Does intellectual capital enhance firm efficiency? Evidence from Vietnam's banking sector

As a result of the rise of a knowledge-based economy, intellectual capital (IC) has replaced tangible inputs as the primary resource and driver of organisational performance. This is the first study to examine the relationship between IC and its components of Vietnamese banks from 2011 to 2018, utilising the modified value-added intellectual coefficient (MVAIC) and stochastic frontier analysis to determine technical efficiency. We find substantial variation in the performance of Vietnamese banks and note a decreasing trend in efficiency, with foreign banks being among the least efficient. Examining the relationship between IC and efficiency as a collective revealed a positive correlation. When the IC components were examined separately, human capital efficiency (HCE) was discovered to be the most significant contributor to efficiency. At the same time, other forms of IC failed to show statistical significance and may even establish a significant inverse relationship. As some valuable resources may be value-destructive, the findings herein have significant implications for resource-based theory. In addition, practitioners may wish to note that HCE is the most significant contributor to efficiency in the Vietnamese banking sector.