Editorial

Citation

Chase, R.L. (2006), "Editorial", Journal of Intellectual Capital, Vol. 7 No. 3. https://doi.org/10.1108/jic.2006.25007caa.001

Editorial

We are still in the early stages of creating frameworks, models, systems and approaches to identify, measure and report intellectual capital (IC) and intangibles. This issue explores a number of attempts to make IC visible and assign a value to it.

Sudi Sudarsanam, Ghulam Sorwar and Bernard Marr review IC from a valuation perspective, and examine the nature of such capital and why traditional valuation methods fail to reflect the unique characteristics of IC. The authors then develop a valuation perspective based on the real option models that have been extended from their origin in financial asset valuation to the valuation of firms’ growth opportunities. The authors next create a typology of IC based on the influence upon the various valuation parameters of real options. This approach provides a rich framework to analyze the relationship between IC and corporate value. The findings of this paper should help managers to understand how different types of IC impact on risk taking, timing of investment projects and the value of speculative investments.

Riccardo Silvi and Suresh Cuganesan in “Investigating the management of knowledge for competitive advantage: a strategic cost management perspective” review knowledge management and strategic cost management literature to identify key elements that determine and facilitate the enhancement of competitive advantage. They develop a cost-knowledge management (CKM) framework that integrates these elements. The CKM framework allows organizations to analyze activities in terms of cost structure and cost drivers, value created, and knowledge utilized, the latter in terms of knowledge specificity and type. The framework also can be used to highlight specific areas of effectiveness improvements in terms of identifying which activities should be leveraged and how knowledge can be better mobilized. In addition, the framework enables an assessment of the non value-added but required and waste elements of organizational activities and the specific drivers of costs in these activities, thereby enabling an identification of efficiency improvement opportunities.

The elements that constitute the organizational capital of the firm, namely its culture, structure, organizational learning, can be a source of competitive advantage. Gregorio Martín de Castro et al. attempt to assess organizational capital from the resource-based view. An assessment framework for intellectual capital is developed. By means of this framework organizational capital can be depicted as a set of: valuable assets; difficult to imitate; to replace, and to transfer; with a prolonged life expectancy; and with a feasible rent appropriation. The construction of this evaluation framework allows further research about other components of the intellectual capital of the firm, bridging the literatures focused on the resource-based view and on intangible assets or intellectual capital.

In June 2001, the Financial Accounting Standard Board issued Statements No. 141 and 142 that eliminated goodwill amortization and required a company to review its goodwill for impairment annually at the reporting unit. The two new standards were aimed at ensuring that all business activities were accounted for in the same approach, and that goodwill and other intangible assets were treated in a way that reflected economic reality. A. Seetharaman, Raju Sudha and Tey Ya Yee examine goodwill impairment indicators, and suggest possible strategies to prevent a company’s goodwill from being impaired. Since previous research has found that an impairment review is expensive, the authors offer a solution to reduce the cost of an impairment review.

The paper “How to measure IC in clusters: empirical evidence” by José L. Hervás Oliver and Juan Ignacio Dalmau Porta presents a strategic framework and tool for measuring and valuing intellectual capital in regional clusters. Clusters are defined as geographic concentrations of interconnected companies and institutions in a particular field. The proposed Intellectual Capital Cluster Index (ICCI^®) is a knowledge-based strategic management framework which incorporates the following “blocks” and indicators: human resources, institutions and infrastructure resources, located and linked industries, firm strategy, linkages, and economic performance. The authors empirically test the model on two tile industry clusters – the Castellon cluster in Spain and the Emilia-Romagna cluster in Italy.

Karthik Namasivayam and Basak Denizci examine the value-creating processes in high-content service industries and their impacts on human capital valuation. The authors argue that no matter what the level of investment in back office technologies, it is the interface between the consumer and service provider that is the critical “fail point.” Therefore, the service industry is encouraged to measure and manage the value of human capital, and to make a concerted effort to estimate the value of high-contact human capital. This paper draws attention to the fact that human capital is not monolithic. In order to make more accurate assessments of the value of human capital in organizations, managers should recognize the important combination of both the creation and delivery of value to customers.

The aim of the paper by Eduardo Bueno et al. is to shed new light on the interactions among capital elements when viewed through the “lens” of complexity theory. In this context, the authors explore the power of biological metaphors, especially the use of “creative neuron,” in the study of intellectual capital. The paper describes the empirical research of the Intellectus Model of Five Capitals (5CM) – human, organizational, technological, business and social – in the Caja Madrid, a Spanish savings bank. In the case study, human and business capital form the “cellular” basic framework. Organizational, technological and social capital have less influence in the creation of wealth through intangible assets.

Thomas Diefenbach investigates how types of intangible resources, sharing common attributes, can be grouped together and how these categories can be defined. This gradually leads to the creation of a categorial system based on inductivism. At the same time, the categorial system is created based on logical deductivism. Although this is a theoretical approach and system, the author states that with such a categorial system we are in a better position to identify and locate the uncountable number of “real world” types of intangible resources more precisely and efficiently.

Rory L. Chase