Intangible asset management framework: an empirical evidence
| Published date | 24 August 2010 |
| DOI | https://doi.org/10.1108/02635571011069121 |
| Pages | 1094-1112 |
| Date | 24 August 2010 |
| Author | Chaichan Chareonsuk,Chuvej Chansa‐ngavej |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Intangible asset management
framework: an empirical
evidence
Chaichan Chareonsuk and Chuvej Chansa-ngavej
School of Management, Shinawatra University (SIU International),
Bangkok, Thailand
Abstract
Purpose – The purpose of this paper is to explore the interrelationships of intangible assets to
business performance. The paper reports an empirical evidence for the impact of three elements of
intangible assets: learning and growth, internal business process, and external structure on the business
performance of the firm. The linkages between intangible asset elements and business performance are
investigated in companies of various business sizes, business sectors and establishment ages.
Design/methodology/approach – The proposed model was adapted from the balanced scorecard
strategy map. The primary data for analyzing and investigating the interrelationships between
intangible assets and business performance were gathered by subjective opinion survey questionnaire.
In all, 3,084 questionnaires were distributed to the top management. The numbers of qualified
responses were 304 and the data were analyzed using the structural equation modeling technique.
Findings – The commonly assumed causal relationships are confirmed, i.e. the element of learning
and growth has influence on internal business process, the element of internal process has effect on
external structure, and the element of external structure, in turn, has effect on business performance.
Originality/value – Following the research findings, top management in companies of different sizes,
business sectors, and establishment ages should understand the nature of interrelationships and
recognize the importance of intangible assets. These findings will enable top management to realize the
impact of intangible asset elements on business performance so that long-term strategies for effective
intangible asset management may be emphasized for sustainable competitive advantage of the firm.
Keywords Thailand, Intangible assets, Balancedscorecard, Business performance,
Management strategy
Paper type Research paper
Introduction
Traditionally, profit and loss figures in the balance sheet and annual financial reports
are used as the main financial performance indicators for the management actions
previously taken monitori ng and crafting short-term st rategies. Although the
investment of tangible assets such as equipment, machinery, building, etc. is also
recorded in the balance sheet, this simple accounting record is no longer sufficient in the
knowledge-based economy. This is because such a bookkeeping account provides no
linkage with long-term strategies to compete with global competitors and survive in
dynamic economic. Prior to the knowledge era, business lived in the world of tangibles,
which worked well with the traditional accounting practices. However, thin gs are
different in today’s world of intangibles. The focus on tangible assets in the industrial
age has shifted to intangible assets in the knowledge age. Toffler and Toffler (1990)
proposed knowledge as the key success factor in the present competition. With the
realization of this paradigm shift, issues concerning intangible assets are now more
The current issue and full text archive of this journal is available at
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IMDS
110,7
1094
Received 6 January 2010
Revised 2 March 2010
Accepted 16 June 2010
Industrial Management & Data
Systems
Vol. 110 No. 7, 2010
pp. 1094-1112
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635571011069121
widely researched and practiced. Intangible assets are of increasing importance for
the corporate value-creation processes of all kinds of organizations. To be sustainable,
companies need to understand and able to manage intangible factors, including
organizational learning and growth, internal process, and external structure.
This study follows up on the intangible asset management framework proposed by
Chareonsuk and Chansa-ngavej (2008), in which the balanced scorecard strategy map
(Kaplan and Norton, 2004) is chosen as a model to depict how strategy links intangible
assets to value-creating processes. The reasons for choosing balanced scorecard as the
stage to build the intangible asset management framework are as follows: first, balanced
scorecard is a practical approach to measure the intangible assets that has been wide ly
used in a variety of organizations over the past two decades. Second, through the
strategy map concept, balanced scorecard provides the linkage relationship between
intangible assets and business performance including the interrelationship between
intangible assets elements:
.learning and growth affect internal process;
.internal process affects external structure; and
.external structure affects business performance.
There are two key areas of expected outcomes of the study. First, the impact of
intangible assets on business performance is expected to be empirically established. In
particular, the interrelationships between learning and growth, internal process, and
external structure would be identified and analyzed. This is so that the details
underlying the relationships can be implemented in practice.
Second, it is expected that the effects of business size, business sector, and
establishment age on the causal links between intangible assets and business
performance would be established. As there are various types of firm’s business (service
and non-service), sizes of business (large and small and medium enterprise – SME),
establishment age in the industry, this study would provide the pattern of
interrelationships between intangible assets and business performance in each
business characteristic.
Given the expected outcomes, the expected academic contributions of the present
study would be to encourage similar studies to establish the causal links between
intangible assets and business performance in other types of economies. The study
would also provide the foundation for the field of intangible asset management.
For business practitioners, top management will benefit from the understanding of
interrelationship and the realization of the importance of intangible assets (learning and
growth, internal business process, and external structure) and business performance.
With the clearer understanding, proper budget allocation and intangible assets
management will be more properly focused and controlled to increase sustainable
competitive advantage. The intangible assets are the strategic key to a sustainable
competitive advantage and future economic profit.
Literature review
There have been a large number of studies in intangible assets during the last two
decades. Intangible assets are involved in the customers, external structure, human
resources, and internal process. The intangible assets are defined as non-financial
assets without physical substance that are held for use in the production or supply
Intangible asset
management
1095
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