Strategic Insights: The Paradox of Intellectual Capital’s Role in Bank Efficiency

Abstract

This study explores the dual nature of intellectual capital (IC) and its components—human capital efficiency (HCE), structural capital efficiency (SCE), capital employed efficiency (CEE), and relational capital efficiency (RCE)—in influencing Vietnamese banks’ technical efficiency. Utilizing data from 30 commercial banks from 2011 to 2018, we employ econometric models including truncated regression, fractional regression, and Tobit models to uncover the intricate relationships between IC and bank performance. Our findings reveal a compelling dichotomy: while human capital consistently drives efficiency, capital employed inversely affects performance, challenging conventional wisdom. Structural and relational capitals exhibit varying impacts across different bank types, with state-owned banks benefiting from relational capital due to government support, unlike foreign and joint-stock banks. Robustness checks via system generalized method of moments (SGMM) and two-staged least squares (2SLS) confirm our results’ resilience. This study underscores the critical importance of IC in enhancing bank efficiency and calls for a strategic reevaluation of capital utilization practices. Our insights suggest that balancing human and financial capital management can yield significant efficiency gains, advocating for targeted training programs while advising caution in capital allocation strategies. This analysis contributes to the broader discourse on resource-based theory, offering fresh perspectives on the interplay between tangible and intangible assets in driving sustainable competitive advantage within the banking industry.