Intellectual capital research: a critical examination of the third stage
| Date | 11 January 2013 |
| Pages | 10-25 |
| Published date | 11 January 2013 |
| DOI | https://doi.org/10.1108/14691931311288995 |
| Author | John Dumay,Tatiana Garanina |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Intellectual capital research:
a critical examination
of the third stage
John Dumay
Discipline of Accounting, University of Sydney Business School,
Sydney, Australia, and
Tatiana Garanina
Graduate School of Management,
St Petersburg University, St Petersburg, Russia
Abstract
Purpose – The purpose of this paper is to examine intellectual capital research (ICR) methods
and critically analyse how they have been utilised. The data set for this analysis is based on examining
IC papers published in specialist IC and important generalist accounting journals from the years
2000 to 2011.
Design/methodology/approach – The basis of the analysis is Alvesson and Deetz’s critical
management framework of “Insight”, “Critique” and “Transformative redefinition” with the goal
of widening the discourse about how to research IC. This paper is motivated by Guthrie et al.,
who identify a third stage of ICR which is “based on a critical and performative analysis of intellectual
capital (IC) practices in action”.
Findings – This paper argues that there is an increasing performative research agenda however
many researchers appear caught in an “evaluatory trap” (Olson et al.) whereby the researchers’
approach to ICR remains stuck in an ostensive approach (see Mouritsen) that characterises second
stage ICR (see Petty and Guthrie). The paper also identifies how many accounting researchers are
impacted by a “dominance structure” and suggests that they need to break free from the dominance of
“accounting” practice before they can understand and realise the potential of IC.
Research limitations/implications – The implication of this paper for ICR and practice is to create
a continued discourse about evolving approaches to ICR so we can continue communicating leading
edge, third wave ICR, which develops IC theory in practice and effective IC management through
praxis.
Originality/value – From 2004 onwards,Guthrie et al. claim the third stage was gaining impetus and
thus this paper is novel because it investigates how ICR has transitioned and how ICR might continue
to develop.
Keywords IC research, Ostensive vs performative, Third stage ICR, Evaluatory trap,
Dominance structure, Intellectual capital, Research methods
Paper type Research paper
1. From the first to third wave of IC research
Intellectual capital research (ICR) has evolved over the past two decades in what
Guthrie et al. (2012) describe as three distinct stages. The first stage of ICR has its
origins in the late 1980s and into the 1990s and according to Petty and Guthrie (2000,
p. 155) helped develop a “framework of intellectual capital”. Typically, first stage ICR
focused on raising awareness of why intellectual capital is important in “creating and
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1469-1930.htm
Journal of Intellectual Capital
Vol. 14 No. 1, 2013
pp. 10-25
rEmeraldGroup Publishing Limited
1469-1930
DOI 10.1108/14691931311288995
The authors thank Professor James Guthrie for his support for allowing them to continue an
important stream of research. The authors also thank Lisa Marini for her excellent research
support and Fiona Crawford of the Editorial Collective for her excellent editorial assistance.
10
JIC
14,1
managing sustainable competitive advantage” (Petty and Guthrie, 2000, p. 155). This
recognition was the foundation for IC development. At the same time different
guidelines and standards were created to make the invisible IC more visible. In early
ICR publications the main argument was “intellectual capital is something significant
and should be measured and reported”, but with little empirical research provided in
support (Petty and Guthrie, 2000, p. 162).
The first stage of ICR is firmly grounded in the work of practitioners in the 1980s
and 1990s. For example, Karl-Erik Sveiby “discovered the knowledge organization”
while working at Swedish publisher Affa
¨rsva
¨rlden Group; Leif Edvinsson is famous
for his work at the Swedish insurer Skandia (Edvinsson, 1997). On the other side of the
world, in the USA, journalist Thomas Stewart, a writer for Fortune magazine
popularised the concept of IC through his papers (Stewart and Losee, 1994; Stewar t,
1997a) and book (Stewart, 1997b). At the same time the balanced scorecard was also
gaining popularity in management circles (Kaplan and Norton, 1992). As Petty and
Guthrie (2000, p. 156) declared in “The aim of stage one was to render the invisible
visible by creating a discourse that all could engage in. Mission accomplished”.
The second stage of ICR can be defined as a stage where approaches to measuring,
managing and reporting IC came to the fore and to gather evidence in support of its
further development (Petty and Guthrie, 2000, p. 156). During this stage different
classifications were created which helped to define and group different methods of
IC evaluation (Guthrie et al., 2007; Boedker et al., 2008; Ricceri, 2008). B y the mid 2000s
more than 50 methods were created which either helped to define IC as a whole or
define different elements of IC and the list keeps growing (see Pike and Roos, 2007;
Sveiby, 2010).
The first stage of ICR was characterised by the use of “grand theories” to create
awareness of IC concepts, being the broad principles about IC that guide management
action. As Dumay (2012, p. 4) argues, IC concepts as “grand theories” have been
embraced and then under-used and he thus “finds that these grand theories mislead
because they cannot be proven empirically. Therefore, managers should attempt
to better understand the possible causal relationships betwe en their people, processes
and stakeholders (human, structural and relational capital) rather than adopting
someone else’s mousetrap”. For example, the concept of “market-to-book ratios”
(Stewart, 1997b) as an IC grand theory is flawed because of problems with fluctuating
market values, historical cost accounting and the inability to measure intangibles
in dollar terms (Dumay, 2012, p. 8).
The second stage of ICR investigated the impact of IC on financial performance and
value creation. On a theoretical level, proponents argue that IC is the value driver
leading to greater profitability (Bismuth and Tojo, 2008) and that organisational
knowledge is at the crux of competitive advantage (Bontis et al., 1999). However,
empirical and case evidence is inconclusive and far from achieving a solid scientific
consensus (Dumay, 2012). For example, Riahi-Belkaoui (2003) found a positive
relationship between IC and financial performance , while Firer and Williams (2003)
examined the relationship between IC and traditional measures of firm performance
(ROA, ROE) and failed to find any relationship. Chen et al. (2005), using the same
methodology, concluded that IC has a significant impact on profitability. Following the
resource-based theory (Barney, 1991), Chen et al. (2005) argued that IC is a valuable
resource for a company’s competitive advantage and contributes to the company’s
financial performance. This view is also shared by Youndt et al. (2004), who stated
that IC intensive companies are more competitive and thus more successful. However,
11
Intellectual
capital research
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