Measuring national intellectual capital: a novel approach
| DOI | https://doi.org/10.1108/JIC-06-2020-0183 |
| Published date | 16 February 2021 |
| Date | 16 February 2021 |
| Pages | 799-815 |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & finance,Accounting/accountancy,Behavioural accounting |
| Author | Duc Hong Vo,Ngoc Phu Tran |
Measuring national intellectual
capital: a novel approach
Duc Hong Vo and Ngoc Phu Tran
The CBER –Research Centre in Business,
Economics and Resources, Ho Chi Minh City Open University,
Ho Chi Minh City, Vietnam
Abstract
Purpose –A very few studies have been conducted to measure a degree of national intellectual capital for
selected groups of countries. This paper is conducted to construct a new index of national intellectual capital
(INIC) which is simple, quantifiable, relevant and comparable for countries around the globe.
Design/methodology/approach –The styudy’s new INIC uses various indicators which are proxies for
fundamental aspects of intellectual capital, including (1) human capital, (2) structural capital and (3) relational
capital.These indicatorsare publiclyavailable formany countries.The principal componentanalysis is utilized
to derive the INIC. Varioustests have also been conducted to ensure that the new index is appropriate and fit for
purpose.
Findings –Findings from this paper confirm that the new INIC has a strong correlation of 0.80 with an index
developed by Lin et al. (2014) (the LECB index), an advanced INIC to date. The LECB index has been
infrequently updated and covered selected countries due to data and information unavailability. In addition,
the study’s tests indicate that a high correlation of 0.75 is observed between the study’s index and GDP per
capita. The new INIC represents an advancement in relation to its simplicity, quantification, relevance and
international comparison across nations.
Practical implications –The estimates of national intellectual capital using the approach in this study will
open a new strand of theoretical and empirical studies in relation to national intellectual capital and other
economic and social issues of interests. This novel and innovative approach will provide policymakers with a
valuable framework to formulate and implement relevantpolicies to enhance and improve national intellectual
capital.
Originality/value–To the best knowledge of the authors, this is the first study of its type, which is conducted
to measure national intellectual capital based on publicly available data. Required data cover an extended
period of years and a majority of countries. As such, an INIC will enhance transparency and feasibility for
international comparison across countries.
Keywords Intellectual capital, Index of national intellectual capital, Principal component analysis,
World Bank indicators
Paper type Research paper
1. Introduction
In the knowledge-based economy and the 4.0 technology revolution, tangible assets such as
machinery, equipment and buildings are no longer the only essential assets for firms or
nations. Intangible assets –a form of knowledge-based capital –such as firm’s or nation’s
software, patents and specific skills (Edvinsson and Malone, 1997;Stewart, 1997;Sveiby,
1997) have demonstrated their importance. The term “knowledge-based capital”is generally
referred to as intellectual capital, which plays a significant and vital role to enhance and
support economic growth. This form of capital has received great attention from scholars and
practitioners (Bontis, 2001). Edvinsson and Malone (1997) described intellectual capital as the
knowledge that can be transformed into value. According to Bontis (2004), national
intellectual capital is considered as the most crucial source of capital in the form of the
competitiveness and productivity of the nations. This form of the capital contains the hidden
Measuring
national
intellectual
capital
799
Funding: This research is funded by Ho Chi Minh City Open University under the grant number E2021.
01.02.
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 4 June 2020
Revised 10 November 2020
Accepted 6 January 2021
Journal of Intellectual Capital
Vol. 23 No. 4, 2022
pp. 799-815
© Emerald Publishing Limited
1469-1930
DOI 10.1108/JIC-06-2020-0183
values of enterprises, institutions, communities, individuals and regions that are the sources
of capital for the creation of the nation’s wealth. The intellectual capital stock is considered as
a crucial factor for current and future economic prosperity (Andriessen and Stam, 2005).
Ghosh and Mondal (2009) determined intellectual capital as the hidden value that does not
emerge in financial reports, but this form of capital will establish a competitive advantage for
the company over time.
Previous studies have considered various components for intellectual capital. Edvinsson
and Malone (1997) classified intellectual capital into two main categories, including human
capital and structural capital. Pulic (1998,2000) proposed a value-added intellectual
coefficient (VAIC) model in which intellectual capital efficiency is classified into three
components: capital employed efficiency, human capital efficiency and structural capital
efficiency. Andriessen and Stam (2005) considered that intellectual capital components
include human capital, structural capital and relational capital. Other researchers such as
Nimtrakoon (2015),Vishnu and Gupta (2014) and Nazari and Herremans (2007) proposed a
modified value-added intellectual coefficient (MVAIC) model which accommodates physical
capital (capital employed) and three other intellectual capital components: (1) human capital,
(2) structural capital and (3) relational capital. The MVAIC model has been widely adopted in
considering intellectual capital efficiency at firms’level (Tran et al., 2020;Bayraktaroglu et al.,
2019;Xu and Li, 2019;Xu and Wang, 2019;Chen et al., 2014).
However, at the national level, no widely used or highly recognized methods have been
used to measure a level of intellectual capital across nations. A limited number of studies with
the focus on estimating national intellectual capital have been conducted. However, the
approaches adopted in those studies are very impractical in wide applications in practice due
to the unavailability of required data and/or a high degree of judgment required. Previous
works on measuring national intellectual capital include Kapyla et al. (2012),Lin and
Edvinsson (2011),Schneider (2007),Andriessen and Stam (2005) and Bontis (2004). Among
these studies, we consider that Lin and Edvinsson (2011) study is generally considered as a
significant study which estimates the national intellectual capital indices for 40 countries for
the 1995–2008 period. The method adopted in Lin and Edvinsson (2011) study leads to the
estimation of national intellectual capital across countries.
However, Lin and Edvinsson’s (2011) method is very difficult to be implemented for other
countries outside their sample. A closer examination of the indices for 40 countries in Lin and
Edvinsson’s (2011) study indicates that most of them are advanced countries. As such, the
method appears to be impractical to be adopted for the emerging markets or developing
countries where data are limited. In addition, various scholars have also considered that an
approach used in Lin and Edvinsson’s (2011) study ignores a particular context of countries
such as different objectives and strategies of countries (Kapyla et al., 2012;Salonius and
Lonnqvist, 2012). Different approaches had also been developed and utilized to measure
national intellectual capital for comparison purposes. However, practical implications and
applications of these approaches have hardly been seen (Salonius and Lonnqvist, 2012).
As a result, this study is conducted to develop a new index of national intellectual capital
(INIC) which includes the following fundamental attributes: (1) simplicity–a new index is
simple to be calculated, (2) quantification –a new index is easily quantifiable without using
judgements, (3) market relevance –a new index is able to reflect the prevailing conditions for
the economy under investigation and (4) international comparison –a new index is practically
implemented for comparison purposes across countries regardless of their level of economic
growth and development. We claim that this is the first study which has been conducted to
develop a new index of national capital intellectual, which achieves the above essential
attributes.
The structure of this paper is as follows. Following this introduction, section 2 of the paper
presents the literature review. Previous studies on measuring national intellectual capital
JIC
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