Intellectual capital in Society 5.0 by the lens of the knowledge creation theory
| Pages | 478-505 |
| Published date | 26 March 2021 |
| DOI | https://doi.org/10.1108/JIC-02-2020-0060 |
| Date | 26 March 2021 |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & finance,Accounting/accountancy,Behavioural accounting |
| Author | Noboru Konno,Carmela Elita Schillaci |
Intellectual capital in Society 5.0
by the lens of the knowledge
creation theory
Noboru Konno
Tama Graduate School of Business, Tama University, Tokyo, Japan, and
Carmela Elita Schillaci
Universita degli Studi di Catania, Catania, Italy
Abstract
Purpose –This paper reviews the development of knowledge creation theory in the last quarter-century and
how it has contributed to innovation management and looks into social and human aspects of innovation in the
era of “Society 5.0”.
Design/methodology/approach –This research aims to relate basic theoretical concepts: knowledge
creation and knowledge assets, purpose, leadership, and place (Ba) for innovation to drive innovation and its
management as a whole ecosystem. It also discusses the application to innovation management systems open
innovation, and social innovation.
Findings –Today’s innovation demands socio-economic fusion that goes beyond current corporate
boundaries. By preparing the system (knowledge ecosystem) asthe basis, we could build the bridge, and such
fusion would be possible.
Research limitations/implications –This paper shows the framework of the idea. Evidence-based
research based on “knowledge assessment”will be discussed on another occasion.
Originality/value –This research is to explain knowledge management, innovation, and social innovation
beyond the corporate framework.
Keywords Intellectual capital, Knowledge creation, Society 5.0, Innovation management, Societal innovation
capital
Paper type General review
1. Introduction
By using the lenses of the knowledge creation (KC) theory, the present conceptual article
discusses the application and practice of intellectual capital (IC) to social capital and societal
innovation, as factors that transcend the boundaries of firms. The theory of KC was initially
presented in the early 1990s. Precisely, it emerged from the observation of new products
development of Japanese companies occurred during the ’80s. Since then, numerous studies in
the research have been focused on knowledge management (KM) and knowledge-based
management (Bushra et al., 2017;Andreeva and Kianto, 2011;Curado, 2008), albeit they were
mostly centered on the accounting approach to IC (Brennan and Connell, 2000;Petty and
Guthrie, 2000;Wu, 2002). Nevertheless, since 1994 the term IC started to be widely used as a
means to indicating those intangible assets (Edvinsson, 2000) that generate value for
companies (Petty and Guthrie, 2000). For instance, Wiig (1997) retained the IC optimizes and
enhances the value of intangible assets of a company, whereas KM is a process which allows
such optimization. He also explicated that knowledge creation is at the basis of organizational
learning, the mechanism for which employees acquire knowledge and are motivated to
generate new knowledge as the end of improving companies’competitiveness. So, IC is
originated thanks to organizational learning (Huss, 2004). In fact, IC stems from the KC
process and from the development of new relationships. A company, thus, develops a
collective ability which supports a KC process (McElroy, 2002;Scuotto et al., 2017b).
Consistently, IC can be deemed as the key driver of innovation (Cuganesan, 2005;Bontis and
Bart, 2009;Inkinen, 2016;Duodu and Rowlinson, 2019), thus rooting its origin in society.
JIC
22,3
478
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1469-1930.htm
Received 28 February 2020
Revised 23 December 2020
27 January 2021
Accepted 27 January 2021
Journal of Intellectual Capital
Vol. 22 No. 3, 2021
pp. 478-505
© Emerald Publishing Limited
1469-1930
DOI 10.1108/JIC-02-2020-0060
Following this approach, Bueno et al. (2004) investigated the concept of social innovation
capital in light of the shift from an industrial environment to a knowledge society (or
economy), by enforcing the relevance of IC in the KC process. However, the IC underpinnings
of social innovation capital were scarcely investigated so far (Shih et al., 2010).
As a matter of fact, the general contribution of IC as a resource for creating value
(Galbraith, 1969;Cuganesan, 2005), for companies’profitability (Grant, 1991;Marr et al., 2003;
Petergraf, 1993;Prahalad and Hamel, 1990;Teece et al., 1997), and for execution strategies
(Edvinsoon and Malone, 1997) is rather an accustomed evidence, whilst its connection with
social capital and social innovation is not quite clear and it is needed to be put in a broader
context.
At a level of critical thinking, it has been observed somewhat a convergence, over time,
between the two domains IC and KM. This convergence endured for over twenty years so far
and it was fostered by the role they both play in innovation.
There are two views of knowledge management (KM): broadly defined and narrowly
defined. KM, in a narrow sense, was more inclined to the management of data and explicit
knowledge. But it only forms part of organizations’knowledge creation (KC), i.e. the process
of knowledge creation and the management of knowledge assets that are created and utilized
in the process of transformation of tacit and explicit knowledge. Management based on
knowledge that encompasses these can be called KM in the broadest sense. This knowledge
asset can be converted or interpreted as intellectual capital (IC) to express and manage
corporate values.
Indeed, IC is within the scope of KM, which induces both the KC process (Wu, 2002) and an
improved decision-making process (Petty et al., 2008). Accordingly, these concepts leverage
the capacity to respond market challenges in a creative way (Rastogi, 2000). Henceforth, IC
forges those organizational capabilities that can be used to convert tacit to explicit knowledge
with the intent to generate innovations (Shaikh, 2004;Phusavat and Kanchana, 2007). In light
of the KM theory, then, the IC can be interpreted as the set of “knowledge-based resources”
(Dzinkowski, 2000), which includes human, structural, and relational capital (Al-Ali, 2003;
Mayo, 2001;Joia, 2000), and as a combination of internal and external intangible assets. In
other words, the IC is an aggregation of employees’knowledge (or human capital),
organizational environment (or structural capital), and external relationships (or relational
capital) (Shih et al., 2010).
McElroy (2002), adding focus to these “tri-dimensional”view of IC, considered the concept
of social innovation capital, as the result of the intersection among the three aforementioned
dimensions.
As a matter of fact, McElroy (2002) described the social capital as “the collective capacity
of a firm to innovate”(McElroy, 2002, p. 30). Hence, this concept emerged as a sort of union
between two further constructs, which are the construct of social innovation and that of
innovation capital. At a theoretical level, this model merges the three components of
intellectual capital, the structural component, represented by innovation capital, the human
component, and the relational component. However, there are some misconceptions at the
basis of this idea. First, this vision considered the structural component in relationship to the
“embodiment”of those tools that support human resources in accomplishing their tasks.
Thus, by definition, it entails a misconception in relationship to the organization, which is a
sum of incorporated tools, where the embodiment more precisely refers to tacitness of certain
kinds of human-based knowledge.
Second, it only considered external relationships of the firm, in the form of customer
relationships, as if all the other formal and informal relationships with a plethora of
institutions and third parties were not a paramount driver of value. On this second point,
McElroy (2002) himself noted this resounding gap. In fact, he argued that social capital is
exactly the results of the various relationships a firm can have. Yet, the social innovation
Intellectual
capital in
Society 5.0
479
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