Intangibles in commercialisation: the case of air navigation services in the South Pacific
| DOI | https://doi.org/10.1108/14691930510574672 |
| Pages | 72-88 |
| Published date | 01 March 2005 |
| Date | 01 March 2005 |
| Author | James Warn |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Intangibles in commercialisation:
the case of air navigation services
in the South Pacific
James Warn
School of Business, UNSW@ADFA, Canberra, Australia
Abstract
Purpose – To demonstrate that different approaches to commercialisation can determine the nature
of intangible resources that managers can develop.
Design/methodology/approach – A framework linking political strategy, financial capitalisation
and business strategy is developed to analyse the management of intellectual capital in the
commercialisation of air navigation services in New Zealand and Fiji. Case study evidence is organised
as an intellectual capital portfolio and links are drawn to subsequent business outcomes for each
organisation.
Findings – Explains how key decisions about financial capitalisation and business strategy at the
time of commercialisation influence the subsequent management and development of intangible
resources in the organisation. Identifies how political assumptions about commercialisation can
constrain or enhance subsequent management success in developing intellectual capital to pursue
business growth.
Research limitations/implications – The interpretations offered, although plausible in the
context of the case studies, may not generalise to other situations.
Practical implications – Key decision makers need to design commercialisation arrangements that
will resource the desired intellectual capital portfolio of the commercialised organisation.
Originality/value – The paper provides a framework for establishing a linkage between strategic
management decisions and the development of an intellectual capital portfolio in the context of
commercialisation. The paper develops the theoretical extent of intellectual capital concepts and
provides practical analysis to decision makers contemplating commercialisation issues.
Keywords Commercial aircraft, Aircraft navigation,Intellectual capital, Intangibleassets, Fiji,
New Zealand
Paper type Case study
Intangibles and commercialisation
Successful privatisation and commercialisation of state-owned enterprises requires a
number of financial and non-financial issues to be addressed. In privatisation the
capitalisation problem of transferring enterprises from the public to private sector is
clearly recognised (Lancaster and Brierly, 2001) and typically, the discussion addresses
questions about the availability of financial capital, pricing mechanisms and the incentives
for continued investment (Gerber, 2002; Hooper, 2002). Similarly, important structural and
regulatory factors have been identified for the operation of commercial enterprises owned
by the state. Less developed is the understanding of the non-financial issues that are a
feature of the shift from a public sector orientation to one of competing in the marketplace.
Air navigation services (ANS) have not readily followed the trend seen already in
the airline and airport industries towards increased private sector participation.
However, there have been notable examples of commercialisation. In the South Pacific,
the governments of New Zealand and Fiji created state-owned enterprises to achieve
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
JIC
6,1
72
Journal of Intellectual Capital
Vol. 6 No. 1, 2005
pp. 72-88
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930510574672
the efficiencies associated with competition. These cases allow useful comparisons
because of similarities in the conditions before commercialisation. In both cases similar
legislation forming state-owned enterprises was enacted, similar regional requirements
existed for oceanic navigation services and a well-trained group of air traffic
controllers was transferred to the commercialised entity. A key difference at the time of
commercialisation occurred in the structural arrangements devised to organise the air
traffic controllers. In New Zealand, controllers were organised in a manner to support a
partnership strategy with airlines, whereas in Fiji, a service delivery model was
employed. The current paper draws on an intellectual capital framework to examine
the soft resources or intangibles that flowed from the two different approaches to
commercialisation. The political agenda behind commercialisation determined the
level of capitalisation that had direct consequences for the type of business strategy
pursued and management decisions about the nature of the intellectual capital portfolio
that was to be sought (see Figure 1).
Organisational culture and intellectual capital
Intangible resources are associated with elements of organisation behaviour and can be
distinguished from the tangibles of cash, assets and infrastructure. An important
intangible is the organisational culture, defined as the assumptions and values
underpinning the behaviour of people in the organisation (Schein, 1997). The shift to
commercialisation requires public sector managers to adopt values and assumptions
focussed on the customer and commercial dealings (Heracleous, 1999; Lanc aster and
Brierly, 2001). In presenting the case for the role of organisational culture, Salama
(1995) argues that regardless of the investment in new systems and technologies,
managers must change their work-related values before they can acquire the skills
needed to compete in the marketplace.
Organisational culture is regarded as an important element in explaining the
performance of the organisation (Fitz-Enz, 1997). The danger with using it exclusively
is that it requires reliance on universal shared values to explain some very specific
behaviours and capabilities within the organisation. Efficiencies in air navigation
depend on acquisition and deployment of advanced technologies integrated with
modified procedures, all supported by the setting in place of ongoing training for the
air traffic controllers. Obtaining these efficiencies depends on a wider set of
management skills and practices than could comfortably be accommodated under the
label of organisational culture. A more attractive alternative is the intellectual capital
model (Roos et al., 1997), which identifies a range of intangibles including organisation
culture. An advantage of the intellectual capital model is that it can address inta ngibles
directly related to specific performance, such as an understanding of particular
co-dependent work routines.
Figure 1.
Strategic influences on the
transformation of
intellectual capital
ANS in the
South Pacific
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