An intellectual capital ontology in an integrated reporting context
| Pages | 83-99 |
| DOI | https://doi.org/10.1108/JIC-05-2018-0090 |
| Published date | 05 December 2018 |
| Date | 05 December 2018 |
| Author | Riccardo Stacchezzini,Cristina Florio,Alice Francesca Sproviero,Silvano Corbella |
| Subject Matter | Behavioural accounting,Organizational structure/dynamics,Accounting/accountancy,Knowledge management,Information & knowledge management |
An intellectual capital ontology in
an integrated reporting context
Riccardo Stacchezzini, Cristina Florio, Alice Francesca Sproviero and
Silvano Corbella
University of Verona, Verona, Italy
Abstract
Purpose –The purpose of this paper is to investigate the intellectual capital (IC) ontology in an integrated
reporting context to explore the function that integrated report (IR) preparers assign to IC elements and the
role of integrated thinking in this process.
Design/methodology/approach –Social ontology theory helps elucidate how an energy-sector company
socially constructed an IC ontology in which IC is a core element of the value creation story told in the IR. The
empirical analysis benefited from in-depth interviews with the corporate staff.
Findings –The subjective nature of IC ontology emerges, in that IC’s function is defined during the very
process of IR preparation. The intangible elements drive sustainability-oriented financial value creation
according to the sustainability approach embraced by the company’s business model. Integrated thinking
both facilitates this perspective on IC is shared among various departments of the company and provides a
procedure for scrutinising what counts as IC in this integrated reporting context.
Research limitations/implications –The research scope is limited to the IR preparation process. Further
research could explore IC ontologies beyond this process.
Originality/value –This study is the first to explore IC ontology empirically within an innovative
integrated reporting context. It opens paths to further research on the relationships between IC and
integrated thinking.
Keywords Integrated reporting, Intellectual capital, Integrated thinking, Social ontology
Paper type Research paper
1. Introduction
The new paradigm of integrated reporting aims to provide a holistic portrayal of a
company’s value creation process. It also traces directions for future corporate reporting
through its ability to combine financial and non-financial information in a single document
(de Villiers et al., 2014; Dumay et al., 2016). This means the integrated report (IR) provides an
impetus for an interconnected approach to corporate reporting, referring to “corporate
strategy, how the strategy translates into a firm’s business model, and how the business
model takes advantage of the six forms of capital […] to create or destroy value”(de Villiers,
Venter and Hsiao, 2017, p. 939).
According to the International Integrated Reporting Framework published by the IIRC
(2013), IRs should recognise the involvement of both tangible and intangible capital in
explaining the value creation process. The Framework thereby redefines the reporting
boundary by considering, in addition to financial capital, five other forms of capital:
manufactured, intellectual, human, social and relationship and natural (IIRC, 2013, § 2.10).
What is generally referred to as intellectual capital (IC) –comprising human, structural and
relational forms of capital (Stewart, 1997; Sveiby, 1997) –in the IC literature is captured in
the combination of the following three forms of capital defined by the International
Integrated Reporting Framework (IIRC, 2013): “intellectual capital”,“human capital”and
“social and relationship capital”(Guthrie et al., 2012; Beattie and Smith, 2013; Melloni, 2015;
Dumay, 2016).
Journal of Intellectual Capital
Vol. 20 No. 1, 2019
pp. 83-99
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-05-2018-0090
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
The authors are grateful to the guest editors and the reviewers for their insightful comments. The
research benefited from funds obtained within the “Ricerca di Base 2015”project of the University of
Verona (Italy).
83
IC ontology in
an integrated
reporting
context
Hence, integrated reporting represents new hope for IC because it repositions IC on
corporate agendas (Dumay, 2016). More precisely, integrated reporting places IC in the
centre of the value creation story (Abhayawansa, 2014; Dumay and Cai, 2014) and explores
its connections with a concept that is central to IR: value creation (de Villiers and Sharma,
2018). The International Integrated Reporting Framework enhances the relevance of IC
within the value creation story built by IR:
Under [integrated reporting], if IC, human capital, or relationship capital is set to play an important
value creation role in the future of an organization, then this value creation story, with IC at its core,
has to be told in the [IR] (de Villiers and Sharma, 2018, p. 11).
IR preparers are urged to explain the role of IC in value creation (IIRC, 2016). However, the
way in which IC is intended to contribute to value creation within a company cannot be
assumed: it reflects IR preparers’interpretations. Indeed, prior IC research has elucidated
the unstable, subjective ontology of IC, with calls for additional research to explore the role
of IC for value creation (Mouritsen, 2006, 2009). Given that IC is a malleable and fragile
concept (Mouritsen, 2006), its assessment requires further development to support
interventions, rather than mandating definitive measures of its value (Mouritsen, 2009).
Integrated thinking can play an important role in moulding how IC is meant to contribute to
value creation. It may facilitate organisational departments in coming to agree on the role of
IC within a company, and in defining the connections between IC and the corporate strategy,
governance, past performance and future prospects (de Villiers et al., 2014; Dumay,
Bernardi, Guthrie and La Torre, 2017; Feng et al., 2017).
Prior integrated reporting research mainly focuses on IC disclosures in reports
(Melloni, 2015; Setia et al., 2015; Ahmed Haji and Anifowose, 2017) without exploring
empirically how companies deal with IC in their IR preparation process. Furthermore,
there is scant research on the role of integrated thinking in this process, although
integrated thinking might be applied to actively considering the IC’scontributiontovalue
creation (Feng et al., 2017). To address this gap, the present study investigates how IR
preparers define the IC’s function while preparing the IR, and the role of integrated
thinking in this process.
In exploring how IC ontology is socially constructed through IR preparation, this study
turns to the social ontology theory introduced by the philosopher John R. Searle (1995, 2006,
2008). Searle’s approach helps clarify the analysis and interpretation of how IR preparers
collectively assign a function to IC elements and establish what counts as IC in an integrated
reporting context. The case study focuses on an integrated reporting pioneer that operates
in the energy sector, and has already published several annual IRs. In-depth interviews with
managers and employees involved in the IR preparation process provide the key empirical
material to inform the detailed description of IC ontology.
This study contributes to extant literature by extending analyses of the subjective
ontology of IC (Mouritsen, 2006, 2009; Vlismas and Venieris, 2011) in a specific and novel
integrated reporting context. It also responds to calls to explain how IC exists in the process
of integrated reporting (Cuozzo et al., 2017; Dumay, Guthrie and Rooney, 2017). The study
clarifies in detail the nexus between integrated reporting and IC, a noteworthy topic that,
apart from some exceptions (Melloni, 2015; Feng et al., 2017), has received little empirical
research attention. By exploring how IR preparers come to share a collective view about the
role of IC in the IR value creation story, this study specifies the relationships among IC,
integrated reporting and integrated thinking (Chaidali and Jones, 2017; de Villiers, Venter
and Hsiao, 2017; Feng et al., 2017). In light of the call for additional guidance on the
conceptualisation and implementation of integrated thinking (IIRC, 2017, 2018), this study
offers practical insights on how integrated thinking emerges and stimulates collective
reasoning about IC in the IR preparation process.
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