal correlations between intellectual capital
components (H1) ...........................................................................................................115


6.3. Empirical results – testing of the correlations between intellectual capital
components and strategic management accounting practices (H2) ..............................117
6.4. Empirical results – testing of the direct correlations between strategic management
accounting practices and corporate performance (H4) .................................................120
6.5. Empirical results – testing of the direct correlations (H3) and indirect correlations
between intellectual capital components and corporate performance (H5) ..................121
6.6. Empirical results – testing of the associations of strategic management accounting
practices and intellectual capital components (H6) ......................................................127
6.7. Empirical results – testing of control variables .....................................................130
SUMMARY OF CHAPTER 6 .....................................................................................132
CHAPTER 7: IMPLICATIONS FOR MANAGING INTELLECTUAL CAPITAL
BY STRATEGIC MANAGEMENT ACCOUNTING PRACTICES .......................133
7.1. A discovery of three-stage value-creating process ................................................133
7.2. Implications for the management, policy and research of intellectual capital ......135
7.2.1. Recommendations for leaderships ..................................................................135
7.2.2. Recommendations for policymakers...............................................................137
7.2.3. Recommendations for academic communities ...............................................139

7.3. Implications for integration of strategic management accounting practices into
intellectual capital management ...................................................................................140
7.3.1. Orientations to manage intellectual capital by strategic cost management ....140
7.3.2. Orientations to manage intellectual capital by competitor accounting ...........142
7.3.3. Orientations to manage intellectual capital by strategic accounting...............145
7.3.4. Orientations to manage intellectual capital by customer accounting .............147
SUMMARY OF CHAPTER 7 .....................................................................................150
CONCLUSION ..............................................................................................................151
1. Summary of research findings ..................................................................................151
2. Theoretical contributions ..........................................................................................152
3. Practical managerial contributions ...........................................................................153
4. Limitation .................................................................................................................155
5. Further research directions .......................................................................................156


LIST OF THE AUTHOR’S PUBLICATIONS ...........................................................158
REFERENCES...............................................................................................................161
APPENDIX 1: PREVIOUS STUDIES INVESTIGATING THE RELATIONSHIP
BETWEEN IC AND CORPORATE PERFORMANCE ...........................................185
APPENDIX 2: REVIEW OF PRIOR INTERNATIONAL STUDIES OF
STRATEGIC MANAGEMENT ACCOUNTING ......................................................188
APPENDIX 3: PREVIOUS STUDIES INVESTIGATING THE RELATIONSHIP
BETWEEN STRATEGIC MANAGEMENT ACCOUNTING AND CORPORATE
PERFORMANCE ..........................................................................................................192
APPENDIX 4: ELEMENTS OF HUMAN CAPITAL IN INTELLECTUAL
CAPITAL REPORT ......................................................................................................195
APPENDIX 5: ELEMENTS OF STRUCTURAL CAPITAL IN INTELLECTUAL
CAPITAL REPORT ......................................................................................................197
APPENDIX 6: ELEMENTS OF RELATIONAL CAPITAL IN INTELLECTUAL
CAPITAL REPORT ......................................................................................................199

APPENDIX 7: DESCRIPTIONS OF SMA TECHNIQUES .....................................201
APPENDIX 8: CATEGORIZATION OF THE IC MEASUREMENT METHODS
UNDER MARKET CAPITALIZATION MODEL ....................................................205
APPENDIX 9: CATEGORIZATION OF THE INTELLECTUAL CAPITAL
MEASUREMENT METHODS UNDER RETURN ON ASSETS MODEL ............208
APPENDIX 10: CATEGORIZATION OF THE IC MEASUREMENT METHODS
UNDER DIRECT IC MODEL .....................................................................................210
APPENDIX 11: CATEGORIZATION OF THE INTELLECTUAL CAPITAL
MEASUREMENT METHODS UNDER SCORECARD MODEL ..........................213
APPENDIX 12: INDICATORS FOR REFLECTIVE MEASUREMENT OF SMA
CONSTRUCTS ..............................................................................................................215
APPENDIX 13: SURVEY FORM IN ENGLISH .......................................................218
APPENDIX 14: SURVEY FORM IN VIETNAMESE ..............................................224
APPENDIX 15: CRONBACH ALPHA AND EFA RESULTS OF THE
INDICATORS OF SMA CONSTRUCTS ...................................................................230


APPENDIX 16: EVALUATION OF INDICATORS AND LATENT VARIABLES
..........................................................................................................................................231
APPENDIX 17: CROSS LOADINGS OF REFLECTIVE MEASUREMENT
SCALES ..........................................................................................................................233
APPENDIX 18: CORRELATIONS, SQUARE ROOT OF AVE AND HTMT ......234
APPENDIX 19: THE ESTIMATION OF SGA EXPENDITURES AMORTIZATION
RATE ..............................................................................................................................235
APPENDIX 20: THE ESTIMATION OF ORGANIZATIONAL CAPITAL .........239
APPENDIX 21: THE ESTIMATION OF INVESTMENT EFFICIENCY .............241
APPENDIX

22:

DESCRIPTIVE

STATISTICS

AND

CORRELATION

COEFFICIENTS............................................................................................................244
APPENDIX 23: COLLINEARITY STATISTICS – INNER VIF VALUES ...........246
APPENDIX 24: PLS ALGORITHM RESULT WITH THE ASSET TURNOVER
VARIABLE ....................................................................................................................247
APPENDIX 25: PLS ALGORITHM RESULT WITH THE INVESTMENT
EFFICIENCY VARIABLE ..........................................................................................249
APPENDIX 26: PLS ALGORITHM RESULT WITH THE RETURN ON EQUITY
VARIABLE ....................................................................................................................251
APPENDIX 27: PLS ALGORITHM RESULT WITH THE TOBIN Q VARIABLE
..........................................................................................................................................253
APPENDIX 28: REGRESSION RESULTS BETWEEN IC COMPONENTS AND
EACH GROUP OF SMA PRACTICES ......................................................................255
APPENDIX 29: THE INTELLECTUAL CAPITAL BENCHMARKING SYSTEM
FRAMEWORK ..............................................................................................................256
APPENDIX 30: LIST OF PARTICIPATING FIRMS ..............................................257


–I–

LIST OF TABLES
Table 1.1. Milestones of significant contributions to the identifications, measurement and
reporting of intellectual capital ............................................................................................9

Table 1.2. Topics of intellectual capital research in the accounting discipline .................11
Table 1.3. Methods used in intellectual capital accounting research ................................14
Table 1.4. Literature review of essential techniques in strategic management accounting
toolbox ...............................................................................................................................20
Table 1.5. Research trends on management accounting in Vietnam .................................28
Table 2.1. Definitions of intellectual capital......................................................................35
Table 2.2. Some key differences between strategic and traditional management
accounting ..........................................................................................................................45
Table 2.3. Summary of measurement approaches that are mainly used in intellectual
capital research...................................................................................................................47
Table 3.1. Integration of firm-level strategy and reliance on human capital .....................54
Table 5.1. Development of the final sample in the main study .......................................100
Table 5.2. The number of respondents by Industry type .................................................102
Table 5.3. The number of respondents by Organization size and SMA practices type...103
Table 5.4. Number of Respondents by Positions type and Working Years type in the
current organization .........................................................................................................104
Table 5.5. VIF, Significance and relevance of formative indicators ...............................109
Table 5.6. The coefficient of explanatory variables in Equation 4.20 .............................110
Table 6.1. Summary of the SRMR results of 5-testing models .......................................114
Table 6.2. Summary of the results of the first hypothesis testing....................................116
Table 6.3. Summary of the results of the second hypothesis testing ...............................119
Table 6.4. Summary of the results of the forth hypothesis testing ..................................120
Table 6.5. Summary of the results of the third and fifth hypothesis testing ....................126
Table 6.6. Summary of the results of the sixth hypothesis testing ..................................130
Table 6.7. Summary of the testing results of control variables .......................................131
Table 7.1. Example of intellectual capital components in value chain ...........................141


– II –

LIST OF FIGURES
Figure 2.1. Four-stage model of corporate market valuation ............................................43
Figure 3.1. The first research model ..................................................................................51
Figure 3.2. Basic contingency framework .........................................................................60
Figure 3.3. The second research model .............................................................................64
Figure 4.1. The research process .......................................................................................74
Figure 4.2. Calculation of sample size of the first research model....................................82
Figure 4.3. Calculation of sample size of the second research model ...............................82
Figure 4.4. The value-added intellectual coefficient model ..............................................83
Figure 5.1. Assessment of convergent validity of formative indicators relative to
structural capital ...............................................................................................................108
Figure 7.1. The three-stage value-creating process by IC and SMA practices................134
Figure 7.2. Five-step intellectual capital management model .........................................137


– III –

LIST OF ABBREVIATIONS
Abbreviation

Meanings

AVE

Average variance extracted

CIMA

The Chartered Institute of Management Accountants

EFA

Explanatory factor analysis

HC

Human capital

HoSE

Hochiminh Stock Exchange

HNX

Hanoi Stock Exchange

HTMT

Heterotrait-Montrait test

IAMV

Investors assigned market value

IC

Intellectual capital

ICBS

Intellectual capital benchmarking system

OLS

Ordinary least square

PLS-SEM

Partial least square structural equation modelling

RBV

Resource-based view

RC

Relational capital

R&D

Research and development

RO

Research objective

ROA

Return on assets

ROE

Return on equity

SC

Structural capital

SCM

Strategic cost management

SEM

Structural equation modelling

SD

Standard deviations

SGA

Selling and general administrative expenses

SMA

Strategic management accounting

SMEs

Small and medium enterprises

SRMR

Standardized root mean square residual

VA

Value added

VAIC

Value Added Intellectual Coefficient

VIF

Variance inflation factor


– IV –

ABSTRACT
Title of dissertation:

Mediating effect of strategic management accounting practices
in the relationship between intellectual capital and corporate
performance – Evidence from Vietnam

Abstract:
Reason for writing – The organizations with strong level of intellectual capital should

have developed management accounting with strategic directions that support such
endeavors. In the history of IC accounting research, the focus of empirical studies has
always been the direct relationship between intellectual capital components and corporate
performance. A little research investigates that intellectual capital has an indirect
relationship to corporate performance via the mediating role of management accounting.
Furthermore, Vietnamese managers have not actually realized the critical value of
intellectual capital in their managing process; hence, this study is expected to raise
Vietnamese managers’ awareness in terms of intellectual capital.
Purpose – This study investigates empirically the issue of whether an organization
develops strategic management accounting (SMA) system that supports intellectual capital
(IC) which in turn to enhance its financial performance. If doing so, how SMA manages
IC components to boost an organization’s financial performance.
Method – Using secondary data drawn from Vietnamese listed companies and Public’s
Value-Added Intellectual Coefficient (VAICTM) as the efficiency measure of IC
components and primary data through questionnaire survey to investigate the level of SMA
practices, the author constructs regression model to examine the relationship between IC
components and corporate performance via the mediating role of SMA practices. In
addition, this study also analyses which group of SMA practices are related to manage
which components of IC.
Findings – The results support the hypothesis that firms’ IC has a positive impact on the
level of SMA practices and corporate performance. The author finds that under the
mediating role of SMA practices, SMA practices fully or partially mediates the positive
influence of IC components over corporate performance. Finally, in terms of IC
management, the study highlights only strategic accounting approaches are used to manage
human capital. The findings validate the usefulness of all groups of SMA practices as


–V–

techniques to manage structural capital. Except for strategic accounting approaches, three

remaining groups of SMA practices are most appropriately situated as techniques of
relational capital management.
Originality/ value – This study contributes to bridge the research gap and adds to existing
resources management literature on the Resources (i.e. intellectual capital) – Practices (i.e.
SMA practices) – Performance (i.e. financial performance) link. It discoveries three-stage
value creating process and thereby presents the implications for integrations of SMA
practices into IC management. In addition, this study contributes to a growing body of
literature providing empirical evidence on IC and SMA practices roles in improving
investment efficiency.
Conclusion: This study provides an alarming to Vietnamese managers to become more
aware of the role played by intellectual capital in generating a firm’s value, with support
from the techniques of SMA. Therefore, new demands of Vietnamese managers are being
imposed on management accounting to capture, measure and report IC value and
performance.

Keywords: Corporate performance, human capital, intellectual capital, strategic
management accounting practices, structural capital, relational capital


–1–

INTRODUCTION
1. Background
It is often argued that organizations in today’s knowledge-based economy do not only
initially invest in physical assets, nevertheless in intangibles, as these are but also today’s
value drivers (Mehralian, Rasekh, Akhavan, & Ghatari, 2013). Amongst these intangible
assets, intellectual capital plays a key role, and due to the huge investments in intellectual
capital, its management becomes a critical issue given the direct and indirect advantages.
Some of these advantages may consist of the added value of the knowledge that is
processed, the learning process included in the measurement of intellectual capital (Roos,

Roos, Dragonetti, & Edvinsson, 1997), the enhancement of sustainable competitive
advantages arising from the strategic assets i.e. intellectual capital (Riahi-Belkaoui, 2003),
the determinants and the foremost sources of company success (Alum & Drucker, 1986).
Like the countries with free trading, Vietnam has adopted an open-door policy since
1990’s, the level of competition in the economy has been therefore increasing significantly
for most Vietnamese enterprises when Vietnam’s integration in AEC and TPP, thereby,
managers in Vietnamese firms should be aware of the importance of intangibles as well
intellectual capital, which achieve sustainable competitive advantages in the international
competitive arena. This will be a motivator to impulse scholars doing research on the
influence of intellectual capital in the Vietnamese context.
Based on the concerns of the society, the concept of intellectual capital was
introduced in the large body of literature and has expanded in three stages. The first stage
started in the 1990s and concentrated on increasing awareness, defining concepts,
reviewing case studies and developing primary definitions (Mehralian et al., 2013). The
second stage, which started in the year of 2000, consider measurement, modelling,
international case studies, and various level of analysis (Mehralian et al., 2013). Therefore,
there are a numerous piece of research in many countries, affirming the correlation between
intellectual capital and corporate performance, that has been undertaken by a variety of
research methods. In general, these studies find a positive relationship between intellectual
capital (or some of its components) and corporate performance. The third stage of IC
research, which began from 2004, focuses on the managerial implications of managing IC.
Although most of the studies on intellectual capital have been conducted in developed
Western countries and some of Asian developing countries such as Thailand, Malaysia,


–2–

Hong Kong, this specific area of intellectual capital has been neglected in the body of
Vietnamese literature.
On the other hand, as being introduced by CIMA, strategic management accounting

is a form of management accounting which emphasis is placed on information which
relates to key strategic decision (CIMA, 2014a). Simultaneously, following by resourcebased theory, intellectual capital is the asset used for strategic purposes. Strategic
management accounting would therefore appear to have a potential role to play in
intellectual capital management. Notwithstanding the intellectual capital literature in
accounting is varied but mainly addresses external reporting or the measurement or the
valuation of such strategic assets, there has been little discussion on the two-way
relationship between intellectual capital and strategic management accounting. Firstly, the
organizations with strong levels of intellectual capital will have the assets as the necessary
concrete to develop strategic management accounting system to support the managerial
efforts in terms of identifying, measuring, and communicating the value drivers (Tayles,
Pike, & Saudah, 2007). Secondly, once strategic management system has been evolved, it
will address the issues of identifying, measuring, and communicating intellectual capital
to support the strategic objectives. The challenge, therefore, is to devise a system of
strategic management accounting practices that are in alignment with the unique attributes
and the competitive strategies of the company. In other words, it must be possible to
identify and value, with some precision, the component elements of the generic intellectual
capital of the company. Furthermore, when analysing the Vietnamese transitional
economic context, Vietnamese enterprises have gradually applied the advanced accounting
techniques, in line with market mechanisms because many wholly foreign-owned
enterprises established in Vietnam have been providing practical knowledge of strategic
management accounting, which has been introduced to Vietnamese practitioners and
scholars. Therefore, it is undeniable that medium and large enterprises in Vietnam do not
have any understanding of how to implement strategic management accounting in their
business operations. Not surprisingly, the issue of strategic management accounting
thereby started to be studied in Vietnam since the 2010s. Based on all above arguments,
the author believes the necessity of studying the correlation between intellectual capital,
strategic management accounting practices and corporate performance in the case study of
Vietnam. Vietnamese business environment will provide enough information about
intellectual capital as well as strategic management accounting practices that support such

–3–

research endeavours. More particularly, the author emphasizes “the mediating role of
strategic management accounting practices in the relationship between intellectual capital
and corporate performance”.

2. Research questions and research objectives
The research gaps mentioned in Section 1.4 suggest that a need to investigate the
effects of intellectual capital and strategic management accounting practices on corporate
performance in the organizations operating in the transitional economy such as Vietnam
because these issues have not been discovered in such economy. This also raises the issue
of whether an organization should develop strategic management accounting system that
supports intellectual capital which in turn to enhance its financial performance. If doing so,
it is also inevitable that how strategic management accounting manages intellectual capital
to boost an organization’s financial performance. Accordingly, three research questions
have been proposed:
Research question 1: What is the direct effect of intellectual capital components on
corporate performance in Vietnamese enterprises?
Research question 2: What is the effect of intellectual capital components on
corporate performance in the presence of strategic management accounting
practices?
Research question 3: How do strategic management accounting practices handle
each component of intellectual capital to improve corporate performance?
Overall research objective:
The overall research objective of this dissertation is to empirically examine the
association between intellectual capital, strategic management accounting practices and
corporate performance. More importantly, it investigates the mediating effect of strategic
management accounting practices on the relationship among intellectual capital
components and three financial dimensions of corporate performance. It also empirically

analyses the role of strategic management accounting practices playing the management of
intellectual capital components.
Specific research objectives:
-

RO1: Testing the direct impact of each of intellectual capital components on
corporate performance.


–4–

-

RO2: Examining the direct influence of strategic management accounting
practices over corporate performance.

-

RO3: Investigating an indirect path between intellectual capital components and
corporate performance through the mediating role of strategic management
accounting practices.

-

RO4: Empirically analysing which group of strategic management accounting
practices (i.e. strategic cost management, competitor accounting, strategic
accounting and customer accounting) are related to manage which components
of intellectual capital.

-

RO5: Providing additional evidence on the interconnection of intellectual capital
components.

3. Research object and research scope
The research object of this dissertation is the relationship among intellectual capital,
strategic management accounting practices and corporate performance. Therefore, the unit
of analysis is a business organization. To investigate SMA practices applied in a business
organization, the data is collected through questionnaire survey which is sent to SMA
practitioners; thereby, the unit of observation is the informant (i.e. managers or members
of top management) with knowledge about accounting, planning or finance and at least
two years of working experience in the current organization. Moreover, the unit of
observation is also financial information in annual reports or financial statement reports
which draw financial data on IC and corporate performance.
The scope of this study is limited in three aspects. Firstly, this study selects Vietnam,
a developing country in Asia with a transitional economy and a collectivist culture, as the
research site for observation and empirical testing. Secondly, the observed business
organizations are enterprises listed on Hochiminh Stock Exchange (HoSE) and Hanoi
Stock Exchange (HNX) in order the author to collect financial data more conveniently.
Thirdly, since the survey related to SMA practices is conduct in the year of 2016, this study
only uses 2016 financial information about IC and financial performance of the public
companies where respondents has been working instead of using panel data with many
successive years to analyse intellectual capital alike the previous studies. However, to
calculate some variables such as organizational capital, innovation capital, investment


–5–

efficiency, the author has to collect financial data in the period of 7 years (from 2010 to
2016).

4. Methodology
This study first reviews the literature related to intellectual capital, strategic
management accounting practices, corporate performance before proposing two research
models with six hypotheses. This study mainly uses quantitative research method by using
empirical survey data and financial data obtained from a sample of at least 127 public
enterprises in Vietnam for the year of 2016. Due to the complex of the research models
with mediators and a small sample size context, data analysis is conducted by applying
partial least squares structural equation modelling (PLS-SEM) with the support of SPSS
24.0 and SmartPLS 3.1 software packages.

5. Outline of the dissertation
Besides the parts of introduction and conclusion, this dissertation is organized with 7
chapters, as follows:
Introduction part. This part states the background well as the research questions and
objectives. Then it briefly describes the research methodology and provides the research
scope.
Chapter 1: Literature review. This chapter reviews the literature in terms of
intellectual capital, strategic management accounting studied in many different countries
as well as in Vietnam so as to reveal the research gaps which are desirable research
directions to develop the research objectives of this dissertation.
Chapter 2: The concepts and intellectual capital measurement models. This chapter
not only determines the definitions of intellectual capital and its components but also
discusses the concepts of corporate performance and strategic management accounting
practices in order to explain the relationships amongst these concepts. Next, the existing
theories underpinning the measurement of intellectual capital are introduced in the
literature extant so that the measurement of the intellectual capital variables are clearly
understood in the next chapters.
Chapter 3: Theoretical framework and hypotheses development. This chapter
focuses on underlying conceptual framework to develop the testable hypotheses of the two

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research models, that answer research questions to bridge research gaps. This chapter then
presents the arguments that led to six testable hypotheses.
Chapter 4: Research methodology. This chapter presents in detail the development
of the research methodology. It describes and explains how the constructs in the theoretical
model are operationalised and measured. It also discusses the unit of analysis and
informants as well as sample size.
Chapter 5: Sample characteristics and measurement scales assessment. This chapter
firstly demonstrates how to collect data to construct the variables of SMA practices and the
pilot test to examine the attributes of the indicators of SMA practices before collecting
main data. The next is to represent the refinement of the measurement scales from the data
obtained in Vietnamese public enterprises. Finally, it provides descriptive statistics of the
research data and an evaluation of collinearity issue in the inner structural models.
Chapter 6: Data analysis and discussion. Chapter 6 presents and analyses the data
used in this study. It is started at the evaluation of the fitness of theoretical models. The
next sections present the empirical results of examining the hypotheses developed in
Chapter 3. It includes the outcomes of the direct regressions and the mediated path
regressions that are processed by the tool of SmartPLS 3.1. The empirical results are
arranged in order from the first to sixth hypothesis and finally the testing results of control
variables. Not only is the analysis of the data described but corresponding to each
significant proposition it is also explained in the managerial context.
Chapter 7: Implications for managing intellectual capital by strategic management
accounting practices. The managerial implications of this study are outlined in this chapter.
It is started at a discovery of three-stage value creating process, which is inferred from the
testing results of six hypotheses. This chapter also presents the suggestions for leaders,
policymakers and academic community the approaches to manage intellectual capital.
Particularly, the last section suggests the orientations how to manage intellectual capital

following each group of strategic management accounting techniques.
Conclusion part. Following the introductory part, a summary of the main findings is
presented in this part. Then, the theoretical contributions and managerial contributions of
this study are also summarized, followed by a discussion on the research limitations and
suggested directions for further research.


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CHAPTER 1: LITERATURE REVIEW
The first chapter reviews the literature in terms of intellectual capital, strategic
management accounting studied in many different countries as well as in Vietnam so as to
reveal the research gaps which are desirable research directions to develop the research
objectives of this dissertation. This chapter is structured into four main sections. Section
1.1 presents history, research trends as well as methods used to discover the empirical
relationships between intellectual capital and corporate performance in the accounting
discipline. Section 1.2 continues to review the international studies to identify four main
research themes of strategic management accounting focused by scholars. Next, section
1.3 is developed as a distinctive part to review intellectual capital and strategic
management accounting studies conducted in Vietnam since this dissertation is undertaken
in Vietnamese context. All above sections are aimed at identifying three major research
gaps in the Section 1.4.

1.1. Review of international studies of intellectual capital
When changing from an industrial-based economy to knowledge-based economy, a
firm’s value is no longer measured solely on the basis of financial results; rather than value
of activities that develop knowledge resources must also be considered (Stewart &
Ruckdeschel, 1998). Doing so helps understanding how employees, stakeholders and
activities contribute into value creation, leading to the challenge of how to identify,
measure and report on the value of intellectual capital (Dumay, Guthrie, & Ricceri, 2012).

Therefore, the emergence of the intellectual capital topic in the mid-1990s has produced
literature spanning a range of research disciplines. In retrospect, it appears that like a
research fashion (Alcaniz, Gomez-Bezares, & Roslender, 2011), the intellectual capital’s
specialist journals have been continuously developed including the Journal of Intellectual
Capital, the International Journal of Learning and Intellectual Capital, the Journal of
Human Resource Costing and Accounting, as well as within the pages of many leading
business and management journals, with the Accounting, Auditing and Accountability
Journal, European Accounting Review, the Accounting Organizations and Society Journal
especially important in the accounting discipline of intellectual capital measurement and
management.


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1.1.1. Stages in developing intellectual capital as a research field
The historical perspective is a vital component in fostering an understanding of the
context within which intellectual capital came to be viewed as the essential business
element that it is today. Petty and Guthrie (2000) also outlined two stages in researching
intellectual capital. The first-stage efforts typically focused on raising awareness as to why
recognizing and understanding the potential of IC towards creating and managing
sustainable competitive advantages is extremely essential (Petty & Guthrie, 2000).
Additionally, attempts were characterized by the creation of guidelines and standards.
These early publications pay attention to the fact that intellectual capital is something
significant and should be measured and reported, but without referring to specific empirical
research (Petty & Guthrie, 2000). Most research conducted prior to the mid-1990s is
considered first stage (Petty & Guthrie, 2000). The second stage of IC research gathered
further evidence, at an organizational level, focusing on the how of IC capital and labour
market reacted towards the potential for IC to create value (Petty & Guthrie, 2000). In
general, the first and second stages contributed to a commonly accepted terminology of
intellectual capital. Several classifications of IC have been provided, resulting in the

identification of three main IC components. Together with the appearance of three
components of IC, the researchers defined the accounting discipline of IC as a
management, measurement and accountability toward IC (Dumay et al., 2012). According
to Dumay et al. (2012), a third stage of IC research is emerging and is characterised by
research critically examining IC in practice, devoted to the managerial implications of how
to use IC in managing a company, at the beginning with the 2004 special edition of Journal
of intellectual capital entitled “IC at the crossroads – theory and research” by Marr and
Chatzkel (2004). While second stage IC research is predominately devoted to evaluating
IC’s influence on financial outcomes, third-stage IC research focuses on “the deeper
managerial implications of managing IC in all types of organisations and can be classified
as bottom-up research as opposed to top-down” (Dumay & Garanina, 2013). Thus, the
third stage considers value from IC is not just monetary but incorporates worth and
importance of the products and services to customers and other stakeholders (Dumay &
Garanina, 2013).
Despite looking at three developing stages of IC, Guthrie (2001) provides a timeline
of major IC research milestones, as summarized in Table 1.1.


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Table 1.1. Milestones of significant contributions to the identifications,
measurement and reporting of intellectual capital
Period

Progress

Early

General notion of intangible value (often generically labelled

1980s

“goodwill”).

Mid
1980s
Late
1980s

The “information age” takes hold and the gap between book value and
market value widens noticeably for many companies.
Early attempts by practitioner consultants to construct statements/
accounts that measure intellectual capital (Sveiby, 1989).

Early

 Initiatives to systematically measure and report on company

1990s

stocks of intellectual capital to external parties (e.g. The Swedish
Coalition of Service Industries (SCSI) (1995)).
 Kaplan and Norton (1992) introduce the concept of a Balanced
Scorecard. The Scorecard evolved around the premise that “what
you measure is what you get”.

Mid
1990s

 Nonaka and Takeuchi (1995) present their highly influential

work on “the knowledge creating company”. Although the book
concentrates on “knowledge”, the distinction between knowledge
and Intellectual Capital is sufficiently fine as to make it relevant
to those with a pure focus on Intellectual Capital.
 Also in 1994, a supplement to Skandia’s annual report is
produced which focuses on presenting an evaluation of the
company’s stock of Intellectual Capital. “Visualizing Intellectual
Capital” generates a great deal of interest from other companies
seeking to follow Skandia’s lead (Edvinsson & Sullivan, 1996).
 Pioneers of the Intellectual Capital movement publish bestselling
books on the topic (Kaplan and Norton (1996); Edvinsson and
Sullivan (1996); Sveiby (1997)). Edvinsson and Malone’s work,