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 betw
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,
Hong Kong, this specific area of intellectual capital has been neglected in the body of Vietnamese literature
Strategic management accounting (SMA) is a form of management accounting that concentrates on information relevant to key strategic decisions (CIMA, 2014a) Grounded in resource-based theory, intellectual capital (IC) comprises the assets used for strategic purposes, suggesting SMA could play a pivotal role in IC management Although IC literature in accounting often focuses on external reporting or the measurement and valuation of such assets, the two-way relationship between intellectual capital and SMA remains underexplored On the one hand, organizations with strong IC have the concrete assets to develop SMA systems that identify, measure, and communicate value drivers (Tayles, Pike, & Saudah, 2007) On the other hand, as SMA systems mature, they address how to identify, measure, and communicate IC to support strategic objectives The challenge is to devise SMA practices aligned with a company’s unique attributes and competitive strategies, enabling precise identification and valuation of IC components In Vietnam’s transitional economy, foreign-owned enterprises have introduced practical SMA knowledge, helping practitioners and scholars, yet many medium and large Vietnamese enterprises still struggle with implementing SMA Consequently, studying the correlation between intellectual capital, SMA practices, and corporate performance in Vietnam, with the mediating role of SMA, is both necessary and timely.
Research questions and research objectives
Section 1.4 highlights research gaps that warrant investigating the effects of intellectual capital and strategic management accounting (SMA) practices on corporate performance in transitional economies like Vietnam, where these relationships remain underexplored The inquiry also considers whether organizations should develop an SMA system that supports intellectual capital to enhance financial performance, and, if so, how such a system would effectively manage intellectual capital to drive outcomes Accordingly, three research questions are proposed to guide this investigation.
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?
This dissertation empirically examines the association between intellectual capital, strategic management accounting practices, and corporate performance, while investigating the mediating role of strategic management accounting practices in the link between intellectual capital components and three financial dimensions of corporate performance It also analyzes how strategic management accounting practices contribute to the management of intellectual capital components and their impact on overall corporate performance.
- RO1: Testing the direct impact of each of intellectual capital components on corporate performance
- 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.
Research object and research scope
This study investigates the relationship among intellectual capital (IC), strategic management accounting (SMA) practices, and corporate performance, with the business organization as the unit of analysis Data are collected through a questionnaire survey administered to SMA practitioners, where the unit of observation is the informant—managers or top-management personnel with knowledge of accounting, planning or finance and at least two years of tenure in the current organization Additionally, financial information from annual reports or financial statements is used as part of the observation to draw data on IC and corporate performance.
This study's scope is defined by three limitations: first, Vietnam—a developing country in Asia with a transitional economy and a collectivist culture—serves as the observation and empirical testing setting; second, the observed firms are enterprises listed on the Ho Chi Minh City Stock Exchange (HoSE) and the Hanoi Stock Exchange (HNX) to facilitate access to financial data; third, because the SMA practices survey was conducted in 2016, the analysis uses 2016 financial information for the public companies where respondents are employed, rather than a multi-year panel, while seven years of financial data (2010–2016) are compiled to calculate variables such as organizational capital, innovation capital, and investment efficiency.
Methodology
This study reviews the literature on intellectual capital, strategic management accounting practices, and corporate performance, and then proposes two research models with six hypotheses It adopts a quantitative approach, using empirical survey data and financial data from at least 127 public enterprises in Vietnam in 2016 Given the presence of mediators and a small-sample context, analysis employs partial least squares structural equation modelling (PLS-SEM) with SPSS 24.0 and SmartPLS 3.1 software.
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 offers a comprehensive literature review of intellectual capital and strategic management accounting, examining studies from many countries as well as Vietnam The chapter synthesizes theoretical and empirical findings to map how these concepts have been explored in different contexts, highlighting patterns, debates, and gaps By identifying research gaps, it points to desirable directions for future inquiry and clarifies the research questions that will shape the dissertation objectives This review thus establishes a solid foundation for the study, aligning international scholarship with the Vietnamese perspective on value creation and performance measurement.
Chapter 2 outlines the concepts and measurement models of intellectual capital, defining its components and examining how corporate performance and strategic management accounting practices connect these ideas It then surveys the core theories that underpin intellectual capital measurement, drawing on the current literature to establish a clear framework for measuring intellectual capital variables in subsequent chapters.
Chapter 3 outlines the theoretical framework and hypotheses development, focusing on the underlying conceptual framework used to derive testable hypotheses for the two research models that address the research questions and bridge gaps in the literature It then presents the arguments underpinning six testable hypotheses.
Chapter 4, Research Methodology, provides a detailed account of the development of the research methodology, explains how the constructs in the theoretical model are operationalised and measured, and discusses the unit of analysis, the informants, and the sample size to ground the study's empirical approach.
Chapter 5 analyzes sample characteristics and measurement scales assessment for SMA practices It first demonstrates how to collect data to construct the SMA practice variables and describes a pilot test to examine the attributes of the SMA indicators before gathering main data It then presents the refinement of measurement scales based on data obtained from Vietnamese public enterprises The chapter concludes with descriptive statistics of the research data and an evaluation of collinearity within the inner structural models.
Chapter 6: Data Analysis and Discussion presents and analyzes the data used in this study, beginning with an assessment of the fitness of the theoretical models The section then delivers the empirical results for the hypotheses developed in Chapter 3, reporting findings from direct regressions and mediated path regressions conducted with SmartPLS 3.1 Results are organized sequentially from hypothesis 1 through hypothesis 6 and are followed by the testing results for the control variables In addition to detailing the data analysis, each significant proposition is explained in its managerial context, linking statistical outcomes to practical implications for managers and decision-makers.
Chapter 7: Implications for managing intellectual capital by strategic management accounting practices The managerial implications of this study are outlined in this chapter
This study identifies a three-stage value-creating process inferred from the testing of six hypotheses, offering a concise framework for value creation It also presents targeted recommendations for leaders, policymakers, and the academic community on how to manage intellectual capital effectively The final section outlines specific orientations for applying each group of strategic management accounting techniques to intellectual capital management.
This conclusion presents a concise synthesis of the study by first summarizing the main findings and relating them back to the research questions and theoretical framework, thereby clarifying how the results contribute to current knowledge It then highlights the theoretical contributions, showing how the findings extend or refine existing theories and models, followed by the managerial implications that offer practical, actionable guidance for practitioners seeking to apply these insights The section also addresses study limitations and potential biases, and it outlines concrete directions for future research, including methodological refinements, broader or more diverse samples, and the examination of additional variables to validate and extend the results.
LITERATURE REVIEW
Review of international studies of intellectual capital
Shifting from an industrial-based economy to a knowledge-based one changes how a firm’s value is assessed: it no longer rests solely on financial results, but also on the activities that develop and leverage knowledge resources Recognizing how employees, stakeholders, and knowledge-related activities contribute to value creation raises the challenge of identifying, measuring, and reporting intellectual capital Since its emergence in the mid-1990s, intellectual capital research has spanned multiple disciplines, with specialist journals such as the Journal of Intellectual Capital, International Journal of Learning and Intellectual Capital, and Journal of Human Resource Costing and Accounting, alongside leading business and management publications In the accounting discipline, journals like Accounting, Auditing and Accountability Journal, European Accounting Review, and Accounting Organizations and Society have been especially influential for intellectual capital measurement and management.
1.1.1 Stages in developing intellectual capital as a research field
From a historical perspective, intellectual capital (IC) has come to be viewed as a core business asset, a view traced through two research stages outlined by Petty and Guthrie (2000) The first stage raised awareness of IC's potential to create and sustain competitive advantages and began establishing guidelines and standards for measuring and reporting IC, even though extensive empirical research was limited before the mid-1990s The second stage produced organizational evidence on how IC creates value and how the labor market responds to its potential, helping crystallize a commonly accepted IC terminology and identifying its three main components alongside the accounting discipline of management, measurement, and accountability (Dumay et al., 2012) A third stage is emerging, focusing on practical managerial implications of IC across organizations, beginning with Marr and Chatzkel's 2004 special edition of the Journal of Intellectual Capital, IC at the crossroads, and shifting toward bottom-up research that views IC value as encompassing not only monetary outcomes but also the worth and importance of 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
Table 1.1 Milestones of significant contributions to the identifications, measurement and reporting of intellectual capital
General notion of intangible value (often generically labelled
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)
Initiatives to systematically measure and report on company 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”
Nonaka and Takeuchi's highly influential 1995 study introduces the concept of the knowledge-creating company, outlining how organizations generate and leverage knowledge to drive innovation Although the book concentrates on knowledge, the nuanced distinction between knowledge and Intellectual Capital remains clear enough to make the work relevant for readers whose primary focus is Intellectual Capital.
In 1994, Skandia published a supplement to its annual report that focused on evaluating the company’s stock of intellectual capital The report, titled “Visualizing Intellectual Capital,” generated substantial interest from other firms looking to follow Skandia’s lead, as noted by Edvinsson and Sullivan (1996).
Pioneers of the Intellectual Capital movement published bestselling books on the topic, including Kaplan and Norton (1996), Edvinsson and Sullivan (1996), and Sveiby (1997) Edvinsson and Malone’s work, in particular, focuses on the process and the “how” of measuring intellectual capital, offering practical methods for valuing intangible assets within organizations.
Intellectual Capital becomes a popular topic with researchers and academic conferences, working papers, and other publications find an audience
An increasing number of large scale projects (e.g the MERITUM project; Danish; Stockholm) commence which aim, in part, to introduce some academic rigour into research on Intellectual Capital
In 1999, the OECD convenes an international symposium in Amsterdam on intellectual capital (Organization for Economic Co-operation and Development (OECD), 2000)
From the 2000s onward, IC research has been continually disseminated to the wider accounting research community, driven by a shift in publication venues Generalist accounting journals and conferences have increasingly opened doors to special editions that actively welcome IC-focused submissions, expanding both the reach and visibility of this work This development signals a deeper integration of IC topics into mainstream accounting scholarship and creates greater opportunities for researchers to share findings through reputable outlets.
IC accounting papers (Dumay et al., 2012)
There is an increasing trend on knowledge management research besides intellectual capital research (Dumay et al., 2012)
Source: Summarized by the author on the sources of Guthrie (2001) and Dumay et al (2012)
1.1.2 Research trends on intellectual capital in the accounting discipline
Intellectual capital is widely treated as a knowledge resource that must be well managed, yet it can be analyzed from both microeconomic and macroeconomic perspectives It is studied across four viewpoints—economic, strategic, managerial, and accounting (Alcaniz et al., 2011) In the economic perspective, intellectual capital contributes to national wealth and is tied to high technology and a well-educated workforce (Stewart & Ruckdeschel, 1998) In the strategic perspective, a company’s success increasingly depends on intangible assets rather than tangible ones, and the accumulation of intellectual capital follows from the interplay between resources and strategy (Brooking).
From a managerial perspective, an organization’s resources are formed by the combination of physical, financial, and intellectual capital, which must be identified and managed as the roots of the organization’s value (Bontis, 1999) This study, however, concentrates on the issues involved in accounting for intellectual capital In the accounting discipline, Dumay et al (2012) examined 423 journal papers on intellectual capital published from 2000 to 2009, showing that the most active area of IC accounting research centers on management accounting and external reporting, while accountability, governance, and auditing receive relatively little attention.
Table 1.2 Topics of intellectual capital research in the accounting discipline
Table 1.2 presents the focus of research trends on intellectual capital in the accounting discipline, as follows:
External reporting of intellectual capital (IC) can be voluntary and non-quantitative, but when IC disclosure is linked to firm performance, both companies and investors benefit from clearer transparency Consequently, a substantial body of research has examined IC disclosure practices in developed economies, while evidence from emerging markets remains comparatively thin and is largely concentrated in Asia Across the limited studies in emerging economies, researchers collect IC disclosure data from multiple media—including annual reports, corporate websites, CSR reports, and other communications—and consistently find variations by company size and industry In Europe, for example, relational capital accounts for about 49% of IC disclosure, with 30% related to structural capital and 21% to human capital, highlighting regional differences in the composition of disclosed intellectual capital.
A 2006 literature review indicates that most prior studies relied on content analysis of data from a single year, with only a handful employing longitudinal data; notable longitudinal contributions include Bozzolan, Favotto, and Ricceri (2003) and Bharathi Kamath (2008), which offer detailed examinations of intellectual capital disclosure practices over time.
Accountability and governance: Some papers (Keenan and Aggestam (2001); J
Li, Pike, and Haniffa (2008) investigate the influence of corporate governance factors on intellectual capital disclosure in annual reports, employing several disclosure measures They hypothesize that intellectual capital disclosure is significantly related to board structure, role duality, ownership concentration, and audit committee characteristics—specifically size and meeting frequency—even after controlling for listing age, firm size, and profitability.
Management control and strategy emerge as the most researched areas, as shown in Table 1.2, which encompasses 160 articles across a broad range of management topics The literature includes work on the Balanced Scorecard (Flamholtz, 2003) and its use in managing intellectual capital (O’Connor & Feng, 2005), as well as studies examining intellectual capital management in different organizational settings—service organizations (Namasivayam & Denizci, 2006), the banking industry (Puntillo, 2009), and the not-for-profit sector (Kong, 2009) Other work maps intellectual capital within organizations (Hellström & Husted, 2004) Some studies by Tayles, Bramley, Adshead, and Farr also contribute to this line of inquiry.
Earlier work (including 2002 and Tayles et al., 2007) suggests applying a management accounting approach to support internal control (IC), drawing on the authors’ experience with service companies These studies also indicate that management accounting techniques are appropriate for IC control, recommending reduced reliance on traditional and zero-based budgeting and favoring the beyond budgeting concept to manage IC (Tayles et al., 2007) They further argue that real options valuation is better suited than capital budgeting for assessing strategic IC investment opportunities (Neil & Hickey, 2001).
During the early 1990s, performance measurement evolved to overcome the limitations of financial-only metrics by emphasizing intangible resources—key customers, internal processes, and organizational learning—embedded in intellectual capital Leading models such as the Intangible Assets Monitor and the Skandia Navigator were developed around IC, while the Balanced Scorecard offered a broader strategic lens, linking relational capital (customer perspective) and structural and human capital (innovation and learning) to outcomes for shareholders Lev's Value Chain Scoreboard proposes a structured report on how intellectual capital affects corporate performance and valuation, useful to both management and investors With many of these frameworks adapted for intellectual capital, a substantial portion of the literature shows that firms with higher IC are more likely to adopt performance measurement approaches that enhance shareholder value.
Commentaries and policy statements comprise a group of articles that lack empirical research, tending to be either theoretical discussions or policy-oriented statements, and they are commonly cited alongside Petty and Guthrie (2000), Brennan and Connell (2000), and Roslender and Fincham.
Review of international studies of strategic management accounting
Since Simmonds (1981) argued in Management Accounting for adopting strategic management accounting (SMA), the literature has coalesced around four core themes: defining SMA, identifying the SMA techniques applied across industries and countries, examining how strategy choices influence SMA changes, and detailing the SMA process (see Appendix 2) Over the past 30 years, most empirical research has relied on questionnaire surveys to measure the extent of SMA technique adoption (Langfield-Smith, 2008) However, the limitations of surveys and the scarcity of case studies mean that we know relatively little about how SMA techniques are actually used, by whom, and for whom (Nixon & Burns, 2012).
1.2.1 Research on conceptualizing strategic management accounting
Strategic Management Accounting (SMA) lacks a single agreed-upon definition, but is commonly described as an approach that sits at the intersection of strategic management and accounting Early definitions position SMA as a generic link among management accounting, corporate strategy, and a firm’s strategic positioning (Simmonds, 1981), while Bromwich (1990) narrows SMA to financial information but centers on performance relative to competitors Other scholars argue that a marketing orientation is more relevant for SMA (Foster & Gupta, 1994; Roslender, 1995; Wilson, 1995) Across the literature, three main conceptualizations of SMA can be distinguished.
Simmonds (1981) situates Strategic Management Accounting (SMA) within Porter’s competitive framework, which catalyzed a research stream that emphasizes cost management to support a low-price competitive strategy rather than design and innovation aimed at earning a price premium through product differentiation As a result, SMA practice creates a demand for financial information about competitors to monitor core rivals’ moves and guide strategic responses.
Bromwich (1990) presents the SMA approach based on attribute costing, where the aim is to cost the benefits a product provides to customers rather than the cost drivers of the product This approach requires considering the benefits offered to customers and how these benefits contribute to building a sustainable competitive advantage.
From a marketing–SMA perspective, Roslender and Hart (2003) contend that SMA should be thoroughly infused with marketing issues, theories, and concepts to form a true partnership between accounting and marketing This collaboration necessitates brand management accounting that tracks performance metrics such as market share, market growth, and brand strength, as well as customer profitability analyses that emphasize sub-brands and specific market offerings.
Strategic Management Accounting (SMA) has a multiplicity of interpretations rooted in researchers' diverse scientific backgrounds, underlying assumptions, and starting points, and since Simmonds first defined it over three decades ago, there is little consensus on what SMA is or comprises The term invites varied readings because SMA research spans the interface between accounting and marketing as well as the linkages to corporate strategy The 1990s are described as the "glory decade" when academics, consultants, and practitioners helped popularize SMA (Langfield-Smith, 2008) Shank and Govindarajan (1993) noted that many SMA techniques were piloted in US companies and later appeared as teaching cases or textbook chapters Professional journals carried SMA-focused articles, and the training activities of professional accounting bodies increasingly concentrated on Strategic Cost Management tools and techniques (Langfield-Smith).
Since 2008, global consulting firms have developed highly active practices in SMA, and the term SMA has evolved in the absence of a universal conceptual framework, leading to a range of definitions—from narrow, competitor-focused and performance-measurement practices to broader interpretations anchored in an external-orientation perspective.
1.2.2 Research on strategic management accounting techniques
In SMA practice, the absence of a single, generally accepted conceptual framework has produced a multitude of techniques with a strategic focus Appendix 2 reveals significant overlaps among SMA technique classifications, though differences remain notably in customer accounting versus strategic accounting Despite divergent research perspectives, the groups of SMA techniques—strategic cost accounting, competitor accounting, and strategic accounting—are widely recognized as core components of SMA practice By 2001, and as reported in Guilding and McManus (2002), three customer-focused techniques were added, forming a fourth dimension referred to as 'customer accounting.' The literature review, however, largely neglects this dimension, possibly due to its later appearance and the challenges involved in observing it.
Table 1.4 Literature review of essential techniques in strategic management accounting toolbox
The valuation of customer group
Source: The author’s literature review
Recent studies advance the SMA literature by identifying which SMA techniques matter for corporate use, analyzing how SMA dissemination varies with structural characteristics, and employing cluster analysis to reveal performance differences across groups of firms The adoption of SMA techniques differs by firm type: many tools originally designed for the non-hospital sector have migrated into hospitals, while widely applied techniques like the balanced scorecard and activity-based costing are used only moderately in hospital settings Cadez (2006) also finds that capital budgeting and competitor-focused techniques are the most widely used, whereas customer-focused SMA techniques are the least used.
1.2.3 Research on the relationship between environment, strategy choice and strategic management accounting practices
This theme investigates strategic management accounting within the organizational context through contingency theory, arguing that performance results from the fit between the structure (the management accounting system) and the context (contingent factors) Building on Cadez (2007), the research shows that performance emerges when SMA aligns with the organizational environment Empirical findings from Gerdin (2005) and Seaman and Williams (2011) indicate that SMA serves as a medium for performance measurement, emphasizing strategic indicators over tactical ones to support the organization’s strategic intent.
Research exploring competitive strategies and strategic management accounting (SMA) techniques indicates that strategy type and SMA usage influence perceived performance for medium- and large-sized firms Cinquini and Tenucci (2010) analyzed 328 Italian manufacturing firms with sales above $25 million and found that defender- and cost leader-type strategies are more inclined to use SMA techniques addressing cost information Fowzia (2011) reports differences in the application of SMA techniques across cost leadership, differentiation, and build and harvest strategies Aykan and Aksoylu (2013) examine whether competitive strategies (cost leadership, differentiation, and focus) and SMA usage affect perceived performance, finding that differentiation strategies and competitor-oriented and customer-oriented SMA techniques influence the perceived qualitative performance of the businesses (with consideration of both qualitative and quantitative performance).
1.2.4 Research on strategic management accounting process
Surprisingly, the literature pays relatively little attention to the process of using SMA compared with the other research aspects that have been extensively discussed in numerous articles and conference papers Some researchers view SMA as a process and argue that the deployment of SMA techniques can be understood as a sequence of distinct stages, a view noted by Langfield et al.
Definitions of SMA vary, and so do perceptions of the SMA process Dixon and Smith (1993) present a four-stage SMA process: strategic business unit identification, strategic cost analysis, strategic market analysis, and strategy evaluation Brouthers and Roozen (1999) describe SMA techniques across three stages: monitoring, decision-making and planning, and controlling Lord (1996) differentiates SMA as a six-stage process, illustrating the breadth of SMA methodologies.
(2) Exploitation of cost reduction opportunities
(3) Matching of accounting emphasis with strategic position
(5) Exploitation of cost reduction opportunities
(6) Matching of accounting emphasis with strategic position.” (Lord, 1996, p 352)
Following Lord (1996), Shah et al (2011) summarize the SMA process in four stages: (1) collecting information about competitors, (2) using accounting data to inform strategic decisions, (3) reducing costs based on strategic choices, and (4) gaining a competitive edge by identifying opportunities and selecting strategic directions Although researchers may differ in how SMA usage is viewed, its overall interpretation remains closely aligned with the broader strategic management process.
In summary, the issue of strategic management accounting has been studied worldwide for more than 25 years and it can be argued that SMA has made an impact on practice, scholars and accounting Although it exists the interest of how SMA manages intellectual capital or intangibles, little research to the best of my knowledge do empirical exploratory study to discover this issue Therefore, it may open more recently IC stage research has continued to focus on developing how intellectual capital is managed and reported and more importantly how strategic management accounting practices are applied to manage intellectual capital
1.2.5 Review of studies investigating the relationship between strategic management accounting practices and corporate performance
Review of studies of intellectual capital and strategic management accounting in Vietnam
Vietnam is a developing country with a large population Major changes occurred in 1986, when individual entrepreneurs obtained the right to get involved in light industry, and the Sixth Party Congress approved economic reforms eliminating much of the basic apparatus of control Since the introduction of reforms during the 1980s, Vietnam has experienced phenomenal economic growth, with annual growth rate in GDP averaged 6.45 percent from 2000 until 2017, reaching a high record of 8.48 percent in the fourth quarter of 2007 and a low record of 3.12 percent in the first quarter of 2009 (Trading Economics,
Vietnam has smoothly transitioned from a centralized to a market-based economy and benefits from a strong entrepreneurial spirit, yet persistent challenges remain, including inadequate physical infrastructure, limited technology, insufficient marketing and international business skills, and unclear policies To boost competitiveness, Vietnam must raise education quality to strengthen human capital Intellectual property protection is a critical component of structural capital; government data show only about 25,000 registered products or services and relatively few registrations of industrial and mechanical designs If Vietnamese exporters aim to compete internationally, they need to acquire expertise in international banking, shipping, insurance, and marketing to develop international relations and relational capital The success of Vietnam’s economy appears to rely on an intangible mix of national structural capital, human capital, and international relations, aided by policy openness, leadership reform, a culture of resilience, and the ability to learn and adapt Consequently, advancing intellectual capital should be a top priority for both the government and Vietnamese enterprises, shaping the future of the country’s economy.
Vietnam’s emergence as a growing economy is propelled by the private sector, the development of securities markets, and increased participation in international trade Public enterprises remain a vital part of the Vietnamese economy, with listed companies’ market capitalization accounting for about 26.8% of GDP in 2015 (Trading Economics, 2017) As Vietnam deepens its integration into the global economy—through initiatives such as the Trans-Pacific Partnership (TPP) and the ASEAN Economic Community (AEC)—the competitive environment facing Vietnamese listed firms has intensified The entry of foreign companies brings benefits like knowledge transfer, skills, and infrastructure, while higher competition spurs innovation and positive development across industries Despite numerous incremental or transformative changes in Vietnamese organizations, including listed companies, intellectual capital—comprising human resources capital, structural capital, and relational capital—has often not been measured or valued, even though these assets are generated over time in response to competitive pressures.
1.3.2 Research on intellectual capital in Vietnam
Although most of the world’s intellectual capital research originates from Western countries, empirical studies on intellectual capital have been conducted across a broad range of nations, including North America (Bontis, 1998; Riahi-Belkaoui, 2003), Germany (Bollen et al., 2005), South Africa (Firer & Mitchell-Williams, 2003), Australia (Dumay, 2009), Bangladesh (T Hussain, Chakraborty, & Rahman, 2010), and China (J Chen, Zhu, & Hong Yuan, 2004), with further work spanning Asian economies such as Malaysia (Bontis et al., 2000), Taiwan (Ming-Chin et al., 2005), Singapore (Hong Pew et al., 2007), and Thailand (Saengchan, 2008) Although emerging Asian economies have experienced significant growth in recent years, research on the role of intellectual capital in sustaining that rapid expansion remains limited In Vietnam, intellectual capital research has not yet received adequate attention.
Across the 2010s and onward, the leading international interdisciplinary accounting conferences have expanded opportunities for intellectual capital (IC) researchers to disseminate work and receive feedback While some sessions address IC, most papers at these international conferences hosted in Vietnam were led by overseas researchers and lacked recognition of IC studies conducted in the Vietnamese context A search of specialist academic databases—Google Scholar, Emerald, ScienceDirect, and ProQuest Central—shows only Nga and Thomas (2005) addressing structural and perceptual aspects of IC in Vietnam, outlining IC’s role at the national economy, industry sectors, and individual firms and offering policy recommendations for Vietnamese policymakers Nhon, Thong, and Van Phuong (2018) further explore how IC dimensions—human, organizational, and social capital—affect firm performance, noting the mediating roles of human and social capital in the link between organizational capital and ICT firm performance in Vietnam; this work is a commentary rather than an empirical study In sum, Vietnamese firms are developing various IC dimensions, signaling a need for more empirical IC research in Vietnam.
Western countries have produced detailed descriptions of intellectual capital (IC), how to measure it, and how to manage it The key question is how much of this existing knowledge can be applied to Vietnam, an emerging economy IC practices recommended by international studies may not transfer directly to Vietnamese contexts Consequently, research is needed to understand how Vietnamese managers perceive and understand intellectual capital.
1.3.3 Research on strategic management accounting in Vietnam
Vietnam’s economic transformation has been a key driver of the development of the economy and the business sector As Vietnam integrates with international accounting standards, Vietnamese enterprises are gradually applying advanced accounting techniques that align with market mechanisms Over the past decade, management accounting in Vietnam has progressed significantly since its formal recognition in the Accounting Law 2003 and Circular 53/2006/TT-BTC, even though its roots stretch back earlier in global practice Research on the Vietnamese management accounting system began in the early 1990s, addressing a broad range of themes that have shaped its evolving framework.
Table 1.5 Research trends on management accounting in Vietnam
1990s The directions are related how to build the contents and organization approaches of management accounting system in Vietnamese enterprises (Duoc, 1997)
The author came up with organization solutions of management accounting nested within financial accounting (Dung, 1998)
The directions are how to build reports system of management accounting in Vietnamese enterprises (Quang, 1999)
During the 2000s, management accounting research focused on industry-specific contexts, with in-depth studies conducted in manufacturing (Le, 2002), mining (Hoi, 2007), construction state-owned enterprises (Giang, 2002), transportation sector companies (Dinh, 2003), and the pharmaceutical industry (Thuy, 2007).
2010s Management accounting has been studied in association with the other research fields such as management of environmental issues (Thien, 2010), sustainable development reporting (Thien & Hung,
2016), corporate social responsibilities (Long, 2015), management control system (Tran, 2010), strategic decision making in market orientation and competition (Nguyen & Doan, 2016)
Strategic management accounting is directed how to implement in Vietnamese enterprises (Que & Thien, 2014)
The factors have facilitated the use of strategic management accounting in Vietnam – a transitional economy (Anh, 2010)
The authors have focused on only one of strategic management accounting techniques (i.e Strategic cost management (Hoa,
2014), Time-driven ABC (Thien, 2014), Lean accounting (Hoa,
2015), Balanced scorecard (Van, 2015)) to analyse the conditions resulting in the successful implementation
Source: The author’s literature review
Vietnam’s economic, political, and social environment differs significantly from that of Western nations and even from many other Asian countries Since adopting an open-door policy, competition has intensified across the Vietnamese economy as private, joint-venture, and wholly foreign-owned enterprises have expanded over the last two decades (Anh, 2010) This influx of foreign organizations has introduced practical knowledge of strategic management accounting to Vietnamese practitioners and scholars Consequently, interest in strategic management accounting began in Vietnam during the 2010s, yet there is still limited systematic documentation and analysis of recent efforts to implement these practices in the Vietnamese context.
In Vietnam, evidence from studies such as Loi (2014) and Que and Thien (2014) suggests that small and medium-sized enterprises (SMEs) predominantly apply traditional management accounting, while only medium-to-large enterprises devote greater attention to implementing strategic management accounting to obtain information relevant for decision making Despite the popularity of strategic management accounting as a research topic in many other countries, there is limited empirical research on its impact on Vietnamese enterprises’ performance This gap underscores the need for more empirical work to understand how strategic management accounting practices influence performance outcomes for Vietnamese firms.
Research gaps
This study identifies three key research gaps: first, a lack of studies on the performance implications of intellectual capital when mediated by strategic management accounting (SMA) practices; second, a shortage of empirical research on the relationship between intellectual capital and the various groups of SMA practices; and third, a paucity of Vietnam-specific empirical studies examining intellectual capital in relation to strategic management accounting practices.
1.4.1 Lack of studies concerning performance implication of intellectual capital in association with the mediating role of SMA practices
Across IC accounting research, empirical studies have predominantly examined the direct link between intellectual capital components and corporate performance, with less attention paid to potential indirect effects Ittner and Larcker (1998) argue that management must identify, measure and communicate value drivers—intellectual capital—to improve information systems, performance and resource allocation for investors; this implies that organizations rich in intellectual capital tend to develop strategic management accounting directions that align with these goals Yet Tayles et al (2007) note a gap: it remains unclear whether and how firms with high levels of IC have embedded strategic management accounting practices to address the issues that IC reporting raises and whether these practices, in turn, boost performance While many models map an indirect path from strategy to performance via management practices (e.g., Prajogo & Sohal 2006; Spencer, Joiner, & Salmon 2009; Teeratansirikool, Siengthai, Badir, & Charoennam 2013), only a few studies systematically examine the mediating role of management practices in linking resources to performance Asiaei, Jusoh, and Bontis (2018) investigate the mediating effect of the performance measurement system—one SMA technique—from a control perspective on the IC–organizational performance relationship Consequently, little is known about how intellectual capital's effects on corporate performance differ when mediated by SMA practices Alcaniz et al (2011) identify repetitive practitioner-oriented IC literature focused on the direct IC–performance link, underscoring the need for research that simultaneously assesses direct and indirect effects of intellectual capital on performance through strategic management accounting practices within organizations.
1.4.2 Lack of empirical research concerning the relationship between intellectual capital and each group of SMA practices
Literature on intellectual capital, including Roslender and Fincham (2001), suggests that while some argue for professional accountants to adopt a more strategic management accounting approach to avoid neglecting an organization’s most valuable intellectual capital, the precise role of management accounting in IC management within high-IC firms remains unclear This uncertainty arises from the scarcity of empirical research on how management accounting practices evolve as organizations adapt their management strategies and practices to reflect the value drivers—intellectual capital—when mobilizing around strategic intangible assets In short, how strategic management accounting handles intellectual capital represents a gap in the literature that merits bridging.
1.4.3 Lack of Vietnamese empirical studies on intellectual capital and SMA practices
Most research on intellectual capital and Strategic Management Accounting (SMA) practices has been conducted in developed Western countries, with some studies in Asian economies such as China, Malaysia, Taiwan, and Hong Kong, rather than in Asian developing countries with transitional economies like Vietnam Although Western studies have popularized intellectual capital as a key source of superior performance, there are relatively few studies in developing countries that validate and operationalize these propositions, especially in business environments that are highly unstable, such as Vietnam.
Vietnam Vietnam may differ from Western countries in terms of culture, economy and political environment that influence the progress of IC development (Nga & Thomas,
2005) as well as the orientations how to implement strategic management accounting (Loi,
Culture strongly influences strategic management accounting, with Vietnam's collectivist orientation contrasting Western individualism, which prompts the question of whether national collectivism truly differentiates the Vietnamese practice of strategic management accounting from Western approaches While international research often confirms SMA benefits, there appears to be no empirical study directly examining the link between strategic management accounting practices and corporate performance in the Vietnamese context Investigating the impact of SMA practices on Vietnamese enterprise performance could reveal whether the advantages of SMA are realized in a transitional economy as consistently as in Western settings.
While international studies have linked intellectual capital to value relevance and market valuation (e.g., Ming-Chin et al 2005; Mondal & Ghosh 2012; Cleary 2015), the performance implications of intellectual capital in Vietnam remain under-explored Vietnamese cross-sectional research on how intangible investments affect firm performance is scarce, mainly due to two obstacles First, companies often do not provide complete disclosures or capitalizations for intangible investments, with many expenditures expensed and reporting of such items severely inadequate Second, managers in Vietnam have not fully appreciated the strategic value of intellectual capital, producing a business environment that does not prioritize IC research Consequently, only a small number of Vietnamese studies have examined the performance impact of intellectual capital.
Research on intellectual capital and strategic management accounting in Asian contexts—especially in Vietnam during its transitional economy—can provide fresh insights to the existing literature By examining how intellectual capital is developed, measured, and leveraged, alongside strategic management accounting practices, scholars can better understand performance drivers in transition economies This focus not only fills gaps in the literature on emerging markets but also informs practitioners seeking to align intellectual resources with strategic objectives in Vietnam and similar economies.
Chapter 1 reviews the international studies and Vietnamese studies in terms of intellectual capital, strategic management accounting, corporate performances and their mutual relationships to identify research gaps for this research
Although empirical studies have traditionally focused on the direct relationship between intellectual capital components and corporate performance, only a small body of research examines an indirect link, particularly when mediated by strategic management accounting practices Furthermore, the empirical literature provides limited clarity on the specific role of strategic management accounting in relation to intellectual capital.
Intellectual capital, like other intangible assets, is a critical driver of sustained competitive advantage for both economies and firms Although research on intellectual capital began in the 1980s, studies focusing on Vietnam remain limited and often fail to align with the Vietnamese context This underscores the need for a systematic, comprehensive investigation into the relationships among intellectual capital, strategic management accounting (SMA) practices, and corporate performance in Vietnam Such work would not only enrich Vietnamese academic literature but also advance theoretical understandings of IC management through SMA practices.
The next chapter defines intellectual capital and its components, and also explores corporate performance and strategic management accounting practices, while presenting the theories that underpin the measurement of intellectual capital as the literature’s premises for building the IC variables in Chapter 3.