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1 – 10 of 132Maria Serena Chiucchi and Marco Montemari
Although several frameworks for measuring and reporting Intellectual Capital (IC) have been developed over the past two decades, their actual use in practice is still limited. The…
Abstract
Purpose
Although several frameworks for measuring and reporting Intellectual Capital (IC) have been developed over the past two decades, their actual use in practice is still limited. The purpose of this paper is to answer the call to analyze IC practices from a critical and performative perspective by investigating how and why IC indicators may end up not being used, thus shedding light on the barriers to their use.
Design/methodology/approach
The paper presents a single in-depth case study and focusses attention on the fragility of the IC indicators as well on the interactions that occur among subjects while transmitting IC indicators.
Findings
The case analysis shows how the different perspectives and expectations that are at stake when subjects engage with IC indicators can play a central role in hindering or enabling their use in practice. Expecting IC indicators to be able to accurately represent and to objectively signal the size and the growth/decline of IC, i.e. to be complete and isomorphic measures, can act as a barrier to their use. The case also shows that scores play a role in hindering the use of the IC indicators; the subjects disputed the scores when they did not confirm their perception of reality, and the lack of completeness and isomorphism of the IC indicators, i.e. their fragility, was the reason put forward to justify the subjects’ refusal to accept the scores and thus, to use these measures.
Research limitations/implications
Although the use of a single case study provides in-depth and rich data, it also limits the generalizability of the observations to other companies. Moreover, the findings obtained may be influenced by the specific IC framework and indicators adopted.
Originality/value
Differently from most previous IC research, this paper focusses attention on the transmission of indicators and ultimately, on their “fate,” and it contributes to the understanding of how and why IC indicators may be produced but not used, thus hindering the diffusion of IC frameworks in practice.
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Ricardo Vinícius Dias Jordão and Vander Ribeiro de Almeida
One of the main contemporary challenges in organisations is finding ways of measuring their intellectual capital (IC), and its effects on competitiveness and financial…
Abstract
Purpose
One of the main contemporary challenges in organisations is finding ways of measuring their intellectual capital (IC), and its effects on competitiveness and financial sustainability. The purpose of this paper is to analyse the influence of IC on the long-term financial performance of Brazilian companies.
Design/methodology/approach
Considering that previous studies have not been able to explain the role of IC in financial sustainability (measured by long-term corporate performance), this paper attempts to fill this gap by means of a quantitative, descriptive and applied study. Based on the theories of knowledge management, accounting and finance, the authors have undertaken a study of the companies listed on the BM&FBovespa, based on secondary data, using a multi-industrial cut, over the period 2005 to 2014, using descriptive and multivariate statistics.
Findings
The analysis supports three major conclusions: IC influences positively the profitability and corporate return of these companies; the more intangible-intensive public companies listed on the BM&FBovespa demonstrate higher financial sustainability than the others, in terms of profitability and corporate return, either individually, globally or by industry; and that IC helps increase financial performance, systematically, over time.
Research limitations/implications
Contributions of the following types were sought: theoretical (increasing an understanding of the effects of IC on business performance from a long-term perspective – an understanding that is still only incipient in the management literature); and empirical (increasing an understanding of the role of IC in the differentiation of companies, in organisational profitability and on the return on applications of resources).
Practical implications
The original proposal for the measurement of financial performance presented in this paper proved to be valid and consistent, complementing what is known about the subject under examination, contributing to the improvement of management theory and practice and providing a competitive benchmarking process. This can make it possible for company analysts or managers to evaluate their company in relation to its industry or its market as a whole by means of such indicators, individually or combined with other quantitative or qualitative metrics.
Originality/value
The results of this research reduce a gap in the management and accounting literature, as they shed light on the performance measurement process. In addition to the range and depth of the statistical tests carried out, attention should be drawn to the originality of the proposal presented in this paper. This facilitates the measurement of the effects of IC on financial performance through the selection and application of specific indicators for the assessment of the contribution of IC to organisational results.
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Ricardo Vinícius Dias Jordão, Vander Ribeiro de Almeida and Jorge Novas
The purpose of this paper is to analyze the influence of intellectual capital (IC) on sustainable economic and financial performance (EFP) and value creation (VC) in Brazilian…
Abstract
Purpose
The purpose of this paper is to analyze the influence of intellectual capital (IC) on sustainable economic and financial performance (EFP) and value creation (VC) in Brazilian companies.
Design/methodology/approach
Based on finance and accounting theories, a quantitative and descriptive long-term study was carried out in the companies listed on the Brazil Stock Exchange and Over-the-Counter Market (B3), covering 20 years period.
Findings
The results indicate that IC positively influences profitability, corporate return and organizational value sustainably; the most intangible-intensive Brazilian companies listed on B3 presented more robust results than the least intangible-intensive; and IC contributes to a systematic increase in EFP and VC over time.
Research limitations/implications
Using a well-established metric, the IC-INDEX, the IC and its effects were measured, obtaining theoretical contributions (expanding the understanding of the IC influence in sustainable EFP and VC from a long-term perspective – one subject still unexplored in the literature); and empirical (increasing the understanding of the IC’s role as a driver of competitiveness, performance and organizational value).
Practical implications
This study increases the understanding of the theoretical and practical effects of IC, also providing a competitive benchmarking process to access sustainable EFP and VC of companies and their industries.
Originality/value
The originally applied and validated proposal extends existing theory by offering a set of indicators to scale the contribution of IC to competitiveness from the perspective of long-term (historical) corporate outcomes.
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Haiyan Zhou, Hanwen Chen and Zhirong Cheng
In this paper, we investigate whether internal control and whether corporate life cycle would affect firm performance in the emerging markets of China.
Abstract
Purpose
In this paper, we investigate whether internal control and whether corporate life cycle would affect firm performance in the emerging markets of China.
Methodology/approach
We use Chen, Dong, Han, and Zhou’s (2013) internal control index on the effectiveness of internal control and Dickinson’s (2011) definition on firm life cycle. We use multivariate regression analysis.
Findings
We find that the internal control improves corporate performance. When dividing firm life cycle into five stages: introduction, growth, mature, shake-out and decline, we find that the impacts of internal control on firm performance vary with different stages. The positive impact of internal control on firm performance is more significant in maturity and shake-out stages than other stages.
Research limitations/implications
Our findings would have implications for the regulators and policy makers with regards to the importance of internal control in corporate governance and the effectiveness of implementing standards and guidelines on internal control in public firms.
Practical implications
In addition, our findings on the various roles of internal control at different stages of firm life cycle would help managers and board of directors find more focus in risk management and board monitoring, respectively.
Originality/value
Although the prior literature have examined the link between internal control, information quality and cost of equity capital (Ashbaugh-Skaife, Collins, Kinney, & LaFond, 2009; Ogneva, Subramanyam, & Raghunandan, 2007), our study would be the first attempt to investigate the link between internal control and firm performance during different stages of firm life cycles.
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Xuelian Liu, Nopasit Chakpitak, Pitipong Yodmongkol and Shuang Cang
The purpose of this paper is to present a framework for intellectual capital (IC) disclosure in cross-cultural E-tourism which includes identifying key success factors, as well as…
Abstract
Purpose
The purpose of this paper is to present a framework for intellectual capital (IC) disclosure in cross-cultural E-tourism which includes identifying key success factors, as well as selecting indicators in operational level.
Design/methodology/approach
The method described in this paper involves IC process model initiating from strategy formulation, following key success factors analyst by using a detailed interpretative structural model (ISM) instrument, and the indicators selection employing Delphi approach. The paper explicates methodological decisions associated with cross-cultural E-tourism context: selecting the appropriate specialists panel; the approach to data collection; and selecting the measurable indicators.
Findings
This paper proposes three critical components of the framework: key success factors that based on an organization's strategies and contexts; indicators that measure and monitor the value of IC; an IC model that can help cross-cultural E-tourism enterprise improve management effectively.
Originality/value
This paper extends the methodology developed previously to examine IC information in tourism enterprise. The paper introduces an alternative methodological paradigm to the study of IC measurement framework by employing the ISM. This exploratory study employs IC process model to build up cross-cultural E-tourism IC model, which is a start point for the value and performance research of this kind of enterprise.
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Sonda Wali and Sana Mardessi Masmoudi
This study aims to examine whether the internal control system quality in the French context improve the information quality having been reflected by the level of real earnings…
Abstract
Purpose
This study aims to examine whether the internal control system quality in the French context improve the information quality having been reflected by the level of real earnings management (REM) measured by inventory overproduction, discretionary expenses reduction and sales manipulation.
Design/methodology/approach
The research uses a multiple regression analysis to examine the association between internal control and REM. The years 2010-2015 are used as analysis period by focusing on the French context. Three panel data are applied to the companies belonging to the Cotation Assistée en Continu (CAC) 40 index for the entire study period.
Findings
The results show that high internal control index has a negative impact on the REM and that better internal control indeed makes financial reporting more credible to investors. Further, the results demonstrate that control environment, risk assessment, control activities and monitor are the components that mainly affect REM.
Originality/value
The results contribute to the literature dealing with the relationship between internal control quality and REM by shedding light on the importance of internal control quality in improving information quality in the French context. Moreover, this study is using a quantitative measure of the internal control quality while much of the prior literature uses material weaknesses to estimate the effectiveness of internal control system.
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Stefania Veltri, Andrea Venturelli and Giovanni Mastroleo
The purpose of this paper is to propose a method to measure intellectual capital (IC) in firms involved in strategic alliances, an area that has received scant attention in the…
Abstract
Purpose
The purpose of this paper is to propose a method to measure intellectual capital (IC) in firms involved in strategic alliances, an area that has received scant attention in the literature, as existing research is focused mainly on organizational level mainly and increasingly on macro-level unit such as regions or nations. There are very few works at the meso-level (i.e. alliances, clusters), and the paper aims to fill this void, by providing researchers and practitioners with a tool capable of combining measurement and management aims, developed at organizational level with the active participation of the researchers.
Design/methodology/approach
The method of analysis is based on a model formalized through a fuzzy expert system (FES). The FES are able to merge the capabilities of an expert system to simulate the decision-making process with the vagueness typical of human reasoning, maintaining the ability to still have a numeric value as a response. Its construction requires the participation of experts, whose knowledge of the problem is accumulated in the form of blocks of rules. These features make it possible to formalize the decision-making process related to the IC valuation, handling qualitative and quantitative variables, and exploring the cognitive mechanisms underlying this process.
Findings
The outcome of the application is a system designed to measure the intangible performance deriving from participation in a strategic alliance using FES. This study contributes to the broadening of the research community’s understanding regarding the alternative measurement of IC created within strategic alliances.
Research limitations/implications
To the best of the authors’ knowledge, IC literature lacks methods expressly designed to measure the incremental value of IC originating from collaboration among firms. From a measurement perspective, the results may be regarded as valuable proof that IC performance within strategic alliances can be measured quantitatively.
Practical implications
On the management side, the possibility of retracing the determinants of different IC intermediate indicators composing the final IC index allows strategic alliances managers to use this information for decision-making purposes.
Originality/value
To the best of the authors’ knowledge this is the first study applying FES to measure IC in a firm belonging to a strategic alliance. In the authors’ opinion, fuzzy logic methodology, recently applied in empirical work designed to evaluate IC, represents a reliable methodology because of the “fuzzy” nature of IC.
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Norhayati Mat Husin, Keith Hooper and Karin Olesen
The purpose of this paper is to provide an analysis of intellectual capital (IC) disclosures in annual reports (mandatory and voluntary) and draw attention to the specific issues…
Abstract
Purpose
The purpose of this paper is to provide an analysis of intellectual capital (IC) disclosures in annual reports (mandatory and voluntary) and draw attention to the specific issues related to the methodology used i.e. content analysis. The focus is to incorporate all forms of IC disclosure – narratives, numbers, and visual images – into the analysis as well as highlight the need to study both quantity (extent) and quality of disclosure.
Design/methodology/approach
Using content analysis, this paper analyzes 30 of Malaysia's largest public‐listed companies from the IC disclosure of 2008 annual reports. The results are used to discuss specific methodological issues such as the usage of an IC index, choice of unit of analysis, quantity versus quality, presence/absence versus multiple disclosures, and the usage of narratives, numbers, and visual images.
Findings
This paper proposes that themes are the most appropriate recording and counting unit to analyze IC information combining narratives, numbers, and visual images. The discussion finds, among others, that while quantity and quality are highly related, quality of disclosure provides the most insights into the disclosure behavior adopted by companies.
Practical implications
This paper provides methodological guidelines to future IC researchers interested in analyzing the quantity and quality of IC disclosure.
Originality/value
To the best of the authors' knowledge, so far there are no studies published that provide a detailed discussion on ways to capture the quantity and quality of IC information disclosed in annual reports using all three forms of disclosure – narratives, numbers, and visual images.
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With a view to enabling organisations provide a clear understanding of firm value creation, several national and supranational institutions have produced guidelines and frameworks…
Abstract
Purpose
With a view to enabling organisations provide a clear understanding of firm value creation, several national and supranational institutions have produced guidelines and frameworks for externally reporting intellectual capital (IC). In many cases regulators, the accounting profession and accounting scholars have driven these initiatives. The purpose of this paper is to summarise, analyse and compare the guidelines and frameworks that have been developed with a focus on externally reporting IC.
Design/methodology/approach
The paper analyses the assumptions underpinning 20 guidelines and frameworks that have been developed with a focus on reporting IC using a self-constructed framework.
Findings
The review resulted in a comparison of IC reporting guidelines and framework based on target audience, role of IC within the organisational strategic management process and reporting IC indicator. It provides an understanding of the state of the art in relation to external reporting of IC.
Practical implications
The insights provided by the comparison of the guidelines and frameworks are likely to be helpful for practitioners wanting to adopt or develop an IC reporting model for their organisation. Policy-makers will find these insights beneficial when attempting to refine existing frameworks and guidelines for reporting IC and in developing new ones to suit various circumstances. Also, this paper provides a useful review for academics.
Originality/value
This is the first paper to provide a review of a large number of business reporting guidelines and frameworks with a focus on IC. It is a valuable reference for practitioners, policy-makers and academics on IC reporting models.
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Livio Cricelli, Marco Greco and Michele Grimaldi
– The aim of this article is to expound a holistic intellectual capital index. Moreover, the paper presents its implementation within a real estate organization.
Abstract
Purpose
The aim of this article is to expound a holistic intellectual capital index. Moreover, the paper presents its implementation within a real estate organization.
Design/methodology/approach
The index is calculated on the basis of 14 structured interviews synthesized through the analytic hierarchy process, min–max normalizations and weighted sums.
Findings
The authors estimate a holistic intellectual capital index and show that an analysis of its components may allow identifying discordances within the organization about the contributions of its value drivers.
Research limitations/implications
The proposed index may be used in a medium-/long-term research to measure the evolution in the organizational intellectual capital and its relation with the top management’s initiatives and the competitive environment changes.
Practical implications
The proposed methodology may integrate the reports prepared for shareholders and stakeholders and provide the top management, with an in-depth understanding of the different perceptions of the organizational human resources.
Originality/value
The authors discuss a holistic index of intellectual capital that allows considering both the performances of the intellectual capital components and the interdependencies among them and also their strategic contribution to the value-creation process. In addition, they propose a novel descriptive statistical analysis of the assessment and management of IC-index components to draw indications for the top management.
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