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Emerald Group Publishing Limited
Copyright © 2007, Emerald Group Publishing Limited
This issue of the Journal of Intellectual Capital offers researchers and practitioners valuable insights into IC management and reporting, ranging from a review of IC taxonomies to a discussion of the drivers of intellectual capital disclosures. A report on the German Wissensbilanz project serves as the launching pad for this collection of cutting-edge papers.
Leif Edvinsson and Mart Kivikas report on the pioneering German Wissensbilanz IC reporting project, supported by the German Ministry of Labour and Economics (BMWA). The project has involved nearly 100 enterprises of different types. A systematic process view approach has been applied. A special impact scoring method generates a map, enabling management to determine where they should give executive priority for intellectual capital investment. A special European Community project has now been launched – named InCas (Intellectual Capital Statements) – to continue and spread this approach to other European Union countries (e.g. France, Poland, Slovenia, and the UK). The Japanese Ministry METI also is focusing on the Wissensbilanz approach in order to create a Japanese national IC strategy as well as guidance to enterprises.
Although intellectual capital has received considerable attention for more than a decade, there still is a lack of consensus on its components and definition. Ching Choo Huang, Robert Luther and Michael Tayles propose a grouping of IC items based on empirical evidence in the form of managers’ responses to questions about the availability of information about IC inside their companies. A postal questionnaire was distributed to 520 companies listed on the main board of Bursa Malaysia. It was found that the conventional three a priori categories, namely human capital, customer capital and structural capital, expand into eight facets: employee capabilities; employee development and retention; employee behavior; development of products/ideas; organizational infrastructure; market perspectives; data on customers; and customer service and relationships. Nevertheless, there is remarkable consistency between literature-based expectations and empirical groupings.
The relationship between organizational culture and intellectual capital has been investigated by Sandra M. Sánchez-Cañizares, Miguel Ángel Ayuso Muñoz and Tomás López-Guzmán. First, the authors review a number of IC models. In the process they identify the Intellectus Model as the best starting point for revealing the connection between the concepts of organizational culture and intellectual capital. The authors’ proposed model contains five elements:
structural capital (including organizational capital and technological capital); and
relational capital (including business capital and social capital).
The importance of cultural capital is seen within organizations at two levels:
the national culture; and
the culture of the organization.
These are essential features, and give internal logic to the proposed model.
Ludmila Striukova proposes a taxonomy of values created by corporate patents. Following an extensive literature review, value created by corporate patents is analyzed according to four categories:
embedded in individuals;
embedded in systems and structures;
One of the main findings is that value created by corporate patents can be both market and non-market and can be embedded both in individuals and in systems and structures. Organizations can apply this framework to assess their needs and abilities with regard to value creation from patents.
José Luis Hervas-Oliver and Juan Ignacio Dalmau-Porta have gathered evidence on the core factors which explain countries’ intellectual capital stocks. Results show that technological capability (renewal capital) and the governmental policy oriented to business (process capital) are both key factors in ranking countries by IC stocks. Moreover, in some years the human and educational block and the linkage capability of transferring knowledge from universities to industry can also explain IC stocks. As a consequence, government policy towards business, as well as national efforts in technological areas, are mainly responsible for high levels of national intellectual capital.
The paper by Luis Enrique Valladares Soler and Diego Jesús Cuello de Oro Celestino is the first report on a research project into the valuation of the firm and its intellectual capital. The authors discuss and contrast the hypothesis of the Theory of Intellectual Capital, which maintains that the difference between the market value of a firm and its book value can be explained exclusively in terms of internal intangible assets that are peculiar to the firm. The authors have determined that not all of the overvaluation of corporate assets can be explained by intangible assets of an internal nature. A significant portion can be explained by external factors unrelated to its management, such as the general economic cycle or the sector of economic activity in which the firm is active. Hence, any economic importance that intellectual capital might hold for business management is bounded. Therefore, corporate leadership must focus its actions on the internal assets that are open to management, stressing those that are sources of value creation.
“Does intellectual capital disclosure reduce an IPO’s cost of capital?” is the subject of investigation by Inderpal Singh and J.-L.W. Mitchell Van der Zahn. They studied 334 Singapore IPO prospectuses between 1997 and 2004. Contrary to theoretical predictions and much of the prior financial disclosures, the authors have found a positive association between underpricing and the extent of IC disclosure. Additional sub-sample analysis shows that this positive association is valid across the market’s broader industry base, but is strongest among IPOs heavily reliant on intellectual capital resources. Empirical evidence would suggest that issuers use IC disclosures as a strategic tool to complement underpricing, rather than effectively to reduce the cost of capital. Also, findings suggest that policy-makers may need to introduce minimal uniform IC disclosure requirements to prevent a speculative IPO market from developing as the significance of IC increases.
Gregory White, Alina Lee and Greg Tower have examined the drivers of voluntary intellectual capital disclosure in listed Australian biotechnology companies. The key drivers of voluntary intellectual capital disclosures were found to be the level of board independence, firm age, level of leverage, and firm size. Multiple regression analysis demonstrated that the board’s independence, leverage and size had a significant relationship with the level of voluntary intellectual capital disclosure. Separate regression analysis when controlling for large-sized and small-sized firms demonstrated that voluntary intellectual capital disclosure was only driven by board independence and the levels of firm leverage in large firms. The small firms did not demonstrate this relationship. Implications of these research findings are that smaller biotechnology companies’ managers are not motivated by external debt-holder demands to make voluntary disclosures about intangible firm-value. In addition, large biotechnology companies are better able to establish independent board oversight and appear more effective at driving voluntary intellectual capital disclosures – perhaps in response to greater demand by the owners.
The intellectual capital perspective has been widely applied to research in commercial knowledge-intensive industries; however, less attention has been paid to the healthcare sector. This exploratory study by Tzu-Ju Ann Peng, Stephen Pike and Göran Roos investigates how hospitals in Taiwan view the importance of intellectual capital and performance. By using the Intellectual Capital Navigator (ICN) and the Effector Plot, this study analyzed resource transformations and resource influence among human, organizational and relational capital. Human capital is the most important, and reflects the mission of healthcare, which is “people to care for people”. In organizational capital, healthcare service and quality capital are the most important categories followed by marketing capital, strategic capital and then information technology capital. The results of performance measurement demonstrate that of the five groups of performance measurement, operation efficiency is ranked as the most important performance, followed by cost control, income and growth, clinical and medical quality, and then productivity.
Rory L. Chase