National Intellectual Capital Index. A United Nations initiative for the Arab region
| Pages | 13-39 |
| Date | 01 March 2004 |
| DOI | https://doi.org/10.1108/14691930410512905 |
| Published date | 01 March 2004 |
| Author | Nick Bontis |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
National Intellectual Capital
Index
A United Nations initiative for the
Arab region
Nick Bontis
DeGroote Business School, McMaster University,
Hamilton, Ontario, Canada
Keywords National accounts programmes, Intellectual capital, Human capital, Arab Peninsula
Abstract The intellectual capital of a nation (or a region of nations) requires the articulation of a
system of variables that helps to uncover and manage the invisible wealth of a country. Most
importantly, an emphasis on human capital allows for a better understanding of the hidden values,
individuals, enterprises, institutions, and communities that are both current and potential future
sources of intellectual wealth. This paper endeavours to address the five research questions. The
main outcomes of this paper are the development of a national intellectual capital measurement
methodology and index. The NICI is also used within a structural equation model to test several
hypotheses related to national intellectual capital development.
Knowledge is like light. Weightless and intangible, it can easily travel the world, enlightening
the lives of people everywhere. Yet billions of people still live in the darkness of poverty –
unnecessarily (World Bank, 1998, p. 1).
Introduction
Rapid technological advances in computational power and communication
technologies are transforming the nature of knowledge, skills, talents and the
know-how of individuals in the workplace. Today’s global information
marketplace requires a different kind of worker, one with competencies,
attitudes, and intellectual agility conducive to systemic and critical thinking
within a technologically-oriented environment. For public and private
institutions in the Arab states region to succeed in the new economy, this
translates into restructuring industrial age organizational structures, processes,
and mindsets to utilize the wealth-creating potential of people (Nsour, 2001).
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
www.emeraldinsight.com/researchregister www.emeraldinsight.com/1469-1930.htm
The author would like to acknowledge the financial support and thought leadership of the United
Nations Development Programme, Regional Bureau for Arab States (UNDP/RBAS). Specifically,
the author would like to recognize Dr Rima Khalaf Hunaidi and Dr Maen Nsour who shared their
valuable time and expertise with him in framing and reframing the process of measuring the
intellectual wealth and development of Arab countries. This research paper is the product of
collective ingenuity. The author selected and managed a team of bright and energetic research
associates. Under the author’s guidance, Meaghan Stovel, Brent McKnight, Chris Giovis,
Raed Abu Salem and Zaher Azzam provided a strong base of united intellectual horsepower.
NICI: a UN
initiative
13
Journal of Intellectual Capital
Vol. 5 No. 1, 2004
pp. 13-39
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930410512905
The intellectual capital of a nation (or a region of nations as is the case for
this paper) requires the articulation of a system of variables that helps to
uncover and manage the invisible wealth of a country. Although the
importance of knowledge as a strategic asset can be traced back several
thousands of years, it was the ancient Egyptian and Greek civilizations that
represented the first evidence of the codification of knowledge for the purposes
of leveraging regional power with their implementations of national libraries
and universities. More recently, Machlup (1962) was the first to coin the term
“intellectual capital” and used it to emphasize the importance of general
knowledge as essential to growth and development. Alfred Marshall says
“knowledge is our most powerful engine of production; it enables us to subdue
nature and ... satisfy our wants” (World Bank, 1999, p. 20). However,
“knowledge is often costly to create, and that iswhy much of it is created in
industrial countries” (World Bank, 1998, p. 1).
The concept of intellectual capital was further expounded on by
management guru Drucker (1993) in his description of post-capitalist society.
Drucker (1993) highlights the importance and arrival of a society that is
dominated by knowledge resources and competitive landscape of intellectual
capital allocation. By the end of the 1990s, references to intellectual capital in
contemporary business publications were commonplace (see Bontis, 1996,
1998, 1999). Intellectual capital management became the domain of the
so-called chief knowledge officer (CKO) (Bontis, 2001a, b, 2002; Mitchell and
Bontis, 2000). In his groundbreaking cover story in Fortune Magazine, Stewart
(1991) provided the main impetus for a new world of intellectual capitalists.
Literature review
Much of the current academic literature on intellectual capital theory and its
accompanying frameworks, constructs and measures stems from an
accounting and financial perspective, focusing on the firm level of analysis
(Bontis et al., 1999, 2000, 2002). Theorists soon extrapolated the initial
conceptual level to also include nations. Malhotra (2001) argues that leaders of
national economies are trying to find reliable ways for measuring knowledge
assets to understand how they relate to future performance. The expectation
from finding reliable measures of knowledge assets is that such measures can
help governments better manage the intangible resources that increasingly
determine the success of their economies. Key to determining these success
factors is an understanding of relationships and synergistic modulations that
can augment the value of each sub-component of intellectual capital (Choo and
Bontis, 2002). Approaching economic development from a knowledge
perspective – that is, adopting policies to increase a nation’s intellectual
wealth – can improve people’s lives in myriad ways besides higher incomes
(World Bank, 1998).
The intellectual capital of a nation includes the hidden values of individuals,
enterprises, institutions, communities and regions that are the current and
potential sources for wealth creation. These hidden values are the roots for
JIC
5,1
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