Purpose – The purpose of this paper is to offer a personal critical reflection on the future of intellectual capital (IC) based on my experience as an IC researcher, author, editor, teacher and practitioner. Design/methodology/approach – Offers a first-hand reflection on the future of IC, using evidence collected from IC in the field and the author’s personal reflections. Findings – I argue that the authors need to abandon reporting and instead concentrate on how an organisation discloses what “was previously secret or unknown”, so that all stakeholders understand how an organisation takes into consideration ethical, social and environmental impacts in keeping with an eco-systems approach to IC. Research limitations/implications – While much of the empirical evidence presented in this paper is freely available to all scholars, the interpretation and findings is subjective. Other researchers, given the same opportunity and evidence, may not necessarily make the same conclusions. Social implications – We are now on the cusp of the fourth stage of IC research (Dumay, 2013), whereby IC expands its boundaries into the wider eco-system, to “go beyond IC reporting” (Edvinsson, 2013, p. 163). Originality/value – Offers a critical review of the impact of IC reporting which is relevant to consider because of the newfound resurging interest in IC, based on the current push for integrated reporting ( ), which arguably contains IC information targeted at investors.
Purpose - The purpose of this paper is to examine intellectual capital research (ICR) methods and critically analyse how they have been utilised. The data set for this analysis is based on examining IC papers published in specialist IC and important generalist accounting journals from the years 2000 to 2011.Design methodology approach - The basis of the analysis is Alvesson and Deetz's critical management framework of "Insight", "Critique" and "Transformative redefinition" with the goal of widening the discourse about how to research IC. This paper is motivated by Guthrie et al., who identify a third stage of ICR which is "based on a critical and performative analysis of intellectual capital (IC) practices in action".Findings - This paper argues that there is an increasing performative research agenda however many researchers appear caught in an "evaluatory trap" (Olson et al.) whereby the researchers' approach to ICR remains stuck in an ostensive approach (see Mouritsen) that characterises second stage ICR (see Petty and Guthrie). The paper also identifies how many accounting researchers are impacted by a "dominance structure" and suggests that they need to break free from the dominance of "accounting" practice before they can understand and realise the potential of IC.Research limitations implications - The implication of this paper for ICR and practice is to create a continued discourse about evolving approaches to ICR so we can continue communicating leading edge, third wave ICR, which develops IC theory in practice and effective IC management through praxis.Originality value - From 2004 onwards, Guthrie et al. claim the third stage was gaining impetus and thus this paper is novel because it investigates how ICR has transitioned and how ICR might continue to develop.
Purpose – The basis of value creation has shifted from tangible factors of production towards intangible resources such as intellectual capital (IC) (e.g. Grant, 1996). The average organisation’s IC has been estimated to be three to four times over its book value (Edvinsson and Malone, 1997); thus, it is vital for companies to understand how it is created, managed, measured and evaluated. However, there are still many debated and complex issues, and the empirical measurement of IC is one of those. The purpose of this paper is to determine if IC systematically influences firm performance. Design/methodology/approach – A systematic review procedure was utilised as this study’s research design. Findings – The findings demonstrate that IC influences firm performance mainly through interactions, combinations and mediations. Also, there is a great deal of evidence on the significant relationship between IC and firm’s innovation performance. Research limitations/implications – This paper reviews only empirical studies based on survey data and statistical methods of analysis. Practical implications – The research points to some focal aspects of IC that are associated with firm performance. Originality/value – This is the first study to review empirical literature on IC and firm performance. It increases the current understanding by bringing together the research related to the issue and drawing meta-level analysis.
Purpose – Organizational performance is increasingly grounded on knowledge-related issues. The two key academic discussions addressing knowledge in organizations are the intellectual capital (IC) and knowledge management (KM) literatures. However, there are very few earlier studies systematically combining these approaches and demonstrating how IC assets and their management mechanisms might interact in organizational value creation. Therefore, the purpose of this paper is to develop and argue a theoretical model depicting the connections between IC, KM practices and organizational performance outcomes. Design/methodology/approach – The paper draws on IC and KM literatures to build a theoretical model on how intellectual asset assets and their management practices interact in producing organizational performance. Several conceptual models and related discussion on the interaction of IC and KM practices are put forth. Findings – Organizational value creation is based on both static (IC assets) and dynamic (KM practices) aspects of organizational knowledge, in various combinations. In this paper, potential interaction effects between IC assets and KM practices in terms of moderation and mediation were conceptually analysed, and four alternative models were proposed on how the knowledge-based issues affect organizational performance. Research limitations/implications – The paper is purely theoretical without empirical evidence. Practical implications – The paper suggests that organizational value creation is a function of both possessing valuable intangible assets as well as being able to manage these assets systematically. The four models concerning the interaction of IC assets and KM practices in value creation presented in the paper provide managers with tools to reflect about their own thinking model concerning how knowledge produces value in their own firms. Originality/value – By addressing both the “static” asset aspect of IC as well as the “dynamic” perspective of how leveraging IC assets can be enabled by systematic managerial activities, the paper combines the key issues in IC and KM literatures and demonstrates how intangible resources should be managed to produce value. The authors are not aware of any previous studies explicitly combining and distinguishing IC and KM fields to this extent. The paper therefore contributes to the literature on knowledge-based issues in organizations at large and potentially offers a theoretical grounding for many empirical and theoretical future studies.
Purpose - The purpose of this paper is to analyse the role of value added (VA) as an indicator of intellectual capital (IC), and its impact on the firm's economic, financial and stock market performance.Design methodology approach - The value added intellectual coefficient (VAIC™) method is used on 300 UK companies divided into three groups of industries: high-tech, traditional and services. Data require to calculate VAIC™ method are obtained from the "Value Added Scoreboard" provided by the UK Department of Trade and Industry (DTI). Empirical analysis is conducted using correlation and linear multiple regression analysis.Findings - The results show that companies' IC has a positive impact on economic and financial performance. However, the association between IC and stock market performance is only significant for high-tech industries. The results also indicate that capital employed remains a major determinant of financial and stock market performance although it has a negative impact on economic performance.Practical implications - The VAIC™ method could be an important tool for many decision makers to integrate IC in their decision process.Originality value - This is the first research which has used the data on VA recently calculated and published by the UK DTI in the "Value Added Scoreboard". This paper constitutes therefore a kind of validation of the ministry data.
Purpose - The purpose of this paper is to explore and compare the extent of intellectual capital (IC) and its four components among ASEAN countries, and examine the relationship between firms' IC, market value, and financial performance. Design/methodology/approach - The study uses the data of 213 technology firms listed on five ASEAN stock exchanges. Pulic's Value Added Intellectual Coefficient model is modified by adding an extra component, namely, relational capital efficiency (RCE). The Kruskal-Wallis one-way ANOVA and multiple regression analysis have been utilized to test the hypotheses. Findings - The results reveal that there is no significant difference in Modified Value Added Intellectual Coefficient (MVAIC) across five ASEAN countries; however, firms in each country tend to place a different degree of emphasis on components of MVAIC to generate corporate value. The results further indicate a positive relationship between IC and market value, confirming that firms with greater IC tend to have greater market value. Likewise, a positive relationship between IC and financial performance measures is confirmed. Specifically, IC is found to be positively associated with margin ratio and return on assets. Capital employed efficiency and human capital efficiency are found to be the most influential value drivers for both market value and financial performance while structural capital efficiency and relational capital efficiency possess less importance. Originality/value - This study contributes to the IC literature by expanding our knowledge of IC in the emerging economies, and providing a national comparative IC research when such research is limited.
Purpose - This study aims to examine the effect intellectual capital (IC) has on firm performance of Australian companies.Design methodology approach - Quantitative data are collected for Australian companies listed between 2004 and 2008. IC is measured using Pulic's value added intellectual coefficient (VAIC) and its components (human, structural and capital employed efficiencies (HCE, SCE, CEE)). Direct and moderating relationships between VAIC, HCE, SCE, and CEE and four measures of performance are statistically analysed.Findings - The results suggest that there is a direct relationship between VAIC and performance of Australian publicly listed firms, particularly with CEE and to a lesser extent with HCE. A positive relationship between HCE and SCE in the prior year and performance in the current year is also found. However evidence also suggests the possibility of an alternative moderating relationship between the IC components of HCE and SCE with physical and financial capital (CEE) which impacts on firm performance.Research limitations implications - There are some missing data and some transgression of the assumptions of OLS regression.Originality value - This paper presents the first study of the IC relationship with firm performance in Australia. Inconclusive results from prior studies in developing countries suggested the need for a study from a developed country such as Australia. The paper is also the first to investigate whether IC moderates the relationship between CEE and firm performance.
Purpose – The purpose of this paper is to review and critique the current status of content analysis (CA) as a research method for inquiring into intellectual capital disclosure (ICD) to determine if CA has a continued role to play in developing new intellectual capital (IC) knowledge. Design/methodology/approach – In all, 110 articles utilising CA as a research methodology for inquiring into ICD are analysed. The research is developed in line with other articles critically investigating IC research conducted by Guthrie et al. (2012), Dumay and Garanina (2013) and Dumay (2014). To help understand the impact of CA research articles, the data set is supplemented by including citation data from Google Scholar. The authors also differentiate the paper from other IC research reviews by critically examining the findings and implications of the articles analysed. Findings – The authors do not hold a very positive view on future research which does not substantially depart from the plethora of articles examining ICD using annual reports as a data source or who do not in some way radically change the approach. The authors are of the view that early research into ICD using CA as a methodology was warranted because there was little knowledge about the pattern of IC disclosure in annual reports and other possible ICD forms. However, the research into ICD using annual reports and other data sources has added little more than prove that companies are unwilling to publicly disclose IC to their stakeholders. While the authors do not hold a positive view on future CA research based on annual reports, the authors do hold out hope that researchers will transform their understanding and application of CA as a research methodology and offer one example of how this might be achieved. Originality/value – The paper presents a comprehensive critical review of published articles utilising CA as a research methodology for inquiring into ICD along with measuring the impact of the articles using citation data from Google Scholar. Hence, the research and its impacts are simultaneously assessed offering insights into the future role that CA as a research methodology has to play in developing new IC knowledge.
Purpose – The purpose of this paper is to evaluate the links between intellectual capital sub-components and organizational performance in small and medium enterprises (SMEs) operating in the electrical and electronics manufacturing sector in Pakistan. Design/methodology/approach – Data were collected through structured questionnaires from a sample of 247 respondents from Pakistani SMEs in Gujranwala and Gujarat. Several tests were used to examine the reliability and validity of the research instrument. Finally, multiple regression analysis was used to test the proposed research hypotheses. Findings – The findings of this study demonstrate that the overall regression model of intellectual capital shows goodness of fit while one component of intellectual capital – namely human capital – appeared insignificant. Subsequently, six out of seven research hypotheses was accepted. Practical implications – This study will provide a valuable framework for entrepreneurs, executives, managers and policy makers in managing intellectual capital within the Pakistani context. Originality/value – To the best knowledge of the authors, this is the first empirical study that has been conducted on SMEs operating in the electrical and electronics manufacturing sector in Pakistan.
Purpose - The purpose of this paper is to review and critique the current status of intellectual capital (IC) research as published in the Journal of Intellectual Capital (JIC) as it heads into its 15th year with a view to understanding the past and possible direction of future IC research. Design/methodology/approach - Articles published in the JIC are reviewed building on prior IC research and analysis by Guthrie et al. (2012) and Dumay and Garanina (2013). To help understand the impact of articles in the JIC the analysis is supplemented by including citation data from google scholar, journal impact data from the SCImago Journal & Country Rank portal, and the 2013 Australian Business Dean's Council (ABDC) journal ranking list. Also included is commentary from the JIC's senior editors based on their responses to questions asked via e-mail relating to their involvement in, and the future of, the JIC. Findings - The JIC faces a challenge as it is most recognised as an accounting journal despite its focus on managing IC. The research published in the JIC is multidisciplinary as it comes from a wide range of perspectives. However, there appears to be a paucity of research emanating from different perspectives, most notably from North American academics, and a lack of focus on the private and public sectors. However, new perspectives of IC, especially that associated with IC praxis and the third stage of IC research are emerging as transformational opportunities for future IC research, along with the opportunity to experiment with transdisciplinary research. Originality/value - The paper presents a comprehensive critical review of the articles published in the JIC along with measuring the impact of the articles using citation data from google scholar. Using this approach, the type of research and its impacts can be simultaneously assessed to offer insights into future transformational IC research opportunities, and how IC researchers and the JIC can also be transformational.
Purpose - Intellectual capital (IC) shows a significant growing acceptance as a worthy topic of academic investigation and practical implication. The purpose of this study is to examine the impact of IC on firms' market value and financial performance.Design methodology approach - The empirical data were drawn from a panel consisting of 96 Greek companies listed in the Athens Stock Exchange (ASE), from four different economic sectors, observed over the three-year period of 2006 to 2008. Various regression models were examined in order to test the hypotheses included in the proposed conceptual framework.Findings - Results failed to support most of the hypotheses; only concluding that there is a statistically significant relationship between human capital efficiency and financial performance. Despite the fact that IC is increasingly recognised as an important strategic asset for sustainable corporate competitive advantage, the results of the present study give rise to various arguments, criticism and further research on the subject.Research limitations implications - The lack of available data for the appropriate analysis, the investigation of four sectors of economic activity and the relatively narrow three-year period for data collection are the main limitations of the present study.Practical implications - Results proved that, in the Greek business context, the development of human resources seems to be one of the most significant factors of economic success. Focusing on human capital should, therefore, be at the centre of the companies' attention.Originality value - The present study combines previous methodologies in order to investigate certain causal relationships considering the IC of Greek listed companies. The value of the paper is the empirical investigation of these relationships in the context of the Greek economy and the enrichment of the literature with another paper that follows the value-added intellectual coefficient methodology for the measurement of IC.
Purpose - The public sector is one of the least addressed areas of intellectual capital (IC) research. Universities are an interesting area of investigation because they are considered critical players in the knowledge-based society. The purpose of this paper is to develop a more general, flexible and comprehensive "IC Maturity Model" for Universities (ICMM), a framework for defining and implementing IC measurement and management approaches, as part of the whole strategic management of universities. Thus, the ICMM proposes a staged framework to initiate a step-by-step change within a university based upon its current level of IC management maturity. The different steps of maturity might be an answer to cope with the huge diversity of European universities, some of which have strong managerial orientation, while others follow collegial forms of governance. Design/methodology/approach - The research approach is based on what has been called the "third stage" of IC research (Dumay and Garanina, 2013), focused on the practices of IC approaches rather than on its theoretical conceptualisation. The ICMM has been developed under the "Quality Assurance in Higher Education through Habilitation and Auditing" project framework, initiated by the Executive Agency for Higher Education and Research Funding of Romania (EUFISCDI). Three Mutual Learning Workshops (MLWs) were organised as a mean to bring together 15 international experts and practitioners to share their views and experience on IC reporting and setting up task forces. Findings - An ICMM, which is a flexible model of implementing IC approaches within public universities, is developed. The ICMM provides a theoretical continuum along which the process of maturity can be developed incrementally from one level to the next, moving from IC data collection, awareness of IC, adjustment of IC specific indicators, measurement of IC, reporting of IC, interpretation and decision making, strategy and planning. Research limitations/implications - Future research needs to conduct empirical studies in universities to generalise the effectiveness of the ICMM model and guidelines for implementation. Practical implications - The ICMM provides a staged framework to initiate a step-by-step change within a university based upon its current level of IC management maturity and its IC value creation dynamics. It allows universities to follow different paths, not necessarily a linear sequence. Originality/value - Although several methods for IC measurement and management exist, most of these cannot accommodate the trade-off between the comparability aims and the efforts to capture the institution's uniqueness when designing an IC model.
Purpose - The purpose of this paper is to outline the concept of integrated reporting and to propose a template for integrated reporting in organisations.Design methodology approach - The approach to the conceptual model is founded on concepts proposed on integrated reporting by the King Report on Governance for South Africa (King III), and the International Integrated Reporting Council in the UK.Findings - The integrated report should explain the story of reaching the organisation's vision, underpinned by its values, enacted by management, monitored by governance, and using facets of resources relating to financial capital, intellectual capital, social capital, and environmental capital.Practical implications - The paper proposes an integrated reporting framework, and provides an example of a template to be used in organisations.Originality value - To the best of the author's knowledge, this is the first academic paper that provides a coherent framework on integrated reporting, with a template.
Purpose - The purpose of this paper is to reflect on 21 years of IC theory and practice as input into discussing the origins of IC, its multiple perspectives and where it is heading.Design methodology approach - This article is based on the author's reflections of the past and vision for the future.Findings - IC is still for many an invisible fuzzy dimension, or mainly a measuring and accounting issue. For others, it is thought of as a more and more strategic ecosystem for sustainable value creation. Is there a kind of learned blindness in financial capital accounting or ignorance of new value opportunity spaces? We need to go beyond IC reporting. We are on the edge of something, but what?Originality value - The paper presents the personal views of an internationally renowned IC academic and practitioner about what the future may hold for IC.
Purpose - The purpose of this article is to investigate empirically the relation between the value creation efficiency and firms' market valuation and financial performance.Design methodology approach - Using data drawn from Taiwanese listed companies and Pulic's Value Added Intellectual Coefficient (VAIC™) as the efficiency measure of capital employed and intellectual capital, the authors construct regression models to examine the relationship between corporate value creation efficiency and firms' market-to-book value ratios, and explore the relation between intellectual capital and firms' current as well as future financial performance.Findings - The results support the hypothesis that firms' intellectual capital has a positive impact on market value and financial performance, and may be an indicator for future financial performance. In addition, the authors found investors may place different value on the three components of value creation efficiency (physical capital, human capital, and structural capital). Finally, evidence is presented that R&D expenditure may capture additional information on structural capital and has a positive effect on firm value and profitability.Originality value - The results extend the understanding of the role of intellectual capital in creating corporate value and building sustainable advantages for companies in emerging economies, where different technological advancements may bring different implications for valuation of intellectual capital.
Purpose - The purpose of this paper is to provide examples and technical details for conducting a value network analysis that addresses the conversion and utilisation of intangible assets.Design methodology approach - Value network analysis was first developed in 1993 and was adapted in 1997 for intangible asset management. It has been tested in applications from shop floor work groups to business webs and economic regions. It draws from a theory based in living systems, knowledge management, complexity theory, system dynamics, and intangible asset management.Findings - The paper provides a high level of detail on the analysis method and insights from its practical application across a range of business issues. Tips are provided for how to integrate the methodology with other business analysis approaches.Research limitations implications - The paper does not provide a comparative analysis with other methods because most other value network models are process views, social network analysis or clustering techniques.Practical implications - Sufficient detail is provided so researchers and practitioners will be able to apply the method in their own investigations. Further resources are noted, as well as access points to the global user community and open source tools.Originality value - This paper is the first detailed publication of the value network analysis method, which has been acclaimed by experts in intangibles, network analysis, knowledge management, and process analysis. It fills a gap between theory and practice for managers, executives, analysts, and researchers.
Purpose - The purpose of this paper is to provide a new framework for managing intellectual capital (IC) inside a university considering the collective intelligence perspective. Design/methodology/approach - The research method uses the fourth stage of IC research and adopts the collective intelligence approach. The underlying assumption behind the framework is to consider the university as a collective intelligence system in which the tangible and intellectual assets are coordinated towards the achievement of strategic goals. Findings - The conceptual framework for IC management harnesses the power of IC, collectively created by the engagement of multiple stakeholders inside the university network. The main components are the final goal of a university (what); the collective human capital to achieve the goal (who); the processes activated inside the university (how); and finally the motivations behind the achievement of the goal (why). Research limitations/implications - The research is exploratory and the framework offers opportunities for refinement. Future research is needed to verify the application of the framework to other organisations in the public sector intended as collective intelligence systems. A new perspective for managing IC in universities adopting the collective intelligence approach is developed. Contribution to the fourth stage (ecosystem) of IC research is highlighted, expanding the concept of IC value creation beyond the university into wider society. Practical implications - The framework can be used to manage IC strategically in all the systems interpreted as collective intelligence systems in which the role of IC creation from multiple actors is relevant. This makes possible the understanding of how IC helps create value for the society and the region in which the university operates. Originality/value - The originality of the paper is in bringing together issues usually dealt within the literature in separate domains, such as IC management and collective intelligence perspective. The concept of collective intelligence remains an unexplored field in relation to IC management in the public sector. The collective intelligence approach provides a novel contribution to managing IC and is intended to inspire future research.
Purpose – The purpose of this paper is to examine whether intellectual capital (IC) creates value in the Serbian information communication technology (ICT) sector. More specifically, it examines the degree to which IC and its key components affect the financial performance of selected ICT companies compared to effects on physical and financial capital. Design/methodology/approach – The analysis included 13,989 Serbian ICT companies during 2009-2013. Value-added intellectual coefficient (VAIC) was used to measure the level of IC contribution to value creation. Measures of financial performance used in the study were return on equity, return on assets, return on invested capital, profitability, and asset turnover. Findings – Results indicate that, when using firm size and leverage as control variables, only capital-employed efficiency has significant effect on financial performance. Finally, the research confirms that there were no significant differences in financial performance among different ICT subsectors. Research limitations/implications – Main research limitation is related to the disadvantages of VAIC as the measure of IC’s contribution to value creation. Practical implications – Owners and managers of Serbian ICT companies must recognize the importance of managing both the physical capital and the intangible resources embedded in their employees and processes. Originality/value – This is the first paper to examine comprehensively the impact of IC on financial performance in the ICT sector in a transitional economy. This study differs from prior studies in that the authors analyzed every company that operated in Serbian ICT sector.
Purpose The purpose of this paper is to provide an up-to-the-minute literature review of intellectual capital disclosure (ICD) to: identify the major themes developed within this research stream; investigate the evolution of the theory; and derive insights to guide future research agendas for the benefit of researchers and ICD users. Design/methodology/approach Research articles from ten relevant journals for the 17-year period between 2000 and 2017 are categorised and analysed in a structured literature review (Massaro et al., 2016) to answer these three research questions. This study adds to a data set established by Guthrie et al. (2012) and presents the results in a consistent and comparable manner across the studies. Findings A lack of significant innovation in the evolution of ICD indicates that this research stream may have been a victim of its own success (Dumay and Guthrie, 2017). Stuck in overview mode, studies continue to fixate on general issues, largely drawing their analysis from the corporate reports of publicly listed companies in Europe. Very few studies examine ICD in the USA and beyond, nor do they drill down to organisational level to examine ICD in practice. Practical implications We academics need to leave our ivory towers and base future research on how organisations, in different contexts, using different languages, harness intangible assets to create value. Without discouraging content analysis from corporate reports, we need to be more innovative in searching for IC from the rich variety of media resources modern corporate communication channels offer, and recognise that, while we are all working towards the same thing, we may not be using the same language to get there. Originality/value Despite extending previous work, this study highlights some of the new insights revealed from ICD research, especially over the last two years. The findings regarding differing use of terminology across continents, a general decline in published research due to lack of interest or new ground to cover, and zero evidence for a “groundswell” of IC disclosures by listed companies should motivate further reading in many researchers.
Purpose - The purpose of this study is to analyse the validity of the value added intellectual coefficient (VAIC) method as an indicator of intellectual capital.Design methodology approach - The paper describes VAIC through its calculation formulae and aims to establish what exactly it is that the method measures. It also looks in detail at how intellectual capital is understood in the method, and discusses its conceptual confusions. Furthermore, the paper tests the hypothesis according to which VAIC correlates with a company's stock market value, and reflects the contradictory results of earlier studies.Findings - The analyses show, first, that VAIC indicates the efficiency of the company's labour and capital investments, and has nothing to do with intellectual capital. Furthermore, the calculation method uses overlapping variables and has other serious validity problems. Second, the results do not lend support to the hypothesis that VAIC correlates with a company's stock market value. The main reasons behind the lack of consistency in earlier VAIC results lie in the confusion of capitalized and cash flow entities in the calculation of structural capital and in the misuse of intellectual capital concepts.Practical implications - The analyses show that VAIC is an invalid measure of intellectual capital.Originality value - The result is important since the method has been widely used in micro and macro level analyses, but this is the first time it has been put to rigorous scientific analysis.