Metrics for the elements of intellectual capital in an economy driven by knowledge
| Published date | 08 April 2014 |
| DOI | https://doi.org/10.1108/JIC-08-2013-0091 |
| Pages | 206-226 |
| Date | 08 April 2014 |
| Author | Mariya Anatolievna Molodchik,Elena Anatolievna Shakina,Angel Barajas |
| Subject Matter | Information & knowledge management,Knowledge management |
Metrics for the elements of
intellectual capital in an economy
driven by knowledge
Mariya Anatolievna Molodchik and Elena Anatolievna Shakina
Department of Financial Management,
National Research University Higher School of Economics, Perm, Russia, and
Angel Barajas
Department of Accountancy and Finance, University of Vigo, Ourense, Spain
Abstract
Purpose – The purpose of this paper is to explore the plausibility of six elements of IC and justify the
measurement ability of a set of indicators based on publicly available data for each of the proposed
element in order to provide tools to managers for their decision-making process in knowledge
management (KM).
Design/methodology/approach – Core company’s intangibles are combined into six intellectual
capital (IC) elements that appear after the division of each of the traditional components (human,
structural and relational capital (RC)). The human capital includes management and human resources
capabilities (HRC). Structural capital is divided into innovation and internal process capabilities (IPC).
RC contains networking capabilities and customer loyalty. In drawing on the relevant literature each
element is described through a set of indicators collected from publicly available data. The validity
of proposed IC model is justified through structural equation modeling. Each element is tested on a
sample of more than 1,650 listed European companies over the period of 2004-2011.
Findings – The study gives empirical support of three component IC structu re and its decomposition
into second level. The findings reveal that implementation of KM plays a significant role for HRC
as well as for IPC.
Research limitations/implications – The analysis was conducted for a particular sample that may
restrict the conclusions.
Practical implications – The proposed measurements for intangibles can be applied by any
company for benchmarking and comparative analysis in KM.
Originality/value – The study provides empirical justification of metrics for intangibles allowing a
better route in an economy driven by knowledge.
Keywords Innovation, Measurement, Human capital, Intellectual capital,
Structural equation modelling, Structural capital, Relational capital, Intangibles
Paper type Research pap er
1. Introduction
Intangible resources play a pivotal role for sustainable competi tive advantages
(Grant, 1996; Edvinsson and Malone, 1997; Kaplan and Norton, 2003; Strandskov, 2006)
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1469-1930.htm
Received 30 August 2013
Revised 18 December 2013
Accepted 20 December 2013
Journal of Intellectual Capital
Vol. 15 No. 2, 2014
pp. 206-226
rEmeraldGroup PublishingLimited
1469-1930
DOI 10.1108/JIC-08-2013-0091
The authors thank Professor Edvinsson his comments and suggestions about our first draft
paper. The authors also thank the referees and the editor for their anonymous work to improve
the quality of this paper. The authors express our gratitude to the researchers and assistants of
the Empirical Corporate Finance Laboratory (NRU Higher School of Economics – Perm Campus)
for their work creating the database and their support. This study comprises research findings
from the The Changing Role of Companies’ Intangibles over the Crisis carried out within The
National Research University Higher School of Economics’ Academic Fund Program in 2013,
grant No. 13-05-0021.
206
JIC
15,2
as well as for strategic value creation (Stewart, 1997; Lev, 2001; Stegmann, 2009).
They generate intellectual capital (IC) and are involved as key resou rces in corporate
knowledge management (KM) (Adams and Oleksak, 2010). At the same time, the
measurement of intangibles remains one of the most debated issues of KM (Bontis,
2001; Dumay, 2012). Lev (2001) and Andriessen (2004) maintain that its complexity is
derived from their nature. Intangibles have no physical form. Human resources are
inherent in individuals. The tacit component of the main p art of relational resources
makes them non-transferable and non-tradeable. On the other hand, as stated
by Kristandl and Bontis (2007), the nature of intangibles determines their rarity,
appropriability, immobility and, as a consequence, their high value for competitive
advantagein terms of a resource-based view. Managershave to deal with the complexity
of intangibles in their companies and they need also tools to measure them. As noted
by Edvinsson(2013), IC metrics area kind of knowledge navigator that providesthe start
position, progress, direction and speed of the organizational activ ity. KM can use this
information for the dynamic process of value creation.
The first question that is faced when companies implement KM and seek for
measurement of intangibles is: “Which are the elements that constitute IC?” The correct
decomposition of intangibles into clearly distinguished elements allows managers
making effective decisions (Mouritsen, 2009). To the date, the most popular IC structure
was proposed by Sveiby and Edvinsson in 1994 (Edvinsson and Malone, 1997), and
later reported by Stewart (1997). It contains three com ponents: human, relational
and structural capital (SC). In this study, the authors take as references the Skandia
Navigator (Edvinsson, 1997), IC Rating model by Jacobsen et al. (2005) and the model
offered in the collective research project entitled “Intellectual Capital Statement – made
in Europe” (InCaS, 2009). Then, two levels of IC decomposition are implemented. In line
with Jacobsen et al. (2005), two elements for each of the three components of IC are
considered. Human capital (HC) is divided into the abilities of management and human
resource capabilities (HRC). SC is divided into innovation and internal process
capabilities (IPC). Finally, relational capital (RC) splits into networking capabilities
(NC) and customer loyalty (CL).
Once the IC elements have been proposed, the following question arises: “How to
measure these elements?” In recent years, an increasing effort to develop practical tools
in order to measure the IC has been observed. Some examples are the Skandia
Navigator (Edvinsson, 1997), Intangible Asset Monitor by Sveiby (1997), InCaS (2009),
the IC Transformation Evaluating Model by Molodchik et al. (2012). Nevertheless,
Sydler et al. (2013) noted that the field connected with the measurement of intangibles
through publicly available data are underdeveloped.
This paper has two objectives: to explore the plausibility of six elements of IC
and to justify the measurement ability of a set of indicators based on publicly available
data for each of the proposed element.
The paper contributes to IC theory and the practical implementation of KM.
Drawing on the literature the authors validate the items of six elements of IC and
determine a set of indicators reflecting the entity of each element. The methods
of measurement for these indicators are described in the paper. Even with this
approach, capturing the entire reality of the busin esses is difficult. Nevertheless,
the paper tries to provide an objective and inde pendent tool using only publicly
available data. Furthermore, assessing intangible resources through accessible data
allows researchers to enhance model reliability and to increase the sample size (Sydler
et al., 2013).
207
Metrics for the
elements of IC
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