Factors Affecting Intellectual Capital Amongst the Best Ranking ESG Economies: A Panel Data Analysis.

Abstract

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 that more focus can be on economic development policies that must be followed by top ESG countries to overperform in terms of innovation.