Leveraging Intangible Cultural Heritage for Local Economic Development: The Mediating Roles of Innovation and Commercial Value

Abstract

Intangible cultural heritage represents an important source of cultural identity and has growing potential to contribute to local economic development. However, the economic value of heritage does not emerge automatically from its preservation or existence, rather communities need appropriate capabilities to transform cultural resources into innovative and commercially valuable outcomes. This study examines how cultural heritage identity contributes to local economic development through the mediating roles of innovation capability and commercialization capability in the Vietnamese context. Drawing on the Resource-Based View and Dynamic Capabilities Theory, the study develops and empirically examines a structural model linking cultural heritage identity with innovation, commercialization and local economic development. Data were collected from 272 respondents in Vietnam and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 3. The results show that Cultural Heritage Identity has significant and strong positive effects on both Innovation Capability (β = 0.798, p < .001) and Commercialization Capability (β = 0.718, p < .001). Innovation Capability significantly contributes to Local Economic Development (β = 0.583, p < .001), while Commercialization Capability also has a significant positive effect (β = 0.247, p < .001). Furthermore, both Innovation Capability (β = 0.465, p < .001) and Commercialization Capability (β = 0.177, p < .001) significantly mediate the relationship between Cultural Heritage Identity and Local Economic Development. The stronger indirect effect through Innovation Capability highlights the importance of innovation in transforming cultural heritage into contemporary economic value. The findings contribute to the intangible cultural heritage literature by demonstrating that cultural identity can function as a foundation for capability development and that innovation and commercialization represent distinct pathways through which heritage can support local economic development. The study also provides practical implications for Vietnamese policymakers, heritage communities, and businesses seeking to balance cultural preservation with innovation, market development, and sustainable local economic benefits.