The role of national intellectual capital in the digital transformation of EU countries. Another digital divide?
| DOI | https://doi.org/10.1108/JIC-02-2020-0024 |
| Date | 24 July 2020 |
| Pages | 768-791 |
| Published date | 24 July 2020 |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & finance,Accounting/accountancy,Behavioural accounting |
| Author | Jadranka Švarc,Jasminka Lažnjak,Marina Dabić |
The role of national intellectual
capital in the digital transformation
of EU countries.
Another digital divide?
Jadranka
Svarc
Institute of Social Science Ivo Pilar, Zagreb, Croatia
Jasminka La
znjak
Faculty of Humanities and Social Sciences, Department of Sociology,
University of Zagreb, Zagreb, Croatia, and
Marina Dabi
c
Faculty of Economics and Business, Department of International Economics,
University of Zagreb, Zagreb, Croatia and
Department of Management, College of Business Law and Social Sciences,
Nottingham Trent University, Nottingham, UK
Abstract
Purpose –This study, an exploratory one, aims to empirically investigate the association of national
intellectual capital (NIC) with the national digital transformation readiness of the European Union’s (EU’s)
member states. Apart frombuilding the conceptualmodel of NIC, this study explores the role of NIC dimensions
in the digital divide between European countries.
Design/methodology/approach –Based on the literature review and the available EU statistical data and
indexes, the theoretical framework and conceptual model for NIC were developed. The model explores the
relation of NIC and its dimensions (human, social, structural, relational and renewable/developmentcapital) on
the readiness of European countries for digital transformation and the digital divide. Significant differences
between EU countries in NIC and digital readiness were tested. Multiple linear regression was used to explore
the association of each NIC dimension with digital transformation and digital divide within the EU.
Findings –Despite a positive association between all dimensions of NIC and digital transformation readiness,
the proposed model of NIC was not confirmed in full. Regression analysis proved social capital and working
skills, a dimension of human capital, to be the predictors of digital transformation at a national level, able to
detect certain elements of digital divide between EU member states. Structural capital, knowledge and
education, as dimensions of human capital, were predictors of the digital divide in terms of the integration of
digital media in companies.
Research limitations/implications –This research has a limited propensity for generalisation due to the
lack of common measurement models in the field of NIC exploration.
Practical implications –This research offers policy makers an indication of the relationships between NIC
and digital transformation, pointing out which dimensions of NIC should be strengthened to allow the EU to
meet the challenges of digital economy and to overcome the digital divide between EU member states.
Social implications –The use of digital technologies is key in creating active and informed citizens in the
public sphere and productive companies and economic growth in the business sphere.
Originality/value –This study provides an original theoretical framework and conceptual model through
which to analyse the relationship between NIC and digital transformation, which has thus far not been explored
JIC
22,4
768
This research has received funding from the Horizon 2020 Programme of the European Union within the
OpenInnoTrain project under grant agreement no. 823971. The content of this publication does not
reflect the official opinion of the European Union. Responsibility for the information and views
expressed in the publication lies entirely with the author(s).
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1469-1930.htm
Received 3 February 2020
Revised 29 March 2020
21 May 2020
4 June 2020
Accepted 27 June 2020
Journal of Intellectual Capital
Vol. 22 No. 4, 2021
pp. 768-791
© Emerald Publishing Limited
1469-1930
DOI 10.1108/JIC-02-2020-0024
at the level of the EU. This research makes an original contribution to the empirical exploration of NIC and
produces new insights in the fields of digital transformation and intellectual capital.
Keywords European Union, Digital divide, Digital transformation, National intellectual capital
Paper type Research paper
1. Introduction
Since the beginning of the 21st century, two revolutions within global and national economic
systems have occurred. The first revolution was linked to the rise of intangible economy, as
the developed economies of the USA and Europe began to invest, for the first time after 2010,
in more intangible assets than tangible ones (Haskel and Westlake, 2018,2018a). Investments
in innovation, design, research and development (R&D), human resources and software were
becoming the main source of companies’market success, while tangible assets such as
buildings, land and machinery or hardware became less necessary for long-term economic
growth. This reinforced the role of intellectual capital as a subset of intangible assets (Petty
and Guthrie, 2000), able to drive competition and progress. For example, the national
intellectual capital (NIC), according to Stahle et al. (2015, p. 9), accounts roughly for 50% of the
European Union’s (EU’s) gross domestic product (GDP) formation, with Nordic countries in
the lead. The role of NIC is rather important, as the intangible economy is fundamentally
different from the tangible one (Andriessen, 2004) and requires different behaviours, rules,
knowledge and intangible assets to work properly and to avoid the recently recognised
threats of secular stagnation and social inequality (Haskel and Westlake, 2018a, p. 7).
The second revolution marks the rise of the digital economy –a phenomenon resulting
from online connections between people, businesses and devices, as well as changes in
conventional notions of businesses and social interactions. This usually refers to the concept
of “Industry 4.0”and advanced manufacturing (OECD, 2017b), but it can also encompass
semantically different concepts of platform economies, sharing economies, gig economies,
etc. (ILO, 2018). Digital economy marks the increasing digitalisation of businesses, giving
intangibles more of a prominent role in their income generation (Mayer, 2018) (e.g. Airbnb,
Uber or Netflix, which do not possess much physical capital) and forces not only companies
but also regions and whole countries to invest considerable efforts into digital
transformation. Although digital transformation (DT) manly challenges companies to
radically redesign their business models to draw on information technologies (Del Giudice
and Straub, 2011;Scuotto et al., 2017;Ardito et al., 2019;Solima et al., 2016) and on digital
innovation embracing their intangible and non-rivalry character (Yoo et al., 2012;Nambisan
et al., 2019,2016;Smit et al., 2016), it also requires dramatic social and cultural changes at
broader levels. The perceptions of societal changes vary from the techno-optimistic view of
revolutionary power of digitalisation, which will advance all aspects of society, to the
opposite beliefs by which digitalisation threatens public values, democracy and social
equality (Betancourt, 2015;Srnicek, 2016;van Dijck et al., 2018). In any case, DT is a global
process and no economy or society can avoid this transformation if it is to achieve prosperity.
The successful realisation of these two revolutions was highly dependent on intellectual
capital as an economic value of intangible assets of businesses, regions or nations (Bounfour
and Edvinsson, 2005;Malhotra, 2000,Stahle et al., 2015,Nambisan et al., 2019;Scuotto
et al., 2017).
Some key international studies have shown that digitalisation contributes towards
economic growth, increases in productivity and employment (OECD, 2017a, p. 13, WEF,
2017). The scope and speed of DT varies across countries. While some parts of the world are
better prepared for DT, others are lagging. According to UNCTAD (2019, p. 3), Europe, Africa
and Latin America are trailing considerably behind the USA and China in terms of digital
technological developments. For example, Europe’s share in the market capitalisation value
Intellectual
capital and
digital
transformation
769
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