Developing and managing knowledge through intellectual capital statements

Publication Date01 Mar 2002
AuthorJ. Mouritsen,P.N. Bukh,H.T. Larsen,M.R. Johansen
subjectMatterAccounting & finance,HR & organizational behaviour,Information & knowledge management
Journal of Intellectual Capital,
Vol. 3 No. 1, 2002, pp. 10-29.
#MCB UP Limited, 1469-1930
DOI 10.1108/14691930210412818
Developing and managing
knowledge through intellectual
capital statements
J. Mouritsen
Copenhagen Business School, Frederiksberg, Denmark,
P.N. Bukh
Aarhus School of Business, Aarhus, Denmark,
H.T. Larsen
Copenhagen Business School, Frederiksberg, Denmark, and
M.R. Johansen
Aarhus School of Business, Aarhus, Denmark
Keywords Intellectual capital, Management, Strategy, Narratives, Companies, Denmark
Abstract On the basis of empirical illustrations from five Danish firms this paper discusses how
the objects of intellectual capital statements were constructed. These objects were the activities
that defined knowledge management, and the intellectual capital statements monitored these
through depicting a particular narrativised strategy for managing knowledge ± called a knowledge
narrative ± and through a monitoring system that reflected the activities set in motion to mobilise
the strategy for managing knowledge. Particularly, the paper discusses the idea of knowledge as a
narrative. It is suggested that for knowledge to count, it has to be able to produce something. This
something is found the value-to-the-user of the products and services.
Intellectual capital is, even if it refers to ``capital'', not a conventional accounting or
economic term. Some authors use it descriptively ``to refer to the knowledge and
knowing capability of a social collectivity, such as an organization, intellectual
community, or professional practice'' (Nahapiet and Ghoshal, 1998, p. 245). Other
writers associate it more intimately with management activities, either in the area
of human resources (Boudreau and Ramstad, 1997) or of information technology
(Davenport and Prusak, 1997). Intellectual capital has also been decomposed into
``human capital'', ``organisational capital'' and ``customer capital'' (e.g. Edvinsson
and Malone, 1997; Stewart, 1997; Sullivan, 1998).
These definitions illustrate three perspectives on intellectual capital that
suggest it be about the effects of a collective practice, two sets of management
issues or a template for describing its elements. Comparing the three
perspectives, there is a possible irony or tension. As effects of a collective
practice, intellectual capital is not a ``thing'' that has certain stable traits: it is
``merely'' the effects of how certain elements of a collectivity come together. The
knowing capability, of which Nahapiet and Ghoshal (1998) talk, does not
necessarily reside anywhere. Intellectual capital is not an object but an effect!
Others suggest that it is possible to attach certain management problems to
intellectual capital such as human resource management and the management
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Developing and
of information technology, respectively. Here, intellectual capital is a
departmental issue ± either an HR issue or an IT issue. Even if both Boudreau
and Ramstad, and Davenport and Prusak call for top management to support
their agendas, they do so to rally support and not because, essentially,
intellectual capital is to be found in these two organisational departments.
From this perspective, intellectual capital is not an effect of the work of a
collectivity; it is more an element in interdepartmental struggles for visibility
towards top management.
Finally, authors such as Edvinsson and Malone, and Stewart suggest that
intellectual capital is a combination of human, structural and customer capital,
whose worth can be identified by subtracting the firm's book value from its
market value. Here, intellectual capital is a mathematical form derived from
manipulating a model of the capital market. Intellectual capital is a residual,
which, on the one hand, illuminates the ``total value'' of intellectual capital but,
on the other hand, poorly reflects the linkages between the three elements of
intellectual capital that would explain this difference.
The tension and ambiguity involved here are that neither of the perspectives
explains the mechanics of intellectual capital. Intellectual capital may be an
effect; it may be a departmental strategy; it may be a mathematical formula,
but how it works is difficult to unravel. Against this background, it is not
difficult to understand why some authors have struggled to find the referent of
intellectual capital ± what is intellectual capital mapping and trying to bring
into the open? What is an intellectual capital statement attempting to make
One of the possible answers is that the management of intellectual capital
and the management of knowledge resources are linked (Sveiby, 1997; Sullivan,
1998) since knowledge management activities can be seen as the substances on
which intellectual capital statements report (Allee, 1997; Birkitt, 1995; Bukh
et al., 2001; Leonard-Barton, 1995; Mouritsen et al., 2001a, b). To Roos et al.
(1997, pp. 6-7) this linkage may be appreciated in the following way:
A veritable multitude of theories has emerged, each trying to capture the essence of the
problem ± on one side the measurement of the hidden value of the company, and on the other
side the management of knowledge and information, as sources of sustainable competitive
advantage. No theory, though, until the beginning of the 1990s and the development of the
concept of intellectual capital, has realised that the two problems are only two sides of the
same coin: what you can measure, you can manage, and what you want to manage, you have
to measure. Intellectual capital theory represents the fusion between these two streams of
thought. IC is concerned with how better to manage and measure knowledge and other
intangibles in the company.
The aim of measurement is to mobilise ``intellectual capital as a language for
thinking, talking and doing something about the drivers of companies' future
earnings. Intellectual capital comprises relationships with customers and
partners, innovation efforts, company infrastructure and the knowledge skills
of organizational members.'' (Roos et al., 1997, p. v, emphasis in original). In this
sense, intellectual capital statements report on the knowledge management

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