A critical examination of implementing government sponsored intellectual capital management and reporting programs for small and medium enterprises. Hong Kong and Japan

Publication Date11 May 2015
DOIhttps://doi.org/10.1108/VINE-09-2014-0053
Date11 May 2015
Pages214-238
AuthorJanice Tee Jeok Inn,John Dumay,Katsuhiko Kokubu
SubjectInformation & knowledge management,Knowledge management,Knowledge management systems
A critical examination of
implementing government
sponsored intellectual capital
management and reporting
programs for small and medium
enterprises
Hong Kong and Japan
Janice Tee Jeok Inn
Graduate School of Business Administration, Kobe University, Kobe, Japan
John Dumay
Department of Accounting & Corporate Governance,
Macquarie University, Sydney, Australia, and
Katsuhiko Kokubu
Graduate School of Business Administration, Kobe University, Kobe, Japan
Abstract
Purpose This study aims to examine the impact of implementation of government-sponsored
intellectual capital (IC) management and reporting (ICMR) programmes in Hong Kong and Japan for
small and medium enterprises (SMEs) for the purpose of issuing an IC statement (ICS).
Design/methodology/approach – The authors present a critical analysis using semi-structured
interviews with employees and owners of Hong Kong and Japanese SMEs who participated in their
respective government’s ICMR programmes and who published an ICS.
Findings – The authors conclude that many enterprises did not achieve the full benet of participating in
the ICMR programme because consultants funded by the government prepared the ICS. Instead, consultants
should take on more of a “missionary” role, educating enterprises about IC, rather than doing the work for
them.
Research limitations/implications – This research is restricted to enterprises that published one
or more ICS. Future research should include enterprises participating in the ICMR programme that
failed to publish an ICS.
Practical implications – Enterprises that are able to utilise IC in their daily business routine will
think IC is useful and continue using it. Conversely, those enterprises that relied on consultants to
prepare the ICS will not understand its benets.
Originality/value Policymakers should not solely concentrate on creating new IC reporting
frameworks or guidelines for enterprises to follow because this focus limits the understanding of how
enterprises can utilise IC concepts with the consequence that they may eventually give up on IC reporting.
Keywords Government policy, SMEs, IC management, IC measurement, IC reporting, IC disclosure
Paper type Research paper
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0305-5728.htm
VINE
45,2
214
Received 9 September 2014
Revised 9 January 2015
21 February 2015
Accepted 23 February 2015
VINE
Vol.45 No. 2, 2015
pp.214-238
©Emerald Group Publishing Limited
0305-5728
DOI 10.1108/VINE-09-2014-0053
1. Introduction
This paper’s aim is to present a study examining the implementation of
government-sponsored intellectual capital (IC) management and reporting (ICMR)
programmes in Hong Kong and Japan for small and medium enterprises (SMEs) for
the purpose of issuing an IC statement (ICS). The study is important because the
effectiveness of government-sponsored ICMR programmes need to be assessed; if the
programmes do not deliver results, public money spent is wasted.
SMEs play an essential role in economies and rely on IC because they have fewer
tangible assets compared to larger enterprises. However, relative to IC research on
publicly listed companies, there is little published research on SMEs (Guthrie et al., 2012,
p. 74; Dumay, 2014, p. 12), which is surprising given that several major IC research
projects target SMEs (Humphreys et al., 2010;Dumay and Garanina, 2013, p. 12). Thus,
this paper adds to the IC literature from both policy and SME perspectives. After
reviewing the literature (Section 2), we identify three research questions (RQs) that are
the focus of the paper:
RQ1. What is the main purpose for enterprises participating in ICMR programmes
and are these purposes achieved?
RQ2. Is quantifying IC useful for enterprises participating in ICMR programmes?
RQ3. Are specic guidelines useful for enterprises participating in an ICMR
programme?
To answer these RQs, we present a critical analysis using semi-structured interviews
(Qu and Dumay, 2011) with employees and owners of Hong Kong and Japanese SMEs
who have participated in ICMR programmes and published an ICS.
The paper is innovative because it critically examines government and policy
interventions into developing ICMR practices, alongside understanding the impact on
SMEs. We nd that many enterprises did not achieve the full benet of participating in
the ICMR programme because the consultants funded by the respective governments
mainly prepared the ICSs, and thus, the SMEs had little input into, or experience of,
preparation of the ICS. Greater benet would be achieved by consultants taking on more
of a “missionary” role, educating enterprises about IC, rather than doing the work for
them.
The paper is divided into the following sections. First, we present a literature review
and RQs, followed by a section outlining the Japanese and Hong Kong ICMR guidelines
and programmes. Next, we outline the research methodology and then ndings,
followed by conclusions and implications for practice, policy and research, alongside
identifying the limitations of the study.
2. Literature review
IC is a key resource and driver, enabling SMEs to improve their competitive advantage
and enterprise performance and to create value (Jardon and Martos, 2012). IC is also
important for SMEs transitioning from traditional business models to knowledge-based
enterprises (Edvinsson and Malone, 1997;Piperopoulos, 2010;Daou et al., 2013) and
because SMEs have fewer tangible assets as compared to larger enterprises. Therefore,
SMEs must acknowledge and manage their IC, and as a result, there is a small evolving
research body concerning IC’s impact on SMEs in different countries and industries
215
Intellectual
capital
management

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