A framework of intangible valuation areas (FIVA). Aligning business strategy and intangible assets
| DOI | https://doi.org/10.1108/14691930510574654 |
| Pages | 43-52 |
| Date | 01 March 2005 |
| Published date | 01 March 2005 |
| Author | Annie Green,Julie J.C.H. Ryan |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
A framework of intangible
valuation areas (FIVA)
Aligning business strategy and intangible assets
Annie Green and Julie J.C.H. Ryan
School of Engineering and Applied Science (SEAS),
Engineering and Management Systems Engineering,
George Washington University, Washington, DC, USA
Abstract
Purpose – This study investigates the adequacy of existing intangible asset models and defines and
codifies common principal valuation drivers of intangible assets for use in enterprise balanced
scorecard valuation practices of information technology (IT) firms.
Design/methodology/approach – Existing intangible asset balance scorecard valuation models
and value chain models are evaluated to extract their value components and align them with
performance-based activities of the business enterprise to define a common taxonomy of value drivers
of intangible assets. Chief executive officers (CEOs), chief finance officers (CFOs) and “other
executives” of IT firms validate the taxonomy.
Findings – IT firms that use a standard and consistent taxonomy of intangible assets could increase
its ability to identify and account for more intangible assets for measurement and valuation.
Research limitations/implications – This study is limited to the Washington Metropolitan Area,
is a single sector study (IT firms), the target audience is CEOs and CFOs; and emphasis is on the Score
Card (SC) type model as classified by Sveiby. Future studies could expand the geographic
circumference, the scope to other industry sectors, and the target audience to other decision makers
Practical implications – The framework of intangible valuation areas (FIVA) allows a business to
identify and link performance measurements/indicators to its intangible value drivers. It supports the
capture and subsequent evaluation of leading and lagging indicators in the achievement of a
knowledge management strategy.
Originality/value – FIVA provides a framework to have command of and access to effective
utilization of business resources and knowledge, to develop, sustain and enhance its mission
effectiveness and/or competitive advantage.
Keywords Intangible assets,Intellectual capital, Managementstrategy
Paper type Research paper
Introduction
Intangible assets, the strategic key to a business enterprise’s future, are invisible with
respect to traditional bottom-line thinking and corporate practice (Rivette and Klein,
2000). Current accounting methods do not convey the relevant and timely information
that is critical to the survival and success of today’s business enterprises (Lev, 2001).
Prior to the knowledge era, businesses lived in a world of tangibles, which work well
with current accounting practices; however, things are different in today’s world of
intangibles. A major difference is the significance of intangible assets in the market
valuation of the business enterprise and the methods used to account for the value
contributed by them (Sullivan, 2000; Edvinsson and Malone, 1997; Reilly and
Schweihs, 1999; Sveiby, 1997). Business valuations are currently viewed via a
double-entry accounting method that is based on tangible asset valuations. These
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
A FIVA
43
Journal of Intellectual Capital
Vol. 6 No. 1, 2005
pp. 43-52
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930510574654
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