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Over the past several years there have
been intensive discussions about the importance of
intellectual capital –IC- within the business world. The
management of IC is promoted as an important and necessary
factor for organisational survival and maintenance of
competitive strength. One of the main quests in the knowledge
economy, especially among the accounting profession, is
nothing less than to make the intangible tangible; to ideally
have it all on tap and accounted for in strict financial
terms. There is evidence that indicators of intellectual
capital are leading indicators of future financial wealth.
There is also a growing criticism that the
traditional balance sheet does not take account of those
intangible factors that largely determine a company's value
and its growth prospects. The 'unreported' assets are on
average 5-10 times those of the tangible assets. Furthermore
several studies show that future growth is determined not by
historical financial accounts but by factors such as
management skills, innovation capability, brands and the
collective know-how of the workforce. Consequently more
organizations are starting to address the measurement and
management of IC.
There are several different approaches to
measuring IC. One category includes those that take an
organization's reported figures and adjust them to remove
'anomalies' of traditional accounting such as the EVA model.
Other approach considers the various categories of IC, from
which are developed various measures. Here, a starting point
is to divide IC into several categories. A typical
classification is as follows:
1. Human Capital - that in the minds of
individuals: knowledge, competences, experience, know-how
etc.
2. Structural Capital - "that which is left after
employees go home for the night": processes, information
systems, databases etc.
3. Relationship (or Customer) Capital - customer
relationships, brands, trademarks etc.
An expanded set of IC metrics opens up a
major opportunity to apply new analytic tools for assessing
organizational performance in the knowledge society:
· Organizations will be able to
better estimate their performance in regard to knowledge
assets.
· New kinds of IC indicators
could improve the resource allocation decisions capital
resources.
· Financial reports a balanced
of physical as well as intangible assets.
· Intellectual capital metrics
uncertainly could help business leaders and financial
markets to better value “intangible assets” and predict
outcomes with greater clarity.
In summary, each metric has to have a
purpose. Treating IC metrics as simply a numbers game is
worthless. Every user of IC measures needs to find useful
information. And this is the main focus of our proposed
paper.
We have conducted a Delphi study in Spain
to determine the factors that affect the usefulness and
convenience of IC new metrics from the information’s user
point of view. A broad group of factors were examined in
depth, by expert consensus, to be important at the conclusion
of this study. This paper concludes that at present there are
still significant measurement problems to be addressed with
respect to IC metrics and reports.
The main contribution of this paper is to
show that IC metrics are not broadly accepted from the
information’s user point of view. Disclosure rules still
needs to change so information’s users can be armed with a
more uniform, less subjective and more robust way of
measuring IC in the knowledge society. If the user can not
trust them, IC metrics will remain both useless and
worthless.
Over time, the IC metrics will evolve,
continuing to identify value creation drivers, while
remaining sufficiently flexible so it can adapt to the
constantly changing nature of companies in the connected
economy. Further work in terms of measurement and its utility
need to be done to validate the information produced from
intellectual capital metrics so that meaningful analysis of
the organizational IC can be performed.
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