Not all sunshine and roses: discovering intellectual liabilities “in action”
| Pages | 127-144 |
| Date | 11 January 2013 |
| DOI | https://doi.org/10.1108/14691931311289057 |
| Published date | 11 January 2013 |
| Author | Marco Giuliani |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Not all sunshine and roses:
discovering intellectual
liabilities “in action”
Marco Giuliani
Depatment of Management, School of Economics “g. Fua
`”– Universita
`
Politecnica delle Marche, Ancona, Italy
Abstract
Purpose – The aim of this paper is to help to address the need for empirical investigations on
intellectual capital and intellectual liabilities “in action” and their consequences in terms of value
creation and value destruction. In light of this consideration, this study aims to investigate if and how
intellectual capital and intellectual liabilities influence the value creation and destruction processes,
that is, if intellectual liabilities “in action” simply mirror intellectual capital dynamics or if they present
some specificities.
Design/methodology/approach – A multiple case study method is adopted in order to understand
intellectual capital and intellectual liabilities “in action”.
Findings – This study highlights the relevance of intellectual liabilities within the intellectual capital
discourse. In particular, it shows that intellectual capital and intellectual liabilities affect the value
creation process in different ways. Moreover,it emerges that intellectual liabilities tend to be left out of
managerial discussions. Stemming from this, the idea of intellectual equity is proposed and conceived
as the logical difference between intellectual capital and intellectual liabilities.
Research limitations/implications – The main limitations of this study are twofold. The first is
related to the methodology adopted and in particular to the qualitative mapping process developed.
The second is the fact that the constructs to analyse were not indicated by the firms but by the author
in order to make the results comparable.
Practical implications – This study contributes to the development of the literature on “intellectual
capital in action” and “intellectual capital in practice” bringing in the idea of intellectual liabilities and
the consideration that intellectual capital can create, but also destroy,value. Mo reover,it highlights the
need to monitor and manage intellectual liabilities in order to control the negative effects generated by
intellectual capital. Therefore, this analysis has both theoretical and practical implications.
Originality/value – In comparison to the extant literature mentioned, this study does not analyse IC
only in terms of value creation, but also in terms of value destruction. Moreover, instead of proposing
and developing new concepts, methods and tools, this research investigates intellectual liabilities “in
action”. In addition, this work jointly considers value creation and value destruction processes.
Keywords Intellectual capital, Intellectual liabilities, Value creation, Intangibles, Value destruction,
Asset valuation
Paper type Research p aper
1. Introduction
The academic and professional interest in intellectual capital (IC) is underpinned by the
idea that it can be considered one of the main levers to create value (Edvinsson, 1997;
Stewart, 1997; Sveiby, 1997). IC is typically understood to consist of three main
elements: human capital (HC), structural capital (SC) and relational capital (RC). In
order to create value, some would argue that these components are not relevant per se,
but as a part of a process, that is, IC creates value through the development of linkages
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. 127-144
rEmeraldGroup PublishingLimited
1469-1930
DOI 10.1108/14691931311289057
The author would like to express many thanks to Dr John Dumay (University of Sydney
Business School) for his helpful comments and encouragement to develop this paper.
127
Discovering
intellectual
liabilities
among its components (interactions). For this reason it is important to investigate IC
“in action” (Chiucchi, 2008; Cuganesan, 2005; Marr et al., 2004; Skoog, 2003).
Most studies seem to support the idea tha t the more IC the better and therefore,
companies have to invest in it in order to increase their value. Others, however, suggest
that this picture may be too optimistic, that investing in IC has both negative and
positive effects, that its creation and development are not all sunshine and roses.
In fact, most studies tend to overlook the negative or destructive side of IC “in action”,
like the fact that along with the ability of IC to create value and growth, comes
vulnerability and obligations to stakeholders to create and develop IC (Caddy, 2000;
Harvey and Lusch, 1999).
Stemming from this, the concept of intellectual liabilities (ILs) was introduced into
the IC discourse, incorporating the potential of IC to destroy value (Caddy, 2000;
Harvey and Lusch, 1999). While studies of IC are now in their so-called “third stage”,
bridging the gap between theory and practice (Dumay, 2012, p. 12; Guthrie et al., 2012,
p. 79), there is still scant understanding of ILs and their role within the value creation
process.
This paper helps to address the need for empirical investigations on IC (Cuganesan,
2005; Cuganesan and Dumay, 2009; Marr et al., 2004) and ILs (Brunold and Durst,
2012; Garcia-Parra et al., 2009; Ja
¨a
¨skela
¨inen, 2011; Ma
¨enpa
¨a
¨and Voutilainen, 2012)
“in action” and their consequences, in terms of value creation and value destruction.
The aim of this study is to investigate if and how IC and ILs are perceived to influence
the value creation and destruction processes. In order to achieve this purpose , two
objectives have been identified.
The first objective is to investigate the inter-relationships between IC, ILs and
financial capital (FC). Thus, following the lead taken by the main studies on this topic
(Kaplan and Norton, 2003; Fernstrom et al., 2004), the author has first investigated how
managers perceive and talk about the influence of IC and ILs on FC. Then, stemming
from the considerations proposed by Murthy and Mouritsen (2011, p. 644), the author
has also considered the perceptions of linkages between FC and IC/ILs where the first
is an input of the latter.
The second objective is to specifically analyse ILs “in action” in order to understand
how they are perceived. The question is: do ILs “in action” simply mirror IC dynamics
or do they have their own characteristics? In case ILs do not mirror IC, it would imply
the emergence of a gap in IC visualisation and management practices and it could be a
mistake to leave them out of discussions in order to focus only on IC. To achieve
this purpose, nine companies were questioned about their perceptions of what IC
and ILs do.
The structure of the paper is as follows. The following section proposes a brief
review of the literature regarding IC and ILs and after that, the methodology is
described. The next section shows the data collection then attempts to interpret the
findings and to develop the theoretical arguments of the study. Finally, some valuable
insights are extracted and discussed to draw some conclusions and to outline a
research agenda.
2. Creating and destroying value: the case of IC and liabilities
In approaching IC, two main perspectives seem to dominate. The first perspective is
“static”, the other, “dynamic” (Meritum, 2002). The static perspective focuses on the
properties of the three IC components, identifying their size through financial and
non-financial indicators in company reports. The dynamic approach, instead, assumes
128
JIC
14,1
To continue reading
Request your trial