Intellectual capital in action: evidence from Italian local governments
| Date | 10 October 2016 |
| Published date | 10 October 2016 |
| Pages | 696-713 |
| DOI | https://doi.org/10.1108/JIC-01-2016-0011 |
| Author | Francesca Manes Rossi,Francesca Citro,Marco Bisogno |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & Finance,Accounting/accountancy,Behavioural accounting |
Intellectual capital in action:
evidence from Italian
local governments
Francesca Manes Rossi, Francesca Citro and Marco Bisogno
Department of Management and Innovation Systems,
University of Salerno, Fisciano, Italy
Abstract
Purpose –Intellectual capital (IC) is attracting increasing attention from scholars and practitioners in
the private sector, while research in the public sector is still in its embryonic stage, especially in regards
to local governments. The purpose of this paper is to fill this gap by channelling conceptual and
empirical findings from the large body of IC literature.
Design/methodology/approach –The research investigates IC in action in the local government
domain. A survey has been carried out involving both managers and politicians of all Italian local
governments (ILGs) with more than 40,000 inhabitants. In order to define the constituents of each IC
dimension perceived by ILGs, principal component analysis was used in investigating the results.
Findings –Results highlights how IC components are perceived in ILGs: human capital is a
combination of aptitudes in pursuing target performances, sense of ownership and motivations;
relational capital is a combination of values, relationships and acts; structural capital includes
procedures and routines supporting the decision-making process, the ability of achieving objectives
and handling changes.
Research limitations/implications –While the research findings are limited due to being based on
a survey in a single country, they present opportunities for future research regarding further testing of
how IC is perceived in LGs in different context. The conclusion could be beneficial also for standard
setters, providing a path to support the IC disclosure by LGs.
Originality/value –The paper contributes to a narrow strand of research –IC in LGs –adding new
knowledge in “IC in action”research stream.
Keywords Intellectual capital disclosure, Intellectual capital, Principal component analysis,
Local governments
Paper type Research paper
1. Introduction
The increasing importance of the knowledge economy has aroused a considerable
discussion among scholars concerning the definition, role, management and disclosure
of the Intellectual capital (IC) (Guthrie et al., 2001; Lev et al., 2005; Marr et al., 2004;
Guthrie and Petty, 2000; Ramírez-Córcoles, 2010; Ricceri, 2008). The importance initially
given to identifying and disclosing IC in the private sector (see a synthesis in Zambon,
2016) has led to an osmosis in the non-profit and public sectors (Guthrie et al., 2009;
Ramírez-Córcoles, 2010; Schneider and Samkin, 2008; Serrano Cinca et al., 2003), even as
a consequence of the introduction of new public management (NPM) philosophy.
NPM has determined a process of deregulation, decentralization, subcontracting,
substitution of input control systems for output control systems, management by
results and responsibility assignment in public entities. Additionally, NPM has been
characterized by a related attention on methodologies and management tools
(Dunleavy and Hood, 1994; Hood, 1995; Pollitt et al., 2007), including changes in the
accounting and reporting systems (Humphrey et al., 1993; Jackson and Lapsley, 2003;
Ter Bogt, 2008), typically adopted in the private sector. NPM paradigm has meant
Journal of Intellectual Capital
Vol. 17 No. 4, 2016
pp. 696-713
©Emerald Group Publishing Limited
1469-1930
DOI 10.1108/JIC-01-2016-0011
The current issue and full text archive of this journal is available on Emerald Insight at:
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greater attention on efficiency, effectiveness and better public service quality,
designating a dominant role to knowledge and intangibles as source of competitive
advantages for public entities (Ramírez-Córcoles, 2010). However, research on IC in the
public sector is still exiguous, basically focussed on universities, (Bezhani, 2010;
Ramírez-Córcoles and Gordillo, 2014; Secundo et al., 2015; Silvestri and Veltri, 2011),
while only a few have concentrated on local governments with scant reference to their
empirical practices (Bronzetti and Sicoli, 2011; Cohen and Vlismas, 2013; Ramírez-
Córcoles, 2010; Serrano Cinca et al., 2003).
Following the public sector research agenda drawn by Dumay et al. (2015), this
study is dedicated to investigating IC in action in the local governments, channelling
the findings from the large body of IC literature and combining the possible ways to
measure and disclose its components (human, relational and structural capital (SC)).
In the local government context, it would be interestingto understand to what extend
both politiciansand managers have a proper consciousness regardingthe relevance of IC
and if it is considerednecessary to measure and disclose theIC components. This kind of
research could potentially supporta different approach to the performancemeasurement
system, adheringthe management of IC to the resulting performance obtained. To runan
empirical analysis, Italy was selected as a country where NPM reforms have been
implemented since the beginning of the 90s and where in the last decades several
recommendations and laws have been issued focussing on both human and relational
capital (RC). To this end, a survey involving managers and politicians of all Italian
local governments (ILGs) with more than 40,000 inhabitants has been performed.
Additionally, the research would propose a definition of the three IC components
congenial to LGs and, more broadly, public sector entities. In this way, the paper may
provide a path for elaborating a conceptual framework in public entities, as well as for
developing guidelines on how IC could be managed and disclosed in this context.
The paper is then structured as follows. Section 2 presents the literature review on
the matter while Section 3 sets the context. After illustrating the research design and
methodology in Section 4, Section 5 presents and discusses empirical findings, upon
which Section 6 attempts to offer a definition of IC constituents. The final section draws
a conclusion and limitations as well as further development of research on IC in LGs.
2. Reasoning on IC in the public sector
A considerable time has gone by since IC was defined as an organization’s most
valuable asset, being a mix of non-physical resources, such as the wealth of knowledge,
information, intellectual property and experience, to be used to achieve common
welfare (Stewart and Losee, 1994).
A great deal of research has been dedicated to define IC, to clarify its elements and to
discuss its management and disclosure, even if the largest part of this research has
been developed in the private sector (see the literature review in Guthrie et al., 2012),
while research on IC in the public sector, especially at a LG level (Dumay et al., 2015;
Garlatti et al., 2014; Massaro et al., 2015), is still exiguous.
In the last few decades, public administrations have been involved worldwide in a
wide process of reform, due to the NPM approach and the related changes in public
service management and delivery (Broadbent and Guthrie, 2008). According to scholars
(Guthrie and Dumay, 2015), there is a need to find a suitable way of optimizing
the relationship between resources, services and citizens and to relate correctly
the accountability of the performance achieved. IC plays a key role in this approach,
“as it provides a lens into the inner workings of public services and ways to measure
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IC in action
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