Demonstrating knowledge value: a broader perspective on metrics

Pages77-91
Date01 March 2004
Published date01 March 2004
DOIhttps://doi.org/10.1108/14691930410512932
AuthorWilliam John Martin
Subject MatterAccounting & finance,HR & organizational behaviour,Information & knowledge management
Demonstrating knowledge
value: a broader perspective on
metrics
William John Martin
School of Business IT, RMIT University, Melbourne, Australia
Keywords Intellectual capital, Intangible assets, Management accounting,
Knowledge management
Abstract This paper focuses on current efforts to demonstrate the value of knowledge in
organisations with reference to activities and systems for the measurement of intangibles. These
efforts stem largely from widespread dissatisfaction with the manner in which traditional
accounting methods treat intangibles. The wider context is that of national and international
governments and organisations striving to master the drivers of knowledge-based change by
involvement in research projects, in conferences, in attempts to find new means of representing
intangibles in standard industrial classifications and national accounts and in standards setting
for knowledge management. Organisationally this is manifest in proprietary systems for
measuring intangibles, many of which suffer the handicap of being overly-focused on single
organisations, with the metrics process continuing to lack critical mass. Although such efforts are
necessary and will continue, they are most likely to succeed where they relate to mainstream
business activities and operate not so much as metrics as indicators.
Introduction
It can be tempting on occasion to speculate that if only there were reliable and
accepted metrics in place then knowledge management would have come of
age. Indeed the practice of management as a whole could stand to gain from
genuine advances in the understanding of knowledge metrics and their
application in appropriate circumstances. However such understanding in all
likelihood would entail appreciation of the fact that there is much more to
demonstrating the value of knowledge than measurement or indeed, the ability
to apply some form of metrics to the intellectual capital (IC) of organisations. In
reviewing the current position as regards metrics for knowledge, the case is
made for a much broader approach to demonstrating knowledge value.
Where the value lies
Interest in demonstrating the value of knowledge is widespread today and is
manifest not only in the activities of public and private organisations, but also
in those of governments and international governments. These activities range
from attempts by organisations to measure return on investment (ROI) or
return on assets (ROA) in knowledge to revisions of standard industrial
classifications at national and international level. Interwoven among such
efforts are attempts to apply the disciplines of management to knowledge in all
its aspects including those of resource and asset, entity and process. In the
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
www.emeraldinsight.com/researchregister www.emeraldinsight.com/1469-1930.htm
Demonstrating
knowledge value
77
Journal of Intellectual Capital
Vol. 5 No. 1, 2004
pp. 77-91
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930410512932

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