A Conceptual Paper on Intellectual Capital Efficiency and Environment, Social and Governance Performance: The Moderating Role of Innovation and Sensitive Industries

Abstract

The research aims to examine the relationship between Intellectual Capital Efficiency (ICE) and Environmental, Social, and Governance (ESG) performance and the moderating role of innovation and sensitive industries of Public Listed Companies (PLCs) in Malaysia using the Modified Value-Added Intellectual Coefficient (MVAIC) model. The theoretical framework draws on the Resource-Based View (RBV) theory, which proposes that strategic resources a firm uses to attain a sustainable competitive advantage. The research employs a quantitative research design and data will be obtained from the firm's annual reports and the LSEG ESG web portal. All variables will be tested using PLS-SEM software covering 160 firms listed on Bursa Malaysia in the financial year 2022. The research’s findings have practical implications as they establish suggestions for firm managers to make legitimate decisions related to the strategic management of ICE components, innovation practices, and the firm’s characteristics in sensitive industries to improve ESG performance.