Human interaction: the critical source of intangible value
| Pages | 82-99 |
| DOI | https://doi.org/10.1108/14691930310455405 |
| Date | 01 March 2003 |
| Published date | 01 March 2003 |
| Author | David O'Donnell,Philip O'Regan,Brian Coates,Tom Kennedy,Brian Keary,Gerry Berkery |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Human interaction: the critical
source of intangible value
David O’Donnell
The Intellectual Capital Research Institute of Ireland, Ballyagran, Ireland
Philip O’Regan, Brian Coates, Tom Kennedy and Brian Keary
University of Limerick, National Technological Park, Limerick, Ireland,
and
Gerry Berkery
Eglinton Group, Limerick, Ireland
Keywords Human relations, Interaction, Intangibility, Value, Intellectual capital, Ireland
Abstract In this theoretical, empirical and occasionally speculative paper we argue that human
interaction is the critical source of intangible value in the intellectual age. This argument is
supported with some perceptual evidence on the dimensions of intellectual capital (IC) from the
Irish ICT sector. Key findings are that almost two thirds of organizational value is perceived to be
intellectual and that half of this IC value is perceived to stem directly from the people dimension.
Drawing on the system/lifeworld distinction in Habermas’ Theory of Communicative Action we
claim that the dominant tenets of market and hierarchy are changing in both nature and scope in
an increasingly knowing-intensive economy. We argue strongly that these tenets must be
complemented with ideas of community and lifeworld that place human interaction at the center of
a more enlightened economic and social equation.
It is people, through their collaboration and interaction who innovate – in universities,
colleges, institutions, enterprises. Science, technology, systems, software, money are merely
the “things” that people use. The complexity of the innovation process has a lot to do with
inattention to the intangibles and people (Irish Government, 1995, p. 10).
Introduction
The field of intellectual capital (IC) is in its infancy. As researchers and
practitioners we are akin to toddlers taking our first tentative steps in
exploring a fascinating and wonderfully emergent, albeit occasionally
bewildering, confusing and frustrating novel environment. The complexity
of this landscape is so rich, colorful and full of kaleidoscopic surprises that the
quality of our extant interpretative capabilities makes it difficult to make some
sense of it all. Some parents of the industrial era, trained and socialized in the
neat Newtonian straight lines and carefully manicured lawns of an earlier
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/researchregister http://www.emeraldinsight.com/1469-1930.htm
The authors must express their appreciation to the Irish CEOs, CFOs and other “knowing-
nomads” who co-operated and conversed with them, to all members of both research teams on
design and data collection, to Ailish Hannigan and Tom Turner for statistical advice and
assistance, to Joachim Maier and Sven Vo
¨lpel for insights on complex adaptive systems, and
particularly to Margaret Heffernan and Peter Cleary for their trojan work in the IC rain-forest.
The usual disclaimer applies.
Comments to the authors welcome: david.odonnell@ireland.com
JIC
4,1
82
Journal of Intellectual Capital
Vol. 4 No. 1, 2003
pp. 82-99
qMCB UP Limited
1469-1930
DOI 10.1108/14691930310455405
tradition, cannot understand our fascination with the chaotic ever-changing
nature of this rampantly voluptuous rain-forest that constantly commands our
attention, and which continues to encroach on the lawn.
Since Galbraith first coined the term “intellectual capital” in the late 1960s
and Sveiby and Risling (1986) published Kunskapsforetaget in 1986, we have
become increasingly aware that we are living through a major discontinuity in
the nature of value. The rampant rain-forest is rapidly taking over from the
manicured lawn – the intangible, in other words, is gaining ascendancy over
the tangible. Nurturing the riches of this eco-system in real-time has assumed a
much more strategically enlightened purpose than the previous industrial (and
academic) strategy of rigidly predicting, directing, exploiting and controlling
the straight lines, pathways and people on the lawn.
If Adam Smith is the theorist of the domestic system, Karl Marx the theorist of
the industrial system, and Max Weber the theorist of hierarchical bureaucracy,
we await the arrivalof the theorist of the IC era – or perhaps not atheorist, but a
set of ideas that are already emerging from the interdisciplinary meshworks of a
rapidly evolving digitally-mediated knowing-intensive economy and society. In
the interim, we must somehow cope with that element that has to matter mostto
(post)modernconsciousness, an element described by Habermas (1987a, p. 53) as
“the transitory aspect of the moment, pregnant with meaning, in which the
problems of an onrushing future are tangled in knots”.
First, we provide a brief theoretical discussion on the nature of the emerging
IC landscape. We then present some evidence in support of the significance of
IC within this landscape based on the perceptions of leading figures (CEOs and
CFOs) within the indigenous Irish information and communications technology
(ICT) sector [1,2], a sector that has grown at 18 per cent per annum between
1993 and 2000. The key finding is that almost two thirds of organizational
value is perceived to be composed of IC and that over half of this intellectual
value stems directly from the people working, thinking and communicating
within this particular sector. Broadly influenced by the social philosophy and
critical social theory of Habermas (1984, 1987a, b, 1990), which places human
interaction at the center of theoretical analysis, we situate our discussion by
adopting a dynamic “lifeworld-in-system” perspective on IC creation
(O’Donnell, 1999a, b, 2000; O’Donnell et al., 2000). This particular post-
foundationalist approach places human interaction, complemented by ideas of
culture, community of practice, communicative action, trust and reflexive
learning, at the center of theoretical analysis on intangible values. It also
facilitates pragmatic exploration of the changing nature of both market and
hierarchy, emerging issues of heterarchy (Stark, 2001), community/trust (Adler,
2001) and business strategy (O’Donnell, 2000). We conclude by arguing
strongly that traditional tenets of market and hierarchy must be complemented
with ideas of community and lifeworld that place human interaction at the
center of a much more enlightened economic and social equation.
Human
interaction
83
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