Haili Yan, Ong Tze San


Economies have widely accepted intellectual capital and the associated long-term gain of firms and industries. The ESG performance of the economies is the primary factor that affects the decision of any multinational corporation to invest in a country. It is essential to list out economies that have been outperforming their counterparts in terms of ESG rankings and evaluate factors impacting intellectual capital among those economies. Thus, the objective of the current research is to understand the factors affecting intellectual capital amongst the best-ranking ESG economies. An analysis of the factors affecting intellectual capital will be represented by a proxy variable, the Global Innovation Index (GII), over 10 years from 2011 to 2020. The essential factors that will be tested to have a significant effect will include ESG performance, internationalization, performance of human capital, and GDP growth. A secondary quantitative approach has been used in the study. 20 best ranking ESG countries are selected for the research. The data analysis technique used in the study consists of descriptive statistics, correlation analysis, and panel data regression. The outcome of the study is that individual GDP growth has a positive and significant impact. Whereas, HDI has a negative and significant impact on GII. On the other hand, collectively HDI, FDI, ESG score, and GDP growth can have a positive significant impact on the global innovation index (GII). However, the model has only 26% of the variability. Overall, a macroeconomic view of policies should be focus more on economic development policies that top ESG countries must follow to overperform in terms of innovation.

Keyword : ESG score, Intellectual capital, Global innovation index, ESG performance

Published in Issue
Apr 27, 2024
Abstract Views
PDF Downloads
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.


Ali, M. A., Hussin, N., Haddad, H., Al-Araj, R., & Abed, I. A. (2021). A multidimensional view of intellectual capital: The impact on innovation performance. Journal of Open Innovation: Technology, Market, and Complexity, 7(4), 216. Andreeva, T., Garanina, T., Sáenz, J., Aramburu, N., & Kianto, A. (2021). Does country environment matter in the relationship between intellectual capital and innovation performance? Journal of Business Research, 136, 263-273. Baldini, M., Maso, L. D., Liberatore, G., Mazzi, F., & Terzani, S. (2018). Role of country-and firm-level determinants in environmental, social, and governance disclosure. Journal of Business Ethics, 150, 79-98. Chouaibi, J., & Chouaibi, S. (2020). Does value added of intellectual capital influence voluntary disclosure? The moderating effect of CSR practices. Accounting and Management Information Systems, 19(4), 651-681. El‐Bannany, M. (2008). A study of determinants of intellectual capital performance in banks: the UK case. Journal of intellectual capital, 9(3), 487-498. Elliott, R. J., & Zhou, Y. (2013). Environmental regulation induced foreign direct investment. Environmental and Resource Economics, 55, 141-158. Escrig-Olmedo, E., Muñoz-Torres, M. J., & Fernandez-Izquierdo, M. A. (2010). Socially responsible investing: sustainability indices, ESG rating, and information provider agencies. International journal of sustainable economy, 2(4), 442-461. GII. (2020). Global Innovation Index 2020. Global Risk Profile. (2024). ESG Index. Hsu, L. C., & Wang, C. H. (2012). Clarifying the effect of intellectual capital on performance: the mediating role of dynamic capability. British journal of management, 23(2), 179-205. Korsakienė, R., Liučvaitienė, A., Bužavaitė, M., & Šimelytė, A. (2017). Intellectual capital as a driving force of internationalization: a case of Lithuanian SMEs. Entrepreneurship and sustainability issues, 4, 502-515. Michie, J. (2001). The impact of foreign direct investment on human capital enhancement in developing countries. Report for the Organization for Economic Co-operation and Development (OECD). Nasir, M. H., & Zhang, S. (2024). Evaluating innovative factors of the global innovation index: A panel data approach. Innovation and Green Development, 3(1), 100096. Pagano, M. S., Sinclair, G., & Yang, T. (2018). 18. Understanding ESG ratings and ESG indexes. Research handbook of finance and sustainability, 339. Park, S. R., & Jang, J. Y. (2021). The impact of ESG management on investment decision: Institutional investors’ perceptions of country-specific ESG criteria. International Journal of Financial Studies, 9(3), 48. Pelinescu, E. (2015). The impact of human capital on economic growth. Procedia Economics and Finance, 22, 184-190. Pham, C. V., Liu, S. F., & Chen, S. H. (2024). Corporate ESG performance and intellectual capital: International evidence. Asia Pacific Management Review. Plastun, A., Makarenko, I., Khomutenko, L., Osetrova, O., & Shcherbakov, P. (2020). SDGs and ESG disclosure regulation: is there an impact? Evidence from Top-50 world economies. Problems and Perspectives in Management, 18(2), 231-245. Reza, S., Mubarik, M. S., Naghavi, N., & Nawaz, R. R. (2021). Internationalisation challenges of SMEs: role of intellectual capital. International Journal of Learning and Intellectual Capital, 18(3), 252-277. Stevanović, T., Ivanović-Đukić, M., Rađenović, T., & Radović, O. (2018). The impact of national intellectual capital on the economic growth in the South-Eastern European Countries. Zbornik radova Ekonomskog fakulteta u Rijeci: časopis za ekonomsku teoriju i praksu, 36(2), 777-800. The World Bank Group. (2024a). Sovereign ESG Data Portal. The World Bank Group. (2024b). GDP growth (annual %) - Portugal, Finland, Sweden, Switzerland, Australia, New Zealand, Italy, Denmark, Iceland, Norway. The World Bank Group. (2024c). Foreign direct investment, net (BoP, current US$) - Portugal, Finland, Sweden, Switzerland, Australia, New Zealand, Italy, Denmark, Iceland, Norway. The World Bank Group. (2024d). Global Innovation Index.,NOR,CHE,AUS,NZL,SWE,PRT,ITA,DNK&viz=line_chart&years=2013,2020&indicators=944&compareBy=region#table-link United Nations Development Programme. (2024). Data Downloads. Užienė, L. (2014). National intellectual capital as an indicator of the wealth of nations: the case of the Baltic States. Procedia-Social and Behavioral Sciences, 156, 376-381. Vo, D. H., & Tran, N. P. (2023). Measuring national intellectual capital and its effect on country’s competitiveness. Competitiveness Review: An International Business Journal, 33(4), 820-839. Wang, J., Yu, J., & Zhong, R. (2023). Country environmental, social and governance performance and economic growth: The international evidence. Accounting & Finance. Wesiak, D. (2007). Measurement of national intellectual capital: application to EU countries. Yeh‐Yun Lin, C., & Edvinsson, L. (2008). National intellectual capital: comparison of the Nordic countries. Journal of Intellectual Capital, 9(4), 525-545.