A Methodology for Measuring Intellectual Capital. A Structural Equations Modelling Approach

Abstract

The past decade has been characterized by a process of growing dematerialization of the strategic resources possessed by firms. The relational capabilities of the firm, technology connected with the planning and management of firm processes, know-how, as well as the decisional autonomy and technical competencies of the employees all represent intangible assets that are determining in the value creation process of a firm (Longo & Mura, 2007; Roos et al., 2005). The relevance of this topic is supported by the attention that financial markets attribute to the accounting of these assets. In January 2007 the International Accounting Standard Board issued a technical document in support of the ‘Intangible Assets’ project, which is examining the possibility of adding to the balance sheet the intangible assets that are generated internally to the firm and that are not subject to any negotiation on active markets (IASB, 2007). This ‘opening up’ in the accounting system has important effects on the economic evaluation of a company and on its ability to gain access to credit, in that it provides the market, the institutional investors and the financial analysts very precious information regarding the development of fundamental resources for the value creation process of a firm. Furthermore, performance management literature has highlighted the need for specific tools for the measurement of internally-generated intangible assets, defined in managerial literature as intellectual capital (IC) (Tayles et al., 2002). These tools have been shown to greatly support management activity (Roos et al., 2005; Carlucci et al., 2004). As a matter of fact, the integration of information related to company’s intellectual capital together with quantitative information relative to the firm’s strategic policies, offers management a display of important indicators for the definition and the control of corporate objectives. Numerous intellectual capital frameworks have been proposed in the literature (e.g. Edvinsson & Malone, 1997; Roos et al, 2005; Sveiby, 1997), however, further research is still needed to investigate the challenges and opportunities of designing intellectual capital measurement tools that are grounded in relevant measurement theory (Bollen, 1989; M’Pherson & Pike, 2001). 20