On the “essential condition” of intellectual capital: labour!
| DOI | https://doi.org/10.1108/14691930610639804 |
| Date | 01 January 2006 |
| Published date | 01 January 2006 |
| Pages | 111-128 |
| Author | David O'Donnell,Mairead Tracey,Lars Bo Henriksen,Nick Bontis,Peter Cleary,Tom Kennedy,Philip O'Regan |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
On the “essential condition” of
intellectual capital: labour!
David O’Donnell
Intellectual Capital Research Institute of Ireland, Ballyagran, Ireland
Mairead Tracey
Department of Accounting and Finance, Kemmy Business School,
University of Limerick, Limerick, Ireland
Lars Bo Henriksen
Department of Development and Planning, University of Aalborg,
Aalborg, Denmark
Nick Bontis
McMaster University, Hamilton, Canada
Peter Cleary
Department of Accounting, Finance and Information Systems,
University College Cork, Cork, Ireland, and
Tom Kennedy and Philip O’Regan
Department of Accounting and Finance, Kemmy Business School,
University of Limerick, Limerick, Ireland
Abstract
Purpose – Following Marx and Engels’ identification of the “essential condition of capital”, the
purpose of this paper is to begin an initial critical exploration of the essential condition of intellectual
capital, particularly the ownership rights of labour.
Design/methodology/approach – Adopting a critically modernist stance on unitarist HR and OB
discourse, and contextualised within a background on the stock option phenomenon and recent
accounting regulation, the paper argues that the fundamental nature of the capital-labour relation
continues resiliently into the IC labour (intellectual capital-labour) relation.
Findings – There is strong evidence that broad-based employee stock options (ESOPs) have become
institutionalised in certain firms and sectors – but the future of such schemes is very uncertain (post
2005 accounting regulation). Overly unitarist HR/OB arguments are challenged here with empirical
evidence on capital’s more latently strategic purposes such as conserving cash, reducing reported
accounting expense in order to boost reported earnings, deferring taxes, and attracting, retaining and
exploiting key elements of labour.
Research limitations/implications – Research supports the positive benefits of broad-based
employee stock ownership schemes. Further research on the benefits of such schemes and the reasons
why they are or are not implemented is now required.
Practical implications – From the perspective of labour, nothing appears to have really changed
(yet) in terms of the essential condition of intellectual capital.
Originality/value – This paper explicitly raises the issue of the ownership rights of labour to
intellectual capital.
Keywords Intellectualcapital, Stock options, Labour
Paper type Research paper
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1469-1930.htm
The “essential
condition” of IC:
labour!
111
Journal of Intellectual Capital
Vol. 7 No. 1, 2006
pp. 111-128
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930610639804
Introduction
In 1776 Adam Smith noted that “ ... labour ... is the original foundation of all other
property” (Smith, 1962); in 1840 Pierre Joseph Proudhon referred to the “vital principle
– property” (Proudhon, 2003); and eight years later in the rev olutionary year of 1848
Karl Marx and Frederick Engels eloquently argued that “the essential conditio n of
capital is wage labour” (Marx and Engels, 2003): all are so fresh[1], relevant and topic al
that they could very well have been written yesterday!
What’s really so different now? What is the essential condition of intellectual capital
(IC)? How is the condition of intellectual capital? Has the “vital principle” changed or
morphed to something new in the knowledge and intangibles economy? The nature of
employee-employer relations can be viewed through two different perspectives;
pluralist and unitarist. There is a clear distinction between both because in traditional
personnel management the pluralist focus is on the relationship between management
and employees through contractual arrangements in which the former hires and the
latter performs. Conversely, current HR and OB research focuses more on the unitarist
perspective where the “uni” refers to one-and-together; this latter discourse suggests
that the IC-labour relation is changing. This begs some questioning on the nature and
depth of such perceived change – is it merely superficial or is it reflective of something
more fundamental? Grounded in the apparent increasing usage of broad based
employee stock options (ESOPs) and share-ownership schemes, some argue the case
for emergent convergence on the roles of owner, manager and worker, particularly in
knowledge-intensive firms. This would represent a fundamental change in the
capital-labour relation with respect to the ownership rights of labour. Others, in more
critical vein, provide ample evidence that many employers do not even regard labour
as an asset – let alone grant it any stock options or as much as a taste of any
ownership rights! This unitarist and perhaps latently strategic ideological bias in
many, if not all, HR and OB discourses is challenged in this paper. Any discussion of
ownership, the “vital principle” or the “essential condition” raises contentious issues on
why firms introduce stock options, on the perceived changing dynamics of the
IC-labour relation, and on the implications of recently implemented accounting
regulation on the future of labour’s ownership rights and possibilities. Our key
argument is very simple: there can be no capital, intellectual or otherwise, without
labour. Were Engels, Marx, Proudhon and Smith somehow around at the moment –
they would probably agree.
The structure of the remainder of the paper is as follows. First, we briefly
contextualise the issue of how ownership may or may not be changing the nature of the
IC-labour relation. We then shift focus and tease out some critical insights from the
literature related to “expensing” of stock options, one of the accounting issues of the
moment due to regulatory implementation in 2005. We conclude that the fundamental
nature of the capital-labour relation continues resiliently into the IC-labour relation; the
vital principle retains its hegemony – from the perspective of labour, nothing appears
to have really changed (yet) in terms of the essential condition of intellectual capital.
Ownership, IC and “pieces of action”
There is general agreement that performance based forms of employee compensation
are increasing and on the increased usage of stock options by many, certainly not all,
firms over the past decade or so. Favourable accounting and tax treatments up to the
JIC
7,1
112
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
