Identifying tangible costs, benefits and risks of an investment in intellectual capital: Contracting contingent knowledge workers

Abstract

Purpose

The use of contingent knowledge workers may be an efficient means of investing in an organization's intellectual capital. However, exposing contingent workers to private, key competitive knowledge is considered risky. A study was undertaken to collect the costs, benefits and losses experienced by organizations that had contracted contingent knowledge workers to develop intellectual capital.

Design/methodology/approach

A purposive cross‐section of senior managers of knowledge‐intensive organizations were interviewed regarding the tangible benefits, costs, perceived risks, and experienced losses from contingent knowledge worker arrangements. The constant comparison method of analysis was used.

Findings

The data revealed perceived increases in flexibility, expertise, creative stimuli, and knowledge bank development. These benefits were believed to have bottom‐line impact through product and process improvements and innovations, and operational efficiencies. The managers did not perceive much risk or experience material losses as a result of the contingent knowledge worker arrangements.

Research limitations/implications

These findings are based on interviews with a small group of organizations. Although not generalizable, they present an interesting contrast to previous researchers’ conclusions regarding the use of contingent knowledge workers. Further empirical work is needed to test the degree to which this study's findings can be generalized.

Practical implications

Contrary to recent literature, this study suggests that contracting contingent knowledge workers to develop in‐house intellectual capital is worth the risk.

Originality/value

The study presents a divergent viewpoint on the contracting of contingent knowledge workers. It also initiates research on rational evaluation of investments in intellectual capital, which constitutes an important contribution to the area of knowledge management. It also contributes to the ongoing research on intellectual capital valuation.

Citation

MacDougall, S.L. and Hurst, D. (2005), "Identifying tangible costs, benefits and risks of an investment in intellectual capital: Contracting contingent knowledge workers", Journal of Intellectual Capital, Vol. 6 No. 1, pp. 53-71. https://doi.org/10.1108/14691930510574663