Valuation of higher education institution’s intellectual capital: The issue of methodology

Abstract

The paper aims to ground the directions for developing a methodology for valuation of higher education institutions and their intellectual capital. Assessment of investments’ efficiency in this sphere encounters significant difficulties primarily due to non-commercial nature and a wide spectrum of heterogeneous results of higher education institutions’ activities. The author proves that the results delivered by universities’ intellectual capital can be measured and expressed in monetary terms. The development of a methodology for valuation of universities and their intellectual capital allows comparing expenditures and universities’ performance in the form of their intellectual capital increase and clarify the principles of financing higher education institutions from the state budget. The research methodology includes existing methods for measuring intellectual capital, including the group of methods within revenue-based, costbased and comparative approaches. The researcher looks at the possibilities and limitations of Development of Industrial Markets and Enterprises applying existing approaches and methods for valuation of universities, their intellectual capital and its particular elements. The conclusion is made that value-based methods can be applied to the measurement of higher education institutions’ intellectual capital. The author reasons the directions for their modification to ensure correct valuation of universities and their intellectual capital for the purposes of financing and developing the higher education system as a whole.