Intellectual capital in support of farm businesses’ strategic management: a case study
| Pages | 692-711 |
| DOI | https://doi.org/10.1108/JIC-11-2017-0150 |
| Published date | 15 June 2018 |
| Date | 15 June 2018 |
| Author | Caterina Cavicchi,Emidia Vagnoni |
| Subject Matter | HR & organizational behaviour,Behavioural accounting,Knowledge management,Information & knowledge management,Accounting/accountancy |
Intellectual capital in support of
farm businesses’strategic
management: a case study
Caterina Cavicchi
Department of Economics and Management,
University of Ferrara, Ferrara, Italy, and
Emidia Vagnoni
University of Ferrara, Ferrara, Italy
Abstract
Purpose –The purpose of this paper is to shed light on the role of and relationships between human,
structural and relational capital assets for strategic management in a farm business. In particular, it analyzes
the interaction between human capital’s creativity skills and the introduction of climate-smart technologies
for the competitiveness of the firm.
Design/methodology/approach –An explorative case study was conducted on one of the largest Italian
farm businesses to gain an understanding of the drivers of intellectual capital (IC) andof their implications for
strategic management. Full-time employees’perception of the skills required to achieve strategic goals and
their perception of whether they possessed these abilities were investigated to determine if an alignment was
present. The skills were subsequently classified using the framework of Amabile (1988) into domain-relevant
and creativity-relevant skills. Then, two linear regression models were used to investigate the effects of
training on the acquisition of these two sets of skills.
Findings –The analysis confirmed the strategic role of interactions among human capital assets to
effectively exploit the structural capital of the company. When investigating employees’perceptions, a gap
emerged about informatics capabilities and knowledge of soils. As the company’s investments in innovation
are oriented to ICT technologies, the company could strengthen informatics training to enable its employees
to implement effective innovation.
Originality/value –The paper contributes to the literatureon IC by highlighting the roleof interconnections
of assets to alignorganizations with their strategic goals. Therefore,the provision of IC accountingcontributes
to the strategic management of human capital.
Keywords Intellectual capital, Strategy, Accounting, Farm business
Paper type Case study
1. Introduction
Theliteraturehasrecognizedthecriticalroleofknowledgeand,thus,intellectualcapital
(IC)intheenhancementoffirms’strategy (Eisenhardt and Santos, 2002; Marr and Roos,
2005; Sveiby, 2001) and competitiveness (Grant, 1996). IC generally includes human,
structural and relational capital (Meritum, 2002; Roos, 2005). Examining IC components,
human resources contribute to organizational innovation through individual creativity
(Amabile, 1988) which is dependent on domain-specific skills, creativity skills, an
individual’s intrinsic motivation and conditions of social environment (Amabile, 2012).
Amabile (1988) stated that domain-relevant skills represent the “individual ‘raw materials’
for creative productivity”( p. 131), and include basic knowledge and technical skills in a
given domain (e.g. expertise), while creativity-relevant skills represent a “cognitive style
favorable to taking new perspectives on problems, an application of heuristics for the
exploration of new cognitive pathways, and a working style conducive to persistent,
energetic pursuit of one’swork”( p. 131) (e.g. flexibility, social skills, risk orientation).
Domain-relevant skills can be innate or acquired by formal and informal training in the
domain; creativity-relevant skills depend on experience and training (Amabile, 1988).
Transformations of IC, by way of the interaction of assets, as in the case of human capital
Journal of Intellectual Capital
Vol. 19 No. 4, 2018
pp. 692-711
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-11-2017-0150
The current issue and full text archive of this journal is available on Emerald Insight at:
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into new products and services (Edvinsson and Sullivan, 1996) are the main source of
value creation (Peppard and Rylander, 2001).
In agricultureas well as in other firms, the roleof innovation has been discussedas pivotal
(Edvinsson and Sullivan, 1996) to face the increasing uncertainty of the operating
environment (Boehlje et al., 1995; Diederen et al., 2002; Boehlje et al., 2011) and to allow its
economic survival (Nieuwenhuis, 2002) through competitiveness (Subramaniam and Youndt,
2005). Despite this, evidence of the value provided by the interaction of different assets for
strategicalinnovation in agriculturalfirms represents an under-investigatedfield; the majority
of studies mainly a ddress the effect of I C on farm businesse s’productivity and financial
performance(see e.g. Scafarto et al., 2016; Lee and Mohammed,2014). Moreover, there are few
studies on thedevelopment of the human capitalcomponent of IC as a relevant asset(Hitt and
Ireland, 2002)for innovation in the agricultural sectorand these are mainly linked to training/
schooling levels of farming operators, experience and social networking activities (see e.g.
Huffman, 2001). Thecurrent literature on human capital (andof course IC) in agriculture also
presents gaps concerning the strategical determination and assessment of competences
needed to support the competitive advantage(Kozera, 2011). However, accountingstudies on
IC have been focused on the role of IC-based accounting techniques to improve management
and reporting (Guthrieet al., 2012; Mouritsen et al., 2001). To this end, scholars have rec ently
called for investigations into the contribution of IC resources to organizational strategy and
performance (Lev, 2014; Vagnoni and Oppi, 2015), including sustainability (Cavicchi and
Vagnoni, 2017) andvalue creation (Roos, 2005; Peppardand Rylander, 2001), focusing on the
interconnectedness among the different categories of assets (Marr et al., 2004;Habersam and
Piber, 2003). Moreover, the interconnectedness of different IC assets should be studied
focusing on how business activities transform IC and how this process can affect value
creation (Cuganesan, 2005) or negatively impact on it (Cavicchi, 2017).
Indeed, the paper aims to address the above-cited multiple gaps in the literature and
provide evidence of the strategic relevance of developing IC assets’interactions as a source
of innovation for competitive advantage in an analyzed farm business. The case study is
based on interviews and survey questionnaire methodologies. Interviews with the
company’s top and middle management shed light on the strategy of the company and on
the IC assets relevant to the achievement of strategic goals. As some key human capital
competences emerged as pivotal to drive the efficacy of the newly adopted technologies
(structural capital), a questionnaire was given to the 20 full-time farming operators of the
company in order to obtain auto-evaluation of their competences and detect the extent to
which their competences were aligned with those needed for strategic goals. Moreover, the
paper emphasizes the relevance of training in acquisition of individual innovation skills as a
potential source of competitive advantage.
The paper is structured as follows. Section 2 outlines the role of IC and its link with
organizational strategy; Section 3 contextualizes the role of IC in the agricultural sector,
while in Section 4 competences that could drive competitive advantage in farm businesses
are discussed. Section 5 introduces the setting and design of the study, while Section 6
presents the methodology. Section 7 presents and discusses the multiple results of the study.
The results are discussed further in Section 8 to increase their interpretability. In Section 9,
conclusions are drawn.
2. IC development and its link with strategy
In order to be competitive, firms need to fully exploit IC resources to enact strategies; this, in
turn, requires firms to be able to identify the performance drivers as well as their links and
roles for value creation (Marr et al., 2004). New approaches focus on value mapping
techniques to identify key assets and their relations that can provide value creation as they
drive the pursuit of organizational goals (see e.g. Marr et al., 2004). Indeed, the literature has
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Farm
businesses’
strategic
management
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