The Moderating Role of Sustainability Disclosure on the Relationship

between Intellectual Capital and Firm Performance

1SIRAPRAPA SUKSARMRONG, 1*KUSUMA DAMPITAKSE, 2SUNGWORN NGUDGRATOKE

1Faculty of Business Administration, Rajamangala University of Technology Thanyaburi,

Khlong Luang, Pathum Thani, 12110,

THAILAND

2Faculty of Education, Sukhothai Thammathirat University,

Pakkret, Nonthaburi, 11120,

THAILAND

*Corresponding Author

Abstract: - The purposes of this research were to study the relationship between intellectual capital and firm

performance, and the relationship between intellectual capital and firm performance which was moderated by

sustainability disclosure. The accounting firm's performance was measured by return on assets (ROA), and the

market firm's performance was measured by Tobin's Q. Sustainability data were collected according to GRI

Standards. The intellectual capital was measured by value-added intellectual capital (VAIC). The sample

included 185 firms from three industries; agriculture and food, technology, and service industry listed on the

Stock Exchange of Thailand from 2018 to 2020. The results showed that intellectual capital had a positive

relationship with accounting performance and market performance. When the moderating role of sustainability

disclosure was examined, it was found that sustainability disclosure positively moderated the relationship of

value-added intellectual capital (VAICTM) on market performance (Tobin’s Q) at a significance level of .05.

The results showed that intellectual capital influenced firm performance and enhanced firm efficiency,

particularly when firms paid attention to sustainability disclosure.

Key-Words: - Intellectual Capital, Sustainability Disclosure, Firm Performance, GRI standards, Value Added

Intellectual Capital, Return on Assets, Tobin’s Q.

Received: September 23, 2022. Revised: January 24, 2023. Accepted: February 26, 2023. Published: March 17, 2023.

1 Introduction

Competition has forced business organizations

nowadays to adapt and develop continuously. To do

so requires the internal and external potential of the

organization. Such potential is called ‘capital’,

which can be in the form of industrial capital,

including labor, raw materials, tools, machines,

processes, and methods created by monetary funds.

However, intellectual capital (IC) is a form of

capital that does not require any monetary funds.

Intellectual capital with its great potential can

change and develop business endlessly, [1], [2]. It is

also an important factor that provides competitive

advantages to organizations. Thus, it is essential to

use intellectual capital that exists in their personnel

to create added value for the organization. The idea

of intellectual capital was introduced during the

years 1959 - 1997 by a group of researchers. Based

on intellectual capital, economists have developed

new concepts of business strategy that emphasize

resource efficiency by considering the utilization

from the use of existing assets, acquisition of

expertise, knowledge management, and learning.

Edvinsson and Malone, [3], suggested that the

development of intellectual capital is the outcome of

human capital and structural capital. In other words,

experience in applying organizational technology,

customer relationship, and professional skills help

an organization gain competitive advantages that

other competitors cannot easily imitate, [4], [5].

Modern business organization management has a

concept that requires sustainable growth and profits.

However, more profits may not be enough for

growth. Organizations must maintain a balance of

assets, sales, and rate of return to avoid future

financial problems. Thus, intellectual capital, if

constantly developed, is one of the assets that can

add value and maximize benefits to the

organization. While attracting investors, can lead to

organizational growth and survival, [6].

Before making an investment decision,

investors need disclosed information about the

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company, which includes financial reports and non-

financial reports. [7], surveyed institutional

investors around the world in 2014 and found that

75 % of the investors emphasized the importance of

non-financial reports as shown in the corporate

annual reports, integrated reports (IR), corporate

social responsibility (CSR), sustainability reports,

and information about the environment, society and

corporate governance (ESG), [8]. Disclosure of

information related to intellectual capital

management in sustainability reports is considered a

positive signal to investors and those who are

interested in investing in companies with high

intellectual capital management. An increase in

investment also affects the market price of company

stock and value. Moreover, human capital and

capital relationship contribute significantly to

sustainability disclosure practices, [9], [10]. The

importance of human resource development can

lead to outstanding abilities that other competitors

cannot imitate according to the resource-based view

theory, [4]. In addition, Section 400 of the

sustainability disclosure criteria of the GRI Standard

established the criteria and guidelines for disclosure

regarding employee benefits, the extent of training,

and welfare issues, [11].

Performance assessment is required in running

the business since it reflects firm performance by

indicating corporate growth. High-performing

companies have more opportunities to invest in

research and development to create new products

and services. Companies listed on the Stock

Exchange of Thailand are required to disclose

information regarding their purchases, sales, market

surveillance, and member supervision. Disclosure of

information to investors ensures transparency and

reliability, which are essential factors to consider

before making an investment decision.

In Thailand, most firms voluntarily disclose

their sustainability. The Global Reporting Initiative

(GRI standard), which is uncomplicated and suitable

for all sizes of firms to apply, is used as an indicator

to measure this. Therefore, it is obvious that firms

nowadays seem to pay more attention to their

stakeholders’ concerns, annual report analysis for

decision-making, contributions to society, and

related issues. Furthermore, the GRI standard can

serve as a guideline to collect the sustainability data

following form 56-1 issued by the Securities and

Exchange Commission (Thailand). Currently, 75

registered firms have reported their sustainability

based on the GRI standard. The GRI standard is not

only a report of communication but can also

function as a checklist that assists firms to move

forwards in the long run, [12].

In the past, if firms disclosed their sustainability

report, for being approved by the external

committee, it was because the firms wished to show

their responsibility and carefulness in collecting data

to appear more trustful. The study combines two

theories, the Stakeholder theory, and the Resource-

based view theory, to prove the importance of a

firm’s resources which enlarge firm performance.

Currently, the Stock Exchange of Thailand

(SET) promotes and supports more disclosure of

non-monetary information, especially the

sustainability report according to the 56-1 form of

the SEC and the GRI international sustainability

disclosure framework, [12], but it is still voluntary

disclosure. In addition, intellectual capital is an

important intangible asset of the business to drive

the organization. Previous research of intellectual

capital and sustainability disclosure and firm

performance found their relationship to vary

between sometimes positive, or negative, or no

relationship existed. Consequently, this study aims

to investigate the relationship between intellectual

capital on firm performance moderated by

sustainability disclosure.

There are two objectives of this study: (1) to

study the relationship between intellectual capital

(measured by Value Added Intellectual Coefficient

(VAICT™ ) ) and firm performance (measured by

Return on Assets (ROA) and Tobin’s Q), and (2) to

study the relationship between intellectual capital

and firm performance moderated by sustainability

disclosure (following the guidance of the GRI

Standards).

The results of this study would help companies

to find strategies and solutions while creating

competitive advantages by utilizing intangible

assets, such as intellectual capital and sustainability

management. This research helps a firm to foresee

the competency that may be needed to develop for

future success as well as to build agreement.

Decision-makers or executives who pursue the

competency judgment procedure may realize the

important tendency. Firms can use this to help

increase their competitive advantage leading to

higher performance as well as to explore how these

relationships can be sustained in the long run.

This encourages firms to disclose their

sustainability focusing on the quality of the data.

Stakeholders are also able to evaluate the firm’s

actual value. Furthermore, this also assists investors

in accessing the firm’s profitability, wealth, and

value which helps the investors to forecast the

viability and future growth more accurately.

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2 Literature Review

The concepts, theories, and results of previous

studies relating to intellectual capital, sustainability

disclosure, and firm performance were collected and

studied to propose the conceptual framework and

method of this study.

2.1 Concepts of Intellectual Capital

Intellectual capital, or IC, is a set of knowledge

within the organization. There are several terms for

intellectual capital, such as intangible assets, and

intellectual property that help operate the

organization efficiently, [13], generate a reputation

and support the business to achieve sustainable

competition, [14]. In summary, intellectual capital

refers to intangible assets within the organizational

context derived from personnel and resources,

which will eventually effect the creation of value for

the organization. Intellectual capital can be divided

into two major elements, [2], [15] as follows:

Human capital: This is an important resource of

the organization. If an organization has personnel

that can combine knowledge, skills, and

experiences, it can lead to more competitive

advantages, [13]. In addition, knowledgeable

employees with high qualifications can lead to

better sustainability, [11], [16].

Structural capital: This is a component of

intellectual capital created by organizations to

transform human capital into tangible capital, such

as organizing workflow systems, technology, and

databases to support the work of personnel and

achieve the desired results. This type of capital, such

as policies and culture, remains in the organization

even though the employees have left.

Thus, well-structured capital must allow

knowledge sharing for business sustainability, [11],

[16], [17].

[18], found that the utilization of capital employed

is also an element that combines physical capital

and financial capital. Since intellectual capital is an

intangible resource that generates income or added

value directly to the business, it is necessary to rely

on tangible assets from the investment of the

business to generate income or added value.

2.1.1 Intellectual Capital Valuation

Due to the importance of intellectual capital in

business and accounting, several businesses are

interested in measuring the value of intellectual

capital. Thus, a variety of valuation concepts have

been developed with advantages and disadvantages.

However, the main problem is that external data

sources are qualitatively requiring judgment, which

is difficult to measure and may have some

discrepancies. One popular method is Value Added

Intellectual Capital or VAIC, developed by, [19].

This method uses the perspective of stakeholders to

measure the efficiency of three elements of

intellectual capital: physical and financial capital,

human capital, and structural capital. The advantage

of this method is that it is based on quantitative

information from publicly available financial reports

with no restriction on data access. With its easy

calculations and standardized formats, it can be used

to compare businesses based on industry and

country. If intellectual capital can be reliably

measured, it leads to a study on the relationship

between intellectual capital and firm performance in

several countries, [9], [15], [20].

2.2 Theories

2.2.1 Resource-based View Theory

Concerning the issue of whether intellectual capital

and firm performance are correlated or not, the

resource-based view theory suggests that the ability

to create value for a company does not arise from

the movement of external factors, but from the

processes within the company. According to [4], the

nature of the valuable resource that creates firm

value is scarce and cannot be imitated or replaced.

This kind of resource can lead to competitive

advantages, value, and sustainability. Intellectual

capital has the aforementioned characteristics. If

human capital, structural capital, and physical

capital are combined in a process, it can lead to

good firm performance, [10], [11], [21], [22].

2.2.2 Legitimacy Theory

Legitimacy theory refers to legitimate action, [23],

based on the concept of the social contract. In other

words, companies have to meet the expectations of

the community and take steps to ensure that such

activities are lawful. It is similar to a social contract

between businesses and society by utilizing natural

resources and human resources for business

operations. Since companies are bound by the norms

of society, it is essential that they voluntarily report

their activities.

Thus, legitimacy theory is relevant to reporting

corporate information regarding intellectual capital.

Even though there are no criteria for such

disclosure, it still leads to success, [1], [21], [24],

[25].

2.2.3 Stakeholder Theory

Stakeholder theory was described by [26], as a

conceptual framework, which presented a positive

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view of the management in favor of corporate social

responsibility. [27], advocated that management

must please stakeholders who influence the firm

performance, such as employees, customers,

vendors, and the local community. In other words,

stakeholders are individuals or groups of people that

may affect the success of the company. Reporting

those activities to stakeholders is similar to defining

corporate responsibility and revealing information

regarding intellectual, social, and environmental

capital in addition to reporting economic and

financial performance, which is beyond the

requirements. Thus, stakeholder theory involves the

method of implementing analyzed content, which is

the most effective way for organizations to

communicate with stakeholders, [1], [21], [24], [25],

[28], [29].

The aforementioned three theories were used to

explain the relationship between intellectual capital,

sustainability disclosure, and firm performance.

2.3 Sustainability Disclosure (SD)

The trend of sustainable development has pushed all

sectors to pay attention to the development of

operations for sustainability, including the

economic, social, and environmental aspects.

Several countries have agreed to use it as a

framework for development at the organizational

level and the national level.

The global reporting initiative sustainability

guidelines (GRI guidelines) defined the term

sustainability as “the practice of measuring,

disclosing and being accountable to internal and

external stakeholders for organizational

performance towards the goal of sustainable

development”. In other words, it refers to the

accountability to internal and external stakeholders

for sustainable development goals. Sustainability

disclosure can be applied and referenced according

to the generally accepted international reporting

framework, [30], which is a guideline for corporate

sustainability information disclosure from

economic, social, and environmental perspectives,

[31]. The sustainability report sets out the facts of

the operations that positively or negatively affect the

economy, society, and the environment. Thus, it is

necessary to report results that reflect those effects,

[32]. Since the companies listed on the Stock

Exchange of Thailand (SET) are an important

driving force of the country's economy, the SET

encourages them to operate under the principles of

sustainability to meet the needs of investors.

Moreover, sustainability reports are similar to a tool

in the business sector in the form of social

communication since they can be used as another

form of corporate publicity for marketing

promotion, which affects the credibility and image

of the organization, [51]. It is beneficial to various

groups of people, such as companies that plan to

create sustainability while reducing ongoing

operational problems and encouraging employees to

work for an organization that values them with

respect and equality based on human rights, [8].

2.4 Related Research

The importance of intellectual capital led this study

to examine how to evaluate, manage, and utilize

intellectual capital to create competitive advantages

and maximize the value for the organization. Thus,

this study was conducted in an attempt to provide

empirical evidence of a relationship between

cognitive capital and firm performance with

different measures and reveal the results regarding

how the application of sustainability management

disclosed through the sustainability report created or

increased the efficiency of the business.

2.4.1 The Relationship between Intellectual

Capital and Firm Performance

Intellectual capital is considered to be an important

resource that generates profits for organizations and

affects financial performance. According to

Barney's resource-based view theory, excellent

intellectual capital that is available in an

organization is a resource that helps manage the

organization.

According to [33], intellectual capital affects the

financial viability of firms as measured by ROA,

which reflects that superior intellectual capital

possessed by firms is an important resource that

improves overall management. This is consistent

with the study of [15], who found that intellectual

capital measured by a value-added intellectual

coefficient (VAIC) had a positive relationship with

accounting performance measured by ROA and

ROE. Moreover, intellectual capital data was

positively related to firm value and benefits for

market stakeholders who use intellectual capital

information to make decisions. Disclosure of

intellectual capital reduces information inequality

among shareholders by providing investors with

more information for investment, [13], [34]. This is

consistent with study, [35], who found that

voluntary disclosure of human capital data in New

Zealand had a positive relationship with firm value.

When the relationship between the intellectual

capital of the previous year measured by a value-

added intellectual coefficient (VAIC) and firm

performance of the current year measured by

employee productivity was compared, it revealed

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that the previous year's intellectual capital

continuously helped add value to the business and

affected future performance, [20]. [10], stated that

intellectual capital as measured by VAIC increased

the value and affected the added value of market

returns as measured by Tobin's Q. This is consistent

with the resource-based view theory. Furthermore,

competitive advantage from resources, including

intellectual capital in the forms of human capital,

physical capital, and structural capital should be

considered by companies, [36]. Additionally, human

resources are the key to achieving the goals and

leading to competitive advantages that add value to

differentiate from market competitors, [16], [21],

[37], [38]. According to the results of the above

studies, it was mostly found that the relationship

was positive in the same direction. The positive

influence between intellectual capital and business

efficiency contributes to increasing the ability of the

business to create firm value caused by internal

factors, not external factors. This is consistent with

the resource-based theory that indicates that a scarce

resource is valuable to an organization, and cannot

be imitated. This resource can also create

competitive advantages, [9], [15], [33], [39].

However, some studies found no relationship

between them. For instance, [20], found that the

value-added intellectual coefficient (VAIC) in the

previous year had a significant negative relationship

with ROA and RG. In addition, [15], found that the

human capital component had a negative

relationship with accounting and marketing

performance since human capital measured by

employee-related expenses could not generate

returns for the business within one year. Moreover,

intellectual capital was not related to marketing

performance measured by Tobin's Q. The reason is

that even the high amount of expenses spent on

intellectual capital does not reflect added value from

an investor’s perspective. This concurs with, [28],

who found no relationship between intellectual

capital and firm value as measured by Tobin's Q.

This reflects the inability of the company to manage

the three components of intellectual capital together

and to increase the level of operational capacity to

manage the three components of intellectual capital

to add firm value. Likewise, [2], found that

intellectual capital performance as measured by

VAIC had no relationship with firm performance as

measured by ROA, ROE, and NPM. This might be

due to the time that the study was conducted and

other factors that might influence the data used in

the study, such as expenses related to employees

who might be affected by the economic situation

and the COVID-19 pandemic. Thus, the hypothesis

was developed as follows:

H 1: Intellectual capital (VAIC) has a positive

relationship with firm performance.

2.4.2 The Relationship between Sustainability

Reporting and Firm Performance

Corporate sustainability management and

performance are interrelated in many ways.

Profitability increases as companies disclose their

sustainability management on social and

environmental issues. [40], found a relationship

between sustainability performance and financial

and market performance that contributed to driving

innovation and competitive advantage, [41].

Additionally, [51], found that reporting

sustainability according to the criteria of GRI-G4 in

the aspect of the economy had a positive

relationship with the market value measured by

Tobin's Q. Disclosure of economic data is one of the

requirements of the Stock Exchange of Thailand.

The economic report is an important factor affecting

investment. This is in line with, [10], who found that

reporting on the issue of intellectual capital in

sustainability reports boosted enterprise value as

measured by Tobin's Q due to the clarity and

transparency, which affected the profitability of the

business. [25], [28], [29], revealed that the level of

ESG affected the firm performance of the

companies that disclosed their ESG to show good

relationships with their employees since it could

attract talented people to work there. Reporting

could fulfill the stakeholders’ needs and affects firm

performance. This follows the legitimacy theory and

stakeholder theory. In contrast, [56], found the

relationship between sustainability disclosure in the

opposite direction. This might be because

profitability indicators were thought to demonstrate

the success of the company, and non-financial

information may not have been accorded sufficient

importance. However, according to the legitimacy

theory, highly profitable companies will choose to

report only their success numbers. In the case of low

profits, only positive information that reflects good

management would be reported.

However, several studies found no relationship

between financial performance and sustainability

disclosures, or a very low and unclear relationship

was found. In other words, ESG scores might not

reflect non-financial data sufficiently. It was still

difficult to comprehend, [42], [43]. This is

consistent with, [44], who suggested that a

sustainability report did not affect firm performance,

the sustainability disclosure or social responsibility

did not reflect the benefits to management and

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shareholders, and the period of reporting and

collection of performance data was short-term.

Thus, no effect was found. In addition, [24], found

no clear results during the release of the

sustainability report and firm performance as

measured by Tobin's Q.

Based on the review of the literature, sustainable

development drives various sectors to pay more

attention to sustainability. Therefore, the stock

exchange has been trying to encourage companies to

disclose sustainability information, as well as the

negative and positive effects on the economy,

society, and environment. Financial information

alone may not be sufficient to meet the needs of

investors and customers, as well as social and

relevant stakeholders.

2.4.3 The Effect of Intellectual Capital on Firm

Performance Moderated by Sustainability

Disclosure

Intellectual capital information helps reduce the gap

between management and shareholders. [9], found a

similar relationship between intellectual capital and

firm performance as measured by ROA when

sustainability disclosure was moderated. In addition,

the criteria for preparing sustainability reports of the

GRI Standard had indicators that businesses could

use as guidelines for preparing sustainability reports

or use in planning policies on topics related to

human rights, employee management, employee

benefits, frequency of training, and welfare issues,

[11]. Standards for sustainability reports, such as

GRI, contribute to the disclosure of more detailed

sustainability management information. Companies

that pay great attention to the management of

stakeholder groups will try to build credibility and

image with intangible asset management reporting,

such as intellectual capital management, and

knowledge, which are important to create a

sustainable competitive advantage, [45], [46].

[47], stated that human capital, which is a key

component in intellectual capital, plays an important

role in sustainability disclosure. [22], found that

financial services firms with intellectual capital in

the form of skilled human capital in sustainability

disclosure were able to prepare a sustainability

report according to the reporting criteria of GRI,

together with the fact that the business can maintain

the components of intellectual capital: human

capital, structural capital, and capital employed.

This is in line with the resource-based view theory

that management ability, intellectual capital, and

knowledge management were the key to reporting

sustainability in developing countries. This is in line

with, [11], who found that the level of intellectual

capital contributes to supporting report preparation,

and companies with high intellectual capital would

have the ability to produce sustainability reports

under the internationally recognized GRI standard.

Moreover, according to stakeholder theory,

companies are expected to contribute relevant

information about their stakeholder activities, and

investors tend to consider reports other than

financial reporting.

According to the aforementioned theoretical

concepts, it can be seen that intellectual capital and

sustainability disclosure are involved with firm

performance. Companies are required to disclose

information following stakeholder theory and

legitimacy theory based on legal norms and

expectations of stakeholders. In addition, resources

such as intellectual capital must be preserved to gain

a competitive advantage over competitors according

to the resource-based view theory, and increase firm

performance.

From the sources and the importance of

problems, it appears that intellectual capital

becomes an intangible asset, which is necessary for

all firms. Furthermore, it is found that intellectual

capital influences the market value or stock price as

well. However, there are very few studies

investigating the relationship between intellectual

capital aspects or sustainability disclosure that affect

firm performance in Thailand.

To conduct this study, besides using a working

paper for the quality checklists of sustainability

disclosure to collect the data, the available data from

the disclosed reports of the company were collected.

The obtained data were gathered for content

analysis. However, this study aimed to measure the

quality of the disclosure of the sustainability of the

business, which reflects clarity and transparency.

Thus, the hypothesis was developed as follows:

H2: Sustainability disclosure moderates the

relationship between intellectual capital and firm

performance.

3 Research Methodology

3.1 Samples

The samples used in this study included listed

companies in the Stock Exchange of Thailand in the

agriculture and food industry, technology industry,

and service industry. [48], found that the business &

public service industry and the electronic

component industry were two of the five industries

with the most intangible assets. [6], also found that

the sustainable growth rate of companies in the

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agriculture and food industry had the highest

average, followed by the technology industry, and

service industry. The technology industry plays a

part in driving Thailand into Industry 4.0. In the

technology and information technology industry,

firm performance depends on the skill of its

employees, whose knowledge is part of intellectual

capital and is important to the success of the

organization, [1]. The data of 370 companies from

2018 to 2020 were collected from the annual

financial statements disclosed in the Annual

Registration Statement (Form 56-1), sustainability

report, and on the official website of the company.

The number of firms in these industries is shown in

Table 1 below.

Table 1. Firms sampled by industry

Industry

Firms

per year

Percent

Agricultural and Food

26.00

Services

100

54.00

Technology

19.00

Total Samples

185

100.00

The final samples, after removing an outlier, were

185 firms per year consisting of 49 firms in the

agricultural and food industry, 100 firms in the

service industry, and 36 firms in the technology

industry.

3.2 Variables and Their Proxy Measures

3.2.1 Dependent Variables

Financial performance is widely used to assess firm

performance in the early stages. In the mid-1980s,

market-based measures, such as Tobin's Q and the

market-to-book value (MB ratio) were used.

According to [49], accounting and marketing

operations reflect different aspects of information.

Thus, this study only measured the firm

performance based on accounting and marketing

aspects to obtain the most realistic operating results

of the business, [15], by measuring firm

performance in the accounting aspect with the return

on asset (ROA) and using Tobin's Q to measure

marketing performance to reflect intellectual capital

management. This shows the continuous increase in

firm value which would affect future operations,

[20], [37]. Thus, this study used the dependent

variable in year t+1 (the year 2019-2020), after year

t (the previous accounting period, the year 2018-

2019).

Return on assets (𝐑𝐎𝐀𝐭+𝟏): This is one of the

performance indicators of the companies listed on

the stock exchange. It was widely used to measure

dependent variables in the studies on the

relationship between intellectual capital and firm

performance, [2], [16], [25], [29], [33], [36], as well

as indicators used to measure the relationship

between sustainability disclosure or corporate

sustainability management, [9], [24], [41].

T h is ra tio in d icate d the firm effic ien cy in

generating net accounting profit by the calculated

ratio describes the terms of investment efficiency

that can be used to generate a net profit. A ratio

greater than 1 means the ability to produce better

performance than the investment.

ROA = Net Income/Total Assets

Tobin's Qt+1: This is a measure of market

performance. This ratio developed by [57], divides

the market value of corporate assets by the

replacement price of that asset. The replacement

price reflects the value of that asset which can be

used to invest in other ways. If the company uses an

asset whose market value does not exceed the

replacement price, the company should consider

using that asset to invest in other alternatives. Thus,

a company with Tobin's Q value of less than 1 is

unable to make efficient use of its assets, [10], [15],

[24], [25], [29],

[50], [51].

Tobin′s Qt+1 = (Market Capitalization + Total

Debt)/ Total Assets

Where Market Capitalization is the value of assets

according to the market price.

3.2.2 Independent Variables

Value-added intellectual coefficient (VAIC) which

has been widely used in several studies was selected

and applied in this study due to its a d v a n ta g e o f

being a standardized valuation method which made

it possible to use the results obtained from the study

to compare industries and countries effectively.

Besides being easy to calculate, this m ethod of

measuring the value of intellectual capital uses

information from financial reports, which reflects

the reliability of the information since it has been

audited by an auditor and has become publicly

available information. Thus, there were no barriers

to access to the inform ation in focus, [10], [15],

[28], [36]. The measurement process can be

summarized as follows:

Step 1 Calculate gross value added

𝑉𝐴𝑡= 𝑁𝐼𝑡+ 𝑊

𝑡+ 𝐼𝑡+ 𝑇𝑡 where:

𝑉𝐴𝑡 or Value added was measured by net profit plus

th e ex p en ses sha red w ith variou s gro u p s o f

stakeholders.

𝑁𝐼𝑡 is the net profit after tax.

𝑊

𝑡 i s expenses incurred on p e r s o n n e l i n t h e

organization, including salary, wages, welfare, other

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benefits paid to em p loyees , and expenses for

personnel development, such as training. Due to

lim ite d a c c e ss to a ll d a ta , th e d a ta regarding

“employee expenses” were collected from the notes

to the financial statem ents under the heading

“expenses by nature”.

𝐼𝑡 is the interest expense, which was collected from

interest expenses, including financial costs shown in

the financial statements of the business.

𝑇𝑡 is the tax paid, which was collected from the

income tax shown in the financial statements of the

business.

Step 2 Calculate the value-added capital employed

coefficient (𝑉𝐴𝐶𝐴𝑡)

𝑉𝐴𝐶𝐴𝑡 = 𝑉𝐴𝑡 / 𝐶𝐴𝑡

𝐶𝐴𝑡 is capital employed or physical capital, which

can be measured from physical assets + financial

assets or total assets - intangible assets

Step 3 Calculate the value-added human capital

coefficient (𝑉𝐴𝐻𝐶𝑡)

𝑉𝐴𝐻𝐶𝑡= 𝑉𝐴𝑡/𝐻𝐶𝑡

𝐻𝐶𝑡 is an investment in human capital in the form of

salaries, wages, welfare, and other benefits paid to

employees in the current fiscal year. The data were

collected from “employee expenses” within the

notes to financial statements under the heading

“expenses by nature”.

Step 4 Calculate value-added structural capital

coefficient (𝑆𝑇𝑉𝐴𝑡)

𝑆𝑇𝑉𝐴𝑡 = 𝑆𝐶𝑡/𝑉𝐴𝑡

𝑆𝐶𝑡 is structural capital, which can be measured

from 𝑉𝐴𝑡–𝐻𝐶𝑡

Step 5 Calculate the value-added intellectual

coefficient (VAICt)

𝑉𝐴𝐼𝐶𝑡= 𝑉𝐴𝐻𝐶𝑡+ 𝑉𝐴𝐶𝐴𝑡+𝑆𝑇𝑉𝐴𝑡

In summary, VAICt is the efficiency of generating

business value from the resources of the business,

which co nsist of hu m an capital, and structural

capital, being the main components of intellectual

capital. It also includes physical capital, which is

traditional cap ital on w hich the company still

depends or mainly relies in some countries.

3.2.3 Moderator Variables

Concerning the method of data collection

sustainability disclosure (SD), from the literature

review, it was found that most of the previous

research brought disclosures that were

internationally accepted as a disclosure criterion,

[25], [29], [44], [51].

In this study, the disclosure criteria of GRI

Standards, [30], with 145 indicators as a guideline

for collecting data, demonstrating clarity to convey

understanding, was used. The disclosure rating for

each metric was as follows.

1) 1 point if the business discloses information

according to the criteria of the GRI Standard

indicator.

2) 1 point if, the disclosure according to No. 1, the

business explains a table or a picture.

3) 1 point if, the disclosure according to No. 1, the

business is guaranteed by an external agency (GRI

102: General disclosure; Reporting Practice -

Disclosure 102 - 56 External assurance), [30].

The total points of each indicator are 3 points, from

all 145 indicators. Therefore, the total points of all

indicators are 145 points × 3 points = 435 points.

Then, summarize each firm's results. The results

will be computed and adjusted into a percentage (%)

which will be compared with the disclosure

summarized from the total scores of each type of

business of each industry being investigated in this

research. Since sustainability disclosure is

voluntary, certain topics are not disclosed. Hence, it

cannot be concluded that the firms do not progress

with or ignore certain topics.

To balance the correctness of data collecting in each

type of business of each investigated industry, all

several indicators used for measuring the proportion

of sustainability disclosure will be statistically tested

which are presented as follows. The total

sustainability disclosure score categorized by

industry and sector is presented in Table 2.

Table 2. Total sustainability disclosure score

categorized by industry and sector

Industry

Sector

Total

Sustainability

Disclosure

Score

Agricultural

and Food

Food and Beverage

435.00

Agricultural

and Food

Agriculture Business

426.00

Technology

Information and

Communications

Technology

432.00

Technology

Electronic

Component

435.00

Service

Transportation and

Logistics

426.00

Service

Media and

Publications

435.00

Service

Medication

423.00

Service

Specific Services

423.00

Service

Travel and Leisure

423.00

Service

Commerce

426.00

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3.2.4 Control Variables

From the literature review on the relationship

between intellectual capital business performance

sustainability disclosure, it was found that some

independent variables influenced the dependent

variables or firm performance. Thus, to control the

effect of other factors that may affect the dependent

variable, the control variables used in the study were

as follows.

- Each industry type was determined as a dummy

for use in the study.

Agro_Industry; 1 if the company is in the

agricultural and food industries, 0 if the business is

in other industries

Tech_Industry; 1 if the company is in the

technology industry, 0 if the business is in other

industries

Serv_Industry, 1 if the company is in the service

industry, 0 if the business is in other industries

- Leverage ratio is accepted as one of the

fundamentals for investigating firm performance

and creating value. Thus, the ratio of total liabilities

to total assets is used as a proxy for leverage in this

study.

- Firm size is measured by the market value of

assets.

3.3 Data Analysis

The research quantitatively employs multiple

regression at the statistical significance level of 0.05

to analyze the relationship of independent variables,

intellectual capital (the year 2018 to 2019) on

independent variables and future firm performance

(the year 2019 to 2020) in two types of accounting

(return on asset: ROA) and marketing perspective

(Tobin’s Q); moderated by sustainability disclosure

score. The control variables in this research are

industry, leverage, firm size, and industries. The test

of Normality are presented in Table 3 whereas the

list of variables is presented in Table 4.

The assumptions or conditions of the cross-sectional

regression analysis were examined, and it was found

to conform to all of the conditions as follows.

1) The mean of the error was 0.

2) The variance of the error was constant.

According to the scatter plot diagram, it was

found that most of the tolerances were distributed

above and below level 0, and the distribution was

narrow, regardless of Y changes in direction. Thus,

it was concluded that the variance of the error was

constant, and heteroscedasticity did not occur

3) The error was a normally distributed variable.

Table 3. Tests of Normality

Model test

Kolmogorov-Smirnov

statistic

Sig.

Distribution

result

VAIC

0.011

.200*

Normal

0.013

.200*

Normal

ROA

0.005

.200*

Normal

Tobin’s Q

0.013

.200*

Normal

VAIC.SD

0.005

.200*

Normal

4) Test of the independent standard error with the

Durbin-Watson coefficient value is between 1-3

indicating that an autocorrelation does not exist. The

error values (in Table 7, Table 8) of the variables

were independent, and no autocorrelation occurred,

[55].

5) For all independent variables, there is no close

relation to preventing multicollinearity. According

to the criteria of, [54], the tolerance value must be

greater than .10, and the VIF value must not be

close to or exceed 10. The values shown in Table 7

and Table 8, revealed that there is no

multicollinearity.

Table 4. The list of variables

Variable

Type of

Variable

Description

ROAit+1

the

dependent

variable

Return on assets for

firm i in year t+1

Tobin's Qit+1

the

dependent

variable

Tobin’s Q for firm i in

year t+1

VAICit

the

independent

variable

Value-added

intellectual capital for

firm i in year t

SDit

the

moderator

variable

Sustainability

disclosure for firm i in

year t.

VAIC.SDit

the

interaction

variable

The interaction

between value-added

intellectual capital and

sustainability

Agro_Industry

the control

variable

This is a dummy

variable (1 = the

company is in the

Agricultural and food

industry, 0 =

otherwise)

Tech_Industry

the control

variable

This is a dummy

variable (1 = the

company is in the

Technology industry, 0

= otherwise)

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Variables Unit Mean Minimum Maximum

Std.

Deviation

VACA Value 0.2050 0.5600- 0.9200 0.1379

VAHC Value 1.8749 7.6900- 16.3400 1.7708

STVA Value 0.4541 12.9700- 48.0700 2.7786

VAIC Value 2.5339 12.8800- 48.0400 3.3086

SD Ratio 31.2739 16.2000 72.6400 8.9527

ROA Ratio 3.1865 67.6200- 56.3900 10.2930

Tobin's Q Ratio 1.6225 0.3800 10.9000 1.2104

Serv_Industry

the control

variable

This is a dummy

variable (1 = the

company is in the

service industry, 0 =

otherwise)

Leverageit+1

the control

variable

Leverage for firm i in

year t+1

FirmSizeit+1

the control

variable

Firm size for firm i in

year t+1

The regression models for this research are as

follows.

Direct effects are tested by the following

hypotheses.

Hypothesis 1: Intellectual capital (VAIC) has a

positive relationship with firm performance.

Hypothesis 1a: Intellectual capital (VAIC) has a

positive relationship with ROA

ROAit+1=β_0+β_1VAICit+β_2Agro_Industry+

β_3Tech_Industry+β_4Serv_Industry+β_5Leverage

it+1 +β_6FirmSizeit+1

Hypothesis 1b: Intellectual capital (VAIC) has a

positive relationship with Tobin's Q

Tobin's Qit+1 = β_0+β_1VAICit+β_2Agro_Industry+

β_3Tech_Industry+β_4Serv_Industry+β_5Leverage

it+1 +β_6FirmSizeit+1

Testing for a moderation effect

This moderator variable is the third variable

(Mod.) that works with the independent variable as

an auxiliary independent variable. It can change the

way that X has an influence over Y or cause a

comparison between X and Y in a group of mediator

variables. In the case of categorical variables, it is

found when there is a question of why X tends not

to have a high influence over Y as predicted. This

shows that the relationship line seems to be suitable

for certain cohorts of people such as a specific

gender, age group, and so on, [58].

This study uses Sustainability Disclosure as a

moderator to test the relationship between

intellectual capital and firm performance.

Moderation effects are tested by the following two

hypotheses.

Hypothesis 2: Sustainability disclosure moderates

the relationship between intellectual capital and firm

performance.

Hypothesis 2a: Sustainability disclosure moderates

the relationship between intellectual capital and

ROA.

ROAit+1= β_0+β_ 1VAICit +β_2SDit+β_3 VAIC.SDit

+ β_4Agro_Industry + β_5Tech_Industry +

β_6Serv_Industry+β_7Leverageit+1

+β_8FirmSizeit+1

Hypothesis 2b: Sustainability disclosure moderates

the relationship between intellectual capital and

Tobin’s Q.

Tobin's Qit+1 = β_0+β_ 1VAICit +β_2SDit+β_3

VAIC.SDit + β_4Agro_Industry + β_5Tech_Industry

+ β_6Serv_Industry+β_7Leverageit+1

+β_8FirmSizeit+1

Where:

Β_0 = constant

β_1-8 = coefficient of the explanatory variables

4 Research Results

The descriptive statistics of the data from this

study are shown in Table 5 and Table 6.

Table 5. Mean, maximum, minimum, and standard

deviation of the sample group

(N = 370 observations)

Table 5 presents the level of intellectual capital of

listed companies on the Stock Exchange of

Thailand. The average level of intellectual capital

was 2.5339. The highest proportion of intellectual

capital was human capital (VAHC) with personnel

expenses at an average of 1.8749, followed by

structural capital (STVA) at an average of 0.4541,

and physical capital (VACA) at an average of

0.2050. It indicates that added value from the use of

intellectual capital of companies listed on the Stock

Exchange of Thailand mainly comes from the

investment in personnel.

Table 6. Mean, maximum, minimum, and standard

deviation based on industry group

Variables

Unit

Mean

Mini-

mum

Maxi-

mum

Std.

Devia-

tion

Agricultural and food industry

VACA

Value

0.1976

-0.5600

0.6200

0.1487

VAHC

Value

1.6867

-7.6900

6.6700

1.5074

STVA

Value

0.2178

-4.3800

1.1300

0.6499

VAIC

Value

2.1027

-7.1200

7.6500

1.8734

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Table 6 Mean, maximum, minimum, and standard

deviation based on industry group (Cont.)

In Table 6, when considered by industry group, it

was found that the industry group with the highest

average intellectual capital value was the service

industry with an average intellectual capital value of

2.7095, followed by the technology industry with an

average intellectual capital value of 2.6331, and the

agricultural and food industry with an average

intellectual capital value of 2.1027. In terms of the

components of intellectual capital, the highest

average of human capital and physical capital was

the service industry group at 0.6589. The average

sustainability disclosure of the companies listed on

the Stock Exchange of Thailand (Table 5) was

31.2739. When it was analyzed by industry (in

Table 6), sustainability disclosure had the highest

average in the technology industry group at

32.5864.

For multiple regression at the statistical

significance level of .05, the results regarding the

relationship between intellectual capital (VAIC) and

firm performance, including sustainability

disclosure are shown in Tables 7 and 8.

Table 7 shows that the value of intellectual

capital (VAIC) had a positive relationship with a

firm performance at the statistical significance level

of .05. Thus, hypothesis H1, including both sub-

hypotheses H1a and H1b, was accepted. Intellectual

capital had a positive relationship with the

performance of the company as measured by return

on assets (VAIC at 0.0000, p <.05) and Tobin’s Q

(VAIC at 0.0000, p<.05), [10], [15], [16], [21], [33],

[36], [51]. This is following the resource-based

view theory, which believes that the ability to create

value for an enterprise may not be caused by

external factors, such as industry, but by internal

factors, and can lead to the advantage of owning the

capital while improving the firm performance, [4].

Table 8 demonstrates that there was a positive

relationship between intellectual capital (VAIC) and

firm performance as measured by Tobin’s Q (VAIC

at 0.0000 and VAIC.SDI at 0.0067, p < .05) as the

only indicator at the statistical significance level of

.05. Thus, hypothesis H2b was accepted;

sustainability disclosure moderates the relationship

between intellectual capital and Tobin’s Q. In other

words, a high level of intellectual capital increases

the value of Tobin’s Q when a company discloses

its sustainability management with an emphasis on

the preparation of reports by adding information,

such as pictures, and tables, rather than narrative

descriptions of issues that could affect stakeholders,

such as environmental management and external

assurance to guarantee the quality of operations. For

example, securities analysts and institutional

investors have more information to appraise

investments since disclosure allows analysts and

investors to assess the opportunities and risks of a

company. It can also be used to predict the

sustainability of firm performance. Disclosing

information allows communities and society to

understand and realize the relationship between the

survival of the business along with the survival of

the community. This can lead to the strengthening

of a good relationship with the community and

society, [8]. The results of the test are in line with

stakeholder theory since firms are expected to

disclose information that affects stakeholders. Thus,

information on intellectual capital, which is an

intangible asset disclosed in the sustainability

report, supports investors to make an investment

decision based on other reports besides financial

reporting, [28]. This can contribute to the success of

the business to achieve righteousness or legitimacy

with the management of stakeholder groups

according to the legitimacy theory, [1], [21], [25],

[24].

Variables

Unit

Mean

Mini-

mum

Maxi-

mum

Std.

Devia-

tion

Ratio

32.5441

16.2000

54.9400

9.6677

ROA

Ratio

3.6201

-61.4700

20.8300

10.3353

Tobin’s

Ratio

1.5581

0.4600

7.1000

1.3309

Technology industry

VACA

Value

0.1613

-0.1600

0.4400

0.1112

VAHC

Value

1.8133

-3.9400

10.7600

2.0336

STVA

Value

0.6589

-0.9200

17.1200

2.0520

VAIC

Value

2.6331

-2.8400

17.0500

2.7624

Ratio

32.5864

19.9100

72.6400

9.3522

ROA

Ratio

3.1354

-46.8400

56.3900

10.9086

Tobin’s

Ratio

1.4838

0.4800

10.9000

1.3749

Service industry

VACA

Value

0.2244

-0.0100

0.9200

0.1377

VAHC

Value

1.9893

-0.0200

16.3400

1.7888

STVA

Value

0.4962

-12.9700

48.0700

3.5445

VAIC

Value

2.7095

-12.8800

48.0400

3.9673

Ratio

30.1791

16.9000

56.8100

8.3207

ROA

Ratio

2.9924

-67.6200

55.8900

10.0895

Tobin’s

Ratio

1.7040

0.3800

4.8900

1.0785

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However, the statistical test results showed no

relationship between sustainability disclosure and

firm performance at the statistical significance level

of 0.05. This may be because the concept of

sustainability disclosure was becoming popular, and

such disclosure is voluntary in Thailand. Thus, the

management or shareholders might not see the

importance of sustainability disclosure on operating

results. Furthermore, the amount of time spent on

measuring the information may explain the reason

for non-difference or the absence of a definite

relationship, [24], [42], [43].

According to the statistical test results (Table 8), it

was found that the relationship between intellectual

capital and firm performance as measured by

Tobin's Q was statistically significant in the same

direction when sustainability was a moderator. In

other words, intellectual capital results in an

increase in Tobin's Q ratio as sustainability

management in a company increases.

The graphs were plotted to see the trends of Tobin's

Q rate and intellectual capital when sustainability

disclosure is involved in companies with higher and

lower sustainability disclosure than the average

(Table 5, number 31.2739). Group 1 presents a

lower sustainability disclosure ratio than average,

while Group 2 presents a higher sustainability

disclosure ratio than average.

Figure 1 and Figure 2 show the overview of all

sampled firms in the agricultural and food industry

and the service industry. It indicates that companies

with good intellectual capital and joint sustainability

disclosure, regardless of being higher or lower than

the average, improve Tobin's Q of the company

since intellectual capital could help disclose

intangible assets of the company while increasing

clarity, which is consistent with its legitimized

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status. This can also enhance the corporate image,

and attract investors. Thus, companies tend to

disclose their intellectual capital more in their

annual report, sustainability report, the official

website of the company, or other channels disclosed

by the company, [9].

Fig. 1: Relationship between intellectual capital and

Tobin’s Q of the firm in the agricultural and food

industry

Fig. 2: Relationship between intellectual capital and

Tobin’s Q of the firm in the service industry

Fig. 3: Relationship between intellectual capital and

Tobin’s Q of the firm in the technology industry

For the technology industry (Figure 3), the higher

the proportion of sustainability disclosure than

average in group 2 was found to have a positive

effect of intellectual capital on firm performance

when a company had a large degree of sustainability

disclosure; However, the lower proportion of

sustainability disclosure than average in group 1

was found to have a negative effect of intellectual

capital on firm performance, when a company had a

large degree of sustainability disclosure. When a

company discloses insufficient or unclear

information regarding sustainability or intellectual

capital, it also leads to a decrease in firm

performance.

Sustainability management takes time to be

effective. In addition, according to the Stock

Exchange of Thailand, the technology industry

should be based on labor treatment. This is because

most of the products in this industry need to be

produced in large quantities and this requires

employees to serve customers 24 hours a day.

For example, employees in mobile phone

network services and internet services have to work

harder than other businesses to meet the needs of the

customers. It is essential that the business also

carefully considers labor issues, [52]. Thus,

companies in the technology industry should be

more cautious and focus on sustainability and

disclosure, which is an important factor in making

an investment decision. Companies that disclose

information with transparency, accuracy, and

completeness can satisfy stakeholders and attract

investors, [53].

The GRI standard assisted sustainability

disclosure to be more precise and delicate, [45],

[46]. Since the GRI standard became the standard in

disclosing sustainability, this has helped firms

disclose more precise sustainability, [11]. When

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comparing the graphs about the level of

sustainability disclosure, it can be seen that firms

have more activities in disclosing their

sustainability. This assists intellectual capital in

enhancing firm performance measured by Tobin’s

Based on the results of the analysis of the

relationship between intellectual capital (VAIC), the

performance and sustainability disclosure can be

summarized as follows:

H1a: Intellectual capital (VAIC) has a positive

relationship with ROA

H1b: Intellectual capital (VAIC) has a positive

relationship with Tobin's Q

H2a: Sustainability disclosure does not moderate the

relationship between intellectual capital and firm

performance.

H2b: Sustainability disclosure moderates the

relationship between intellectual capital and Tobin’s

5 Conclusion

The objectives of this study are: 1) to examine the

relationship between intellectual capital and firm

performance and 2) to study the relationship

between intellectual capital and firm performance

which is moderated by the sustainability of the

companies listed on the Stock Exchange of

Thailand. The results revealed that most of the

intellectual capital value of companies in the three

industries came from investment in human capital,

structural capital, and physical capital, respectively.

In this study, the disclosure criteria of the GRI

Standard were used and the data collection model

was developed to study the clarity of disclosure of

the samples in the study. In addition to the

explanatory narrative, it was found that the addition

of visual information as tables and pictures, in the

disclosed reports along with external assurance

could provide more understanding and assure those

who use the reports since this type of presentation

describes the company better. The highest average

sustainability disclosure found in this study was in

the technology industry.

Intellectual capital (VAIC) was positively

related to firm performance according to the

resource-based view theory. The ability to create

firm value is not driven by external factors, but by

the internal processes of the company. This leads to

the characteristics of ownership of that resource, [4].

According to the theory, intellectual capital is an

essential resource of a company. It is expected that

human capital, structural capital, and physical

capital can be used to create firm value. This will

ultimately lead to good firm performance, [33] since

it plays an important role in increasing the return to

the organization while raising awareness of its

intellectual capital. This leads to the ability to

increase the value of an organization with

sustainable advantages, [9]. Although intellectual

capital is not recognized as an accounting asset and

is seen as a cost with a high amount of money, the

results of the study indicate that intellectual capital

can reflect firm performance. If companies can

manage their intellectual capital properly, it can lead

to returns and survival of the business in this highly

competitive era, [10], [15]. Companies need

operating capital to generate added value or returns

arising from intellectual capital since it is an

extremely important resource of an organization

which can be in the forms of skill development,

knowledge, and accumulation of experience

embedded in the personnel. Thus, companies must

create a mechanism or structure to transfer that

knowledge to remain with the organization.

However, intellectual capital alone cannot add value

to the organization, and efficient use of capital

investment is also necessary to lead to sustainable

competitiveness, [2], [36], [38].

According to the test, sustainability disclosure

moderates the relationship between intellectual

capital and firm performance, as measured by

Tobin's Q. It shows that by disclosing the

information regarding intellectual capital,

components of intellectual capital, such as human

capital, structural capital, and capital employed

related to economic, social and environmental, and

knowledge management presented in the

sustainability report, annual report, or other

channels to communicate with stakeholders are

beneficial to market participants since such

disclosure reduces the inequality of information

between shareholders while increasing the

efficiency of the capital market. Likewise, [9]

suggested that intellectual capital disclosure is

beneficial for stakeholders and knowledge-based

economies. Unfortunately, insufficient information

in financial reports still occurs since there is no

criteria or format, and intellectual capital has not

been recognized in financial reports. Thus, it is

essential to establish rules or forms that encourage

companies to disclose more information about

intellectual capital for the benefit of stakeholders to

obtain sufficient information, [1]. In addition, the

GRI Standard, which has been continuously

developed for clearer disclosure of sustainability

information, contributes to the disclosure of more

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detailed information, [45], [46] and also affects the

level of intellectual capital disclosure, [11].

5.1 Contribution

According to the results of this study, intellectual

capital enhances firm performance if the company

pays attention to the disclosure of sustainability

information. Corporate sustainability disclosures are

made in response to the needs of stakeholders. This

is in line with stakeholder theory, which explains

the corporate ability to disclose sustainability on the

annual report or sustainability reports. Such

disclosure demonstrates that the company has

operated with integrity and responds to social

expectations for corporate sustainability while

enjoying the right to use natural resources and

human resources according to the principles of

legitimacy theory, together with efficiency in

intellectual capital management. As a result, the

competitive advantage is extended and the ability to

outperform competitors leads to better performance

according to the resource-based view theory. The

results of this study are useful for management to

analyze the data and to invest in intellectual capital

through knowledge management, intelligence, and

experience of the company to create competitive

advantages that differentiate from other competitors

in the market, [36]. The disclosure of sustainability

management or intellectual capital to support the

corporate mission and strategy can also create

competitive advantages in the future. Sustainability

disclosure in economic, social, and environmental

contexts significantly enhances intellectual capital

and increases the firm’s marketing performance

measured by Tobin’s Q. However, there is no

significance found in the effects on accounting

performance measured by Return on Assets (ROA),

it should be explained that the firm’s profitability

and the efficiency of asset management cannot

reflect in the short term; it may take a long time to

generate sustainable firm performance. Furthermore,

the result reflects that firms giving importance to

sustainability disclosure tend to have an increasing

value in marketing since those firms pay attention to

their operation and sustainability for all, including

stakeholders. This not only benefits firm

performance, but also builds a positive image and

reliability as well as attracts investors, traders, and

customers to cooperate with the firm. Ultimately,

this enhances the firm’s market value.

Communication in the form of disclosing

corporate sustainability allows stakeholders to

understand the management of the company better.

Nowadays, besides financial reports, investors use

information from other types of reports to ensure

that they invest in a company that will not cause

problems in the economy, community, society, and

the environment. This is also beneficial for the

agencies involved in issuing regulations or

guidelines for preparing reports. It is vital to

establish guidelines and encourage companies to

realize the importance of the disclosure of

intellectual capital information for the benefit of the

organization and its stakeholders. According to

stakeholder theory, companies are expected to

contribute information related to activities related to

their stakeholders. However, investors should also

consider other reports besides financial reporting,

[28].

5.2 Suggestions for Future Research

In this study, data were limited to listed companies

in only three industrial groups: the agricultural and

food industry, the technology industry, and the

service industry. Future studies should expand their

scope to other industrial groups in Thailand to reach

a clearer conclusion on whether intellectual capital

plays a different role in creating value for the

business or not.

In addition, this study measures the firm

performance of the fiscal year following intellectual

capital and sustainability for only 1 year (year t+1).

Future studies should increase the number of fiscal

years to confirm whether spending expenses on

employee development, sustainability management,

and time are the factors that affect the value of an

enterprise. In this study, return on assets (ROA) and

Tobin’s Q were used to measure firm performance.

Future studies regarding the relationship between

intellectual capital, sustainability, and firm

performance may use other variables in measuring

firm performance such as Economic Value Added

and employee productivity, etc. In addition, future

studies can also study similar concepts to confirm

the result about the roles of intellectual capital and

sustainability disclosure which enhance firm

performance but are measured by other methods. It

is possible to control variables that may affect the

hypothesis such as the length of operation or the

cost of research and development.

In this study, certain types of data were limited

by access even though measuring the value of

intellectual capital by using the VAIC method was

well-accepted. Data can be gained from financial

statements or notes to financial statements published

for all readers, which the researcher can access

without difficulty. Nevertheless, it seems to be an

indirect investigation because intellectual capital is

an issue that requires more in-depth details, and

some sources of data are limited. Hence, if future

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studies intend to investigate intellectual capital

further, it is suggested to use other methods to

measure such as

Intellectual Capital Index, Technology Broker,

or Skandia Navigator. Then, study specifically the

relationship between intellectual capital and firm

performance as the result tends to enlarge the

benefits to firms significantly.

Sustainability data collection was based on GRI

Standards. The study period in the future should be

extended to 3 or 5 years to measure firm

performance or collect sustainability data by using

other methods, such as the KLD index or DJSI

instead of GRI Standards.

Further research may employ the mix method

for in-depth interviewing with successful firms

focusing on intellectual capital and sustainability to

gain better firm performance. In addition, the long

lag time may be shown in the effects of intellectual

capital and sustainability on firm performance over

the long term.

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Contribution of Individual Authors to the

Creation of a Scientific Article (Ghostwriting

Policy)

The authors equally contributed in the present

research, at all stages from the formulation of the

problem to the final findings and solution.

Sources of Funding for Research Presented in a

Scientific Article or Scientific Article Itself

No funding was received for conducting this study.

Conflict of Interest

The authors have no conflicts of interest to declare

that are relevant to the content of this article.

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