Model for calculating the intellectual capital of research centres

Pages787-813
DOIhttps://doi.org/10.1108/JIC-01-2017-0021
Date26 June 2018
Published date26 June 2018
AuthorEdurne Loyarte,Igor Garcia-Olaizola,Gorka Marcos,María Moral,Nora Gurrutxaga,Julian Florez-Esnal,Iñaki Azua
Subject MatterBehavioural accounting,Information & knowledge management,Organizational structure/dynamics,Accounting & Finance
Model for calculating
the intellectual capital of
research centres
Edurne Loyarte, Igor Garcia-Olaizola, Gorka Marcos,
María Moral and Nora Gurrutxaga
Vicomtech, Donostia-San Sebastian, Spain
Julian Florez-Esnal
Engineering School TECNUN, Donostia-San Sebastian, Spain, and
Iñaki Azua
University of Deusto, Donostia-San Sebastian, Spain
Abstract
Purpose The purpose of this paper is to develop a model to help RTC managers in the technological and
R&D decisions and bets so as to change the perceived value of the R&D projects of the centres. To achieve
this aim, the paper investigates the different models for the valuation of intangible assets.
Design/methodology/approach The paper presents a single case study and focusses on creating a
useful IC valuation model for the centre, using existing methods and frameworks in IP and IC fields.
Findings The paper presents a new method for the calculation of IC applied to a RTC in ICT sector, in
which the valuation of the IP is included (software libraries) and the KM and the peculiarities of these kinds of
organisations are explained. The model is based on Edvinsson and Malone (1997) and Leitner (2005).
Research limitations/implications Although the use of a single case provides rich data, it is also limits
the generalisability to other RTCs. Another limitation is that not all existing methods were explained. This
new method constitutes a first proposal for the IP and IC valuation in RTCs and further discussion and
development would be carried out in the future.
Practical implications The results suggest an IP and IC measurement model to improve the strategic and
technological decisions making.
Social implications This paper may favour the competitiveness of companies engaged in intangible
assets (knowledge, R&D) and the negotiation of the contracts since it arrives to determine a value for the
intellectual property (software libraries) and intellectual capital.
Originality/value This paper proposes an IC Model orientated towards an RTC context and to provide a
value perspective for them. The authors are practitioners and the model is in use.
Keywords Intellectual property, Knowledge management, Intellectual capital, Intangible assets,
R&D valuation, Research technology centre
Paper type Case study
The effective management of Intellectual Capital as a strategic tool for the innovation process is
a prerequisite for the development and growth of R&D organisations, as well as for protecting
their competitiveness.
1. Introduction
The past few decades have seen a steady growth in the literature surrounding IC and
intangibles, in both research and practitioner literature (Flöstrand, 2006). As a matter of fact,
the general notion of Intellectual Capital (IC) as an intangible value dates back to early 1980.
However, it is the late 1990s when intellectual capital (IC) becomes a popular topic with
researchers and academic conferences and an increasing number of large-scale projects
(e.g. MERITUM project; Danish; Stockholm) aiming, in part, to apply some academic rigour
to the research into IC (Petty and Guthrie, 2000).
IC is critically important in knowledge-based organisations, where the intangible assets
that generate value for an organisation are more important than traditional physical
Journal of Intellectual Capital
Vol. 19 No. 4, 2018
pp. 787-813
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-01-2017-0021
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
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Intellectual
capital of
research
centres
assets (Martínez-Torres, 2006; Martínez-Torres, 2014). Moreover, from a strategicperspective,
IC is used to create and use knowledge to enhance the firm. However, not all assets of an
intangiblenature form part of an organisations IC. For instance,reputation is the result of the
use of a companys IC rather than a part of it (Petty and Guthrie, 2000).
ARC (real name omitted) is a case study of an Applied Research Centre which shares a
similar focus, challenges and strategic needs with several other centres. The centre belongs
to two applied research networks of similar centres (one international with seven centres
and one regional with nine centres). ARC focusses on information and communication
technologies (crosscutting and therefore multi-sectorial technologies). The main business is
R&D, with the aim of enhancing the innovative performance of their customers and society.
ARC is a non-profit foundation and it has different research outputs, ranging from basic
research to experimental product development. Due to its nature, its financing comes from a
variety of sources: 50 per cent from industrial contract projects, mainly for local SMEs and
in some cases for large enterprises, and 50 per cent from collaborative research projects
(usually through competitive tendering), partially funded by public administrations, such as
the European Commission and both National and Regional Governments.
ARC carries out applied research in six application areas. There are more than
110 employees at the centre, 40 of which hold doctoral degrees, in a variety of technology
domains. As a Foundation, ARC has a Board of Trustees formed by different organisations:
12 private companies from different sectors and of different sizes (most of them Basque),
and 6 public companies.
It is an incubator for knowledge-based spin-offs and aims to respond to the innovation
requirements of companies and institutions. To do this, it:
conducts applied research and develops multimedia visual interaction and
communications technologies;
complements and closely collaborates with industry, univers ities and other
technology centres; and
promotes mobility and training for its researchers.
Tacit knowledge is in the minds of the researchers and the infrastructures and networking
are knowledge generators. It publishes more than 60 scientific publications a year and holds
patents. Furthermore, it develops R&D software libraries which are sold on a licence basis.
ARC cannot capitalise its R&D expenditures according to most national and international
accounting standards. This lack of capitalisation creates information asymmetries on
capital markets because the book value does not reflect the real assets and future earnings
potential of industrial firms; a fact argued by some academics (Lev, 1999). Even though ARC
does not compete in the capital markets, the argument is also of relevance for ARC because
it has to compete for various research grants and funds (Leitner, 2005).
RTCs have been confronted with different challenges in recent years. They have had to
increasingly compete for research funds and cope with new research modes. In many
countries, there has been a reorganisation of these establishments so as to serve, to a greater
degree, the needs of industry and its demand for technological solutions. The austerity
policy of the public funding bodies forces RTCs to raise private funds via professional
research contracts, mainly with industry. Competition on commercial markets, market
orientation and competitive-based funding are becoming a paradigm for this sector, which,
in turn, also clearly demands a more progressive way of communicating with stakeholders,
and of measuring their performance (Lindgren, 2001).
Moreover, as the measurement of IC is mainly based on intangible assets, the calculation
cannot be performed in an objective way. Instead, it requires assumptions and metrics that
have to be established and accepted, as shown in the literature review (Section 2). This
measurement is even more difficult for those organisations that do not deal directly with the
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