Create Value For Society Research Articles

Intellectual capital, sustainable economic and financial performance and value creation in emerging markets: the case of Brazil

PurposeThe purpose of this paper is to analyze the influence of intellectual capital (IC) on sustainable economic and financial performance (EFP) and value creation (VC) in Brazilian companies.Design/methodology/approachBased on finance and accounting theories, a quantitative and descriptive long-term study was carried out in the companies listed on the Brazil Stock Exchange and Over-the-Counter Market (B3), covering 20 years period.FindingsThe results indicate that IC positively influences profitability, corporate return and organizational value sustainably; the most intangible-intensive Brazilian companies listed on B3 presented more robust results than the least intangible-intensive; and IC contributes to a systematic increase in EFP and VC over time.Research limitations/implicationsUsing a well-established metric, the IC-INDEX, the IC and its effects were measured, obtaining theoretical contributions (expanding the understanding of the IC influence in sustainable EFP and VC from a long-term perspective – one subject still unexplored in the literature); and empirical (increasing the understanding of the IC’s role as a driver of competitiveness, performance and organizational value).Practical implicationsThis study increases the understanding of the theoretical and practical effects of IC, also providing a competitive benchmarking process to access sustainable EFP and VC of companies and their industries.Originality/valueThe originally applied and validated proposal extends existing theory by offering a set of indicators to scale the contribution of IC to competitiveness from the perspective of long-term (historical) corporate outcomes.

Integrated reporting in commercial organizations

The article is devoted to the study of the essence of integrated reporting (IR). It shows that the unresolved environmental problems, the growth of the world’s population, the shortage of natural resources result in changes in the information requirements of stakeholders and, as a consequence, to the contents of companies’ reporting. In order to achieve the business goals interested parties need reports that systematically reflects the creation of company value through the complex interconnection of strategy, organizational management, operating, financial and investment activities, as well as the risk environment. Integrated reporting is capable of providing such information, combining financial and non-financial information about the company’s strategy, its achievements and management style. The main purpose of the IR is to summarize retrospective and prospective data demonstrating the process of value creation. The research reveals the problem of the lack of common understanding what IR is and the very idea of generating IR, along with the identity of the concepts of “integrated reporting” and “integrated report”, which does not comply with the International Standard for Integrated Reporting. The results of the research make it possible to determine the place of each type of report in the reporting composition and prove that the published integrated reports of Russian companies are actually integrated reporting, as they include consolidated financial statements and an integrated report, which meets the requirements of the International Integrated Reporting Standard.

Manufacturing Firm Value Drivers through Return on Assets, Return on Equity and Earning per Shares

<p>The company's goal is to create value. Therefore, it is important for companies to know the source of the company's value creation. This study connects the independent factors that affect firm value, namely Return On Equity, Return On Assets, and Earning Per Shares. This research used a sample of 30 companies. The samples used in this research are manufacturing companies listed on the Indonesia Stock Exchange for the period 2017-2019 with the sampling technique using purposive sampling. The results indicated that the return on assets has no significant effect on share prices, return on equity has no significant effect on share prices, EPS has an significant effect on share prices and simultaneously return on assets, return on equity and earnings per share has an significant effect on share prices.</p>

Sustainable Development and Risk Management

In the context of the increasing role of non-financial factors of company value creation, many organizations, when developing a development strategy, go beyond exclusively financial and economic goals and include workplace safety, energy efficiency, customer satisfaction and other non-financial goals in their performance targets. Achieving such goals involves risks, but today there is no common understanding of the composition of the relevant risks, their sources (factors of occurrence), approaches to assessing these risks, as well as universal corporate tools for managing them. In this article, we offer our vision of the place of the so-called “non-financial risks” in the risk management system and show the possibilities of integrating non-financial risk management into the risk management system and the management model of the organization.

Модель эффективности для оценки интеллектуального капитала

Today we live in a knowledge society, a society shaped by the information revolution and developed by communication technologies. At the dawn of the new era, the concept of intellectual capital was first used to explain the importance of intellectual resources - such as information, knowledge, and experience - in the modern economy. Today, intellectual capital is a key factor in the company's profitability and has become an essential resource for creating economic wealth. In this environment, intellectual capital and intangible assets are fundamental to success. Intellectual capital consists of intangible assets that, when properly used, become a source of sustainable competitive advantage. To create value, the components of intellectual capital must interact. The assessment of intellectual capital is an important activity for any organization operating in a competitive market, and involves the achievement of intangible assets, but at a lower cost. The interest in measuring intellectual capital was caused by the fact that accounting, as it is currently practiced, has largely lost its information capacity as enterprises have become more and more knowledge-intensive. Traditional valuation methods based on accounting principles, where the value of a company's assets is a fraction of the value, have systematically undervalued companies. The existence of non-financial standards is critical to the company's value creation, as the accounting rules, under constant review, were originally developed for tangible assets, which are a source of wealth in the industrial period. In the literature, the assessment of intellectual capital is considered in different ways, with many approaches developed over time based on research and research, most of which are aimed at improving the performance of an organization, measured by different tools. This article is a synthesis of the most well-known models used to evaluate intellectual capital and its subsequent implementation in the case of Company X. The results obtained confirm the hypothesis that the intellectual capital of a company has a favorable effect on the results of the organization's activities and may indicate future competitiveness.

Value creation in company–NGO collaboration in corporate volunteering

Purpose This paper aims to examine corporate volunteering as a form of social responsibility carried out by companies in relationships with non-governmental organizations (NGOs). Applying the value creation concept, the success of such relationships is based on value created between the focal company, its employees engaging in the volunteer work and the collaborating NGO actors representing the beneficiaries of the volunteer work. However, how to meaningfully engage employees and strategically manage company–NGO relationships in corporate volunteering has received less scholarly attention. The study hence asks the question: How is mutual value created in corporate volunteering collaborations between business organizations and NGOs? Design/methodology/approach Two qualitative case studies of company–NGO relationships involved in corporate volunteer programs for social benefit in Poland and Finland are analyzed. Findings Corporate volunteering offers value creation opportunities for each of the three actors in the relationships, namely, the company, the NGO and the employees who participate in the volunteer work. Particularly, employment and volunteering relationships appear to be catalysts for the creation of mutual value in the organizational relationship between a company and NGO. Originality/value The present study contributes to the current understanding of company–NGO relationships by emphasizing the role of individual employee volunteers in creating relationship-level value. The study adds also to existing research on corporate volunteering by identifying the way value is created in company–NGO relationships within corporate volunteering.

Improving the Internal Relations Versus Shaping the External Relations of the Enterprise

Purpose: The aim of the paper is to identify the importance of actions for enhancing internal relations in a company, with the aim to improve company’s relations with its environment. Design/Methodology/Approach: The studies conducted in 2018-2020 focused on the importance of relational competencies in the creation of company value and on the role of leadership. The first study concentrated on managers (N=10). The second study focused on the employees of the analysed companies (N=185). The obtained information was used to perform a structural analysis, based on structural indicators expressed as percentage values. Findings: The findings indicate that assessments of the importance of actions for enhancing internal relations in a company to improve company’s relations with its environment vary. The managers of the surveyed enterprises perceive it differently than the employees. In addition, cluster analysis showed that the managers and employees are not unanimous in their assessments of the actions. Practical Implications: The results of the analysis indicate that both the management and employees recognise the importance of taking actions for enhancing internal relations in a company in order to improve company’s relations with its environment. This analysis may identify the directions for building internal relations to improve company’s relations with its environment. Originality/Value: Business strategy making with regard to creation and enhancement of relational competencies and relational capital, both internally and externally, is becoming a key trend in the development of operational philosophy in business. Focusing on internal relations translates into formation of external relations. Development of relational capital essentially affects the growth of an enterprise and its competitive advantage.

Do Stakeholders Modulate Philanthropic Strategy? Corporate Philanthropy as Stakeholders’ Engagement

Corporate philanthropy, as an expression of commitment to the common good, can contribute to the creation of social value in companies. This corporate philanthropy can be managed in various ways. The choice of how to channel corporate philanthropy could be, in accordance with stakeholder theory, the result of companies’ interactions with key stakeholders and, in accordance with the theory of signaling, a signal that companies use to respond to their demands. This approach contributes to the literature on bottom-up initiatives (stakeholder–managers) as opposed to top-down strategies (board–stakeholders) in relation to corporate social responsibility, which is becoming increasingly important in a society where networks of communication, cooperation and interaction are established. To this end, a study was conducted on 221 European companies indexed in the Dow Jones Sustainability Indices in the year 2018. The findings have several practical implications: The management of corporate philanthropy should take into account the stakeholders’ requirements, and stakeholders show greater affinity and trust with the company when philanthropy is channeled through foundations. By contrast, donations are not associated with stakeholder attitudes. As a theoretical implication, this paper supports the theories of stakeholders and signaling by explaining the role of philanthropy in the relationship with stakeholders.

When Does Big Data Benefit Firm Performance?

Notwithstanding the growing academic and managerial interest towards big data, it is not yet clear when it is beneficial for firms. This lack of clarity is mainly due to the fact that big data is commonly considered to be positive for firms, while both benefits and costs are embedded in it. Moreover, the theoretical mechanisms that permit unlocking the benefits of big data have not yet been thoroughly analyzed, nor has a method to effectively assess the availability of big data been devised. Grounding our analysis on a resource-based view, we argue that big data can have a positive impact on firm performance when companies are able to create and capture value from it, allowing its benefits to overcome its costs. To understand the conditions in which a positive impact occurs, we unpack big data into three dimensions, i.e., Volume, Variety and Veracity, and we evidence how it is possible to measure them. Our results highlight that a high Volume of big data has a negative effect on firm performance, evidencing a dark side of big data. The presence of high Variety moderates the effect brought about by the Volume, while simultaneous high values of Volume and Variety allow value creation for companies positively affecting their performance. In addition, high levels of Veracity may further permit companies to benefit from big data by creating value from it. In doing so, we shed light on the circumstances in which big data may be beneficial for firms, contributing to a better academic understanding of the phenomenon, and providing useful indications to managers.

PENGARUH INTELLECTUAL CAPITAL TERHADAP PROFITABILITAS DAN RETURN SAHAM SYARIAH (STUDI KASUS JAKARTA ISLAMIC INDEX PERIODE 2013-2018)

Intellectual capital is the creation of company value added represented by employees with all the potential and capabilites they have. This study aims to analyze the effect of Intellectual Capital, profitability as an intervening variable on Islamic stock returns on the Jakarta Islamic Index (JII). Sampling of 14 issuers was carried out using purposive sampling technique. The method used is path analysis with a maximum likelihood model. Intellectual capital has a positive effect on ROA, ROA has no significant effect on returns, Intellectual Capital has a significant positive effect on returns directly, Intellectual Capital indirectly has insignificant effect on returns for the 2013-2018 period. Based on these results, the issuer company can disclose reports related to intellectual capital from the company. Research on intellectual capital using intervening variables in Indonesia still tends to be limited, besides that the writer also uses path analysis with the maximum likelihood model. In this study robustness tests were also conducted to test the resilience of the variables used.Keywords: intellectual capital, ROA, return, JII, path analysis

Negovanje i zadržavanje talenata u Srbiji

The Fourth Industrial Revolution and the creation of a future based on innovation and knowledge are transforming demand and putting pressure on the supply-side adaptation of human capital, which under these circumstances is crucial for value creation in companies and society. Because talents play a crucial role in creating value, there is an ongoing "war for talents", but also a so-called "talent paradox" that explains that despite the excess supply in the labor market, companies are failing to find the talents they need. By conducting a questionnaire-based survey among companies and students in their final years of study, this paper is trying to address this particular topic. The analysis shows that companies face a paradox considering youth employment, and due to the war for talents, they are developing an internal environment and strategies that are dedicated to attracting and retaining the much-needed talents. Most companies find that the present higher education system does not meet the current needs for necessary skills, especially those necessary for performing creative and complex activities. This need exists among students, as well, given that 60% believe that educational programs should be improved in terms of development of critical thinking, creativity and research skills. The results also indicate that the war for talents is transcending local boundaries and becoming global, given that companies find it harder to recruit young people because of the better opportunities they have abroad. At the same time, most of the students want to develop their careers in Western Europe in order to improve their standard of living.

ПІДВИЩЕННЯ ЕФЕКТИВНОСТІ БІЗНЕС-МОДЕЛІ ПІДПРИЄМСТВА ШЛЯХОМ ПІДГОТОВКИ ІНТЕГРОВАНОЇ ЗВІТНОСТІ

The necessity of formation of integrated reporting by Ukrainian enterprises is investigated. The importance of business presentation of information on the company's value creation, its effectiveness, opportunities, risks it faces, and development prospects for investors and other stakeholders in the form of integrated reporting is determined. It is investigated that integrated reporting should provide stakeholders with information on the long-term development of the enterprise in contrast to financial reporting, which cannot provide such full information. That is the main purpose of integrated reporting is to explain to financial capital providers and other stakeholders how an enterprise creates and plans to create the value in the future over a long period of time. The purpose of the study is to substantiate the need of taking into account the needs of stakeholders in the work of enterprise and the disclosure of non-financial information in the form of integrated reporting, which will increase the efficiency of the business model. The methodological basis of the study is a set of general and special principles, provisions and methods of scientific research, the use of which is determined by the purpose and objectives, in particular, methods of generalization, comparison, analysis and synthesis, methods of system and structural analysis, diagnostic evaluation. In particular, in the process of research the methods of generalization, analysis and synthesis were used in defining the concept of integrated reporting and its individual elements; methods of system and structural analysis in the study of the basic principles of integrated reporting; method of comparison in the study of scientific approaches to the formation of integrated reporting. It is substantiated that by providing information on value creation, in particular on the company's competitive advantages, strategic assets, environmental, social and management indicators (ESG), the company will gain an advantage over competitors, effectively implementing its business model in the market and be able to achieve sustainable development in the long run.

Value generators in forestry and logging

The aim of business is the company value which depends on its ability to generate future profits. It means that all the future decisions must be1 adopted with regard to the influence on the company value. The subject of interest in this paper concerns forestry and logging companies, particularly financial statements of companies that were active on the Czech market in 2016 and thus showed a profit. Aim of this paper is to identify particular value generators of forestry and logging companies in the Czech Republic in 2016. For this reason, the best possible methodology was developed to determine them and the objective was eventually achieved. Using artificial neural networks, a total of 14 indicators, entering a company value creation process most frequently, were identified and measured by the EVA equity indicator. The following key variables were identified as company value generators: external sources, long-term liabilities, material and energy consumption, other operating expenses and sales of goods.

Intellectual capital efficiency and organisational performance

PurposeThe purpose of this paper is to, the first of its kind, investigate the relationship between the intellectual capital efficiency and organisational performance of the pharmaceutical sector in Bangladesh, an emerging economy that enjoys Trade-Related Aspects of Intellectual Property Rights (TRIPS) relaxation.Design/methodology/approachThe study used hand-picked data from annual reports for five years. The relationship between efficient use of intellectual capital and corporate performance was examined through the practical use of human capital, structural capital and capital employed. Multiple regressions were used to assess their impact on financial performance – specifically, return on assets, return on equity, asset turnover and market-to-book value.FindingsValue-added intellectual coefficient components (i.e. human capital, structural capital and capital employed) significantly explained asset turnover and return on assets but failed to predict the return on equity outcome. Additionally, asset turnover was negatively influenced by structural capital and positively influenced by capital employed. The return on assets was mostly affected by variation in human capital. Intellectual capital did not predict market-to-book value or investment decisions.Practical implicationsThis paper provides useful resources for evaluating the financial performance and value creation of companies in emerging economies that enjoy TRIPS exemptions; this research could also be extended using cross-industry comparisons. The findings have theoretical and practical implications, particularly for the pharmaceutical industry in emerging economy contexts, and for managers globally.Originality/valueThis study is among only a few that have reported on the relationship between intellectual capital efficiency and value creation in emerging economy contexts.

Circular economy in Italian SMEs: A multi-method study

Climate change, population growth, and current rate of consumption at global scale have prompted academic and business communities to challenge the current models of production towards more circular approaches. This study aims at understanding what actions small and medium-sized enterprises (SMEs) are taking to meet the challenges and opportunities of the circular economy (CE), analysing actions, barriers, enablers and the connection between CE, business strategy and performance. This research involved 254 Italian SMEs through a multi-method approach, including interviews, surveys, and focus groups. Twenty different CE practices related to waste management, packaging, supply chain and product/process design have been explored. The results show that several CE practices are simultaneously implemented by SMEs, thus supporting the notion that CE implies a systemic approach to company’s value creation. In particular, waste management was widely applied (e.g. separated waste collection was carried out by 84% of the companies surveyed), while resource saving practices were implemented by only 14% of the sample. Higher costs are the main barrier to CE for early adopters (5.13 on a 7-point Likert-type scale). However, companies implementing CE practices perceive them as a business opportunity rather than a cost, thus showing that CE may represent a source of value creation for companies, particularly SMEs. • The study involved 254 Italian SMEs through interviews, surveys, and focus groups. • Actions taken by SMEs to meet challenges and opportunities of CE are investigated. • CE Practices focused on waste management, packaging, supply chain and design. • Sustainability results an opportunity rather than a cost for CE-oriented firms. • Business opportunities emerge from the development of new value chains within CE.

Fostering Value Creation in the Oil & Gas Industry Through Safety-related Investments

Oil & Gas companies have suffered in recent years due to low oil prices and high volatility; the consequent impact in revenues has led to increasing pressure on investments throughout the sector.In addition, in some regions (e.g. developed countries) the issue of asset ageing is emerging, to a point that Companies search for ways to increase asset life far beyond its original design life.Lastly, increasingly stringent regulations and best practices require continuous improvements in safety standards such as Seveso III (2012/18/EU), energy efficiency and emission levels (European Commission, 2018).Therefore, Oil & Gas companies are now facing a challenging choice, as far as old assets are concerned:decommissioning and shut down, orimplementation of large investments into plant upgrade and/or revamping.In such a complex context, it is essential to adopt structured approaches and methodologies to support management decision-making process, particularly in selecting and prioritizing investment options that will create value for Companies in the future.The paper will present a value-based approach for the evaluation of investment options in Oil & Gas Plants, based on a probabilistic method to determine the benefits associated to safety-related investments, to be prioritized according to associated costs. The approach was implemented in a leading multinational company, with over than 10 sites in Europe, where an extensive SIL (Safety Integrity Level) analysis program has been developed and deployed.

The relationship between audit quality and risk taking toward value creation in Indonesia

PurposeThe purpose of this paper is to evaluate the effect between audit quality and risk taking on value creation.Design/methodology/approachPopulation under study is companies on the Jakarta Stock Exchange from 2004 to 2015. Considering the limitations, 145 companies studied in this research, which made a sample containing 1,740 company-years. This study is based on the panel data and multivariate regression method. This research uses fixed and random effects to estimate the regression. In this paper, five components of audit quality, including auditor specialization, tenure, audit firm size, ownership concentration and the percentage of unbounded members of the board, are studied.FindingsThe results of this study indicate that among these five components as well as the risk factor, only tenure and ownership concentration have a significant effect on value creation of companies. In other words, both ownership concentration and tenure are positively effective in value creation and other variables have no significant effect on value creation. Besides, none of them could affect the risk taking on value creation.Originality/valueThe outcomes of the current study help audit market and capital market in developing nations.

Algorithm applied in corporate sustainability

PurposeScientific studies indicate that stakeholder’s engagement is a key factor for the creation of sustainable value in companies. This paper aims to evaluate the sustainability of a sports company and propose a tool to prioritize the relevant issues that this company should consider in its operations.Design/methodology/approachStakeholder theory and Global Reporting Initiative (GRI) are considered, and, from the Fuzzy Logic, the paper proposes a decision-making tool to establish the relevant issues. The “Experton Method” is used in this paper.FindingsThe algorithm used can help decision makers in processes that include the stakeholder’s opinions. In this case, a tool that treats qualitative data in a reliable manner is required. The methodology used allowed knowing the stakeholders expectations and to define priorities in sustainability issues. The results were captured in a materiality matrix. The manuscript concludes that including stakeholders in the decision-making process, the company generates trust and legitimacy of its stakeholders. This participatory approach and the use of algorithm help companies in materiality assessment, definition of priority issues and management of resources.Practical implicationsIn terms of managerial implications, this paper presents a useful tool that can help entrepreneurs in the decision-making to manage their suppliers. Using an algorithm of fuzzy logic applied in the supply chain management, it is indicated how to set priorities to build a consistent corporate social responsibility (CSR) plan to achieve corporation success. This methodology allows reducing subjectivity; it generates greater precision and decreases the risk in decision-making. At the same time, it promotes dialogue and collaboration among stakeholders to create value for stakeholders and CSR, and collaborate to have a responsible company performance. Furthermore, this paper provides theoretical applications in terms of the literature review on corporate sustainability, indicating that companies must consider the stakeholder’s engagement in its strategies. Based on the bibliometric study, there are knowledge gaps on the subject. For these reasons, an important contribution is observed at the academic level that allows expanding the frontier of knowledge on the subject.Originality/valueA tool for decision-making is presented with great utility for entrepreneurs in the processes of dialogue and stakeholder’s engagement, being a contribution for the creation of sustainable value. In addition, there is an important scientific contribution because the paper identifies in the literature the knowledge gaps on the subject.

Pengaruh Intellectual Capital dan Struktur Modal Terhadap Return Saham Dengan Kinerja Keuangan Sebagai Variabel Intervening (Studi pada Perusahaan Yang Terdaftar pada JII (Jakarta Islamic Index) Periode 2012-2016)

Intellectual capital is the company's wealth that is the power behind the company's value creation that includes knowledge, experience, skills, reputation, and also technological capabilities. Capital structure relates to sources of funds, both internal and external. The main purpose of this research is to investigate the relationship between intellectual capital and capital structure on stock return with financial performance as intervening variable. This type of research is quantitative research. The sample of this study is the annual financial statements of companies registered on JII (Jakarta Islamic Index) on period 2012-2016). The sample‟s were chosen by using purposive sampling method and 11 companies were able to fulfill the sample‟s criteria. The research data were analyzed by using path analysis method. The result of this research reported that there is indirect influence between intellectual capital and capital structure to stock return through financial performance measured by return on equity. Intellectual capital insignificance to indirect effect on stock return through financial performance measured through earning per share but there is indirect influence between capital structure on stock return through financial performance measured through earning per share. The study also found that intellectual capital insignificance on stock return. But the finding of direct influence between capital structure on stock return. From these findings it can be concluded that intellectual capital and capital structure indirect significance on stock return through financial performance measured through return on equity.

The Role of Intangibles in the Creation of Company Value

The interest of the business economists in intangibles is growing and to this day the topic remains discussed both with reference to the nature of these resources, and to their role, their contribution in terms of value creation. Intangibles are one of the main sources of companies’ competitive advantage (Tanfous, 2013). The definition and classification of intangibles is still an open question. Among intangibles, knowledge assumes a fundamental role. As stated by Sveiby (Sveiby, 1997) intellectual capital is ‘knowledge that can be converted into value. In fact, only the value of intangibles offers a comapny the possibility of differentiating itself from its competitors, and as stated by Stewart the differences among firms is played out by the correect management of intangible resources, which allow them to overcome competitors (Stewart, 1997). The aim of this work of the work is to carry out an analysis of the literature with reference to the definitions and classifications offered both nationally and internationally, their role in the company and their contribution in terms of value creation. To understand the sources of competitive advantage that intangibles generate it is necessary to build a model based on the statement that the resources of the company are immobile and heterogeneous. (Barney, 1991). Every enterprise must create the structures that help them to accumulate knowledge capital and create intangible assets systematically and to convert it to value for their customers in order to gain a competitive edge and create long-term shareholder value (Lev, 2003). This paper confirms the theory that adequate investments in intangibles exercises a positive influence on company performance; for the future, with the purpose of creating company value, we believe it opportune to consider the good association between intangibles and the various components of immaterial resources; this association will be able to guarantee not only the creation of value for the shareholders but for all the subjects directly and indirectly involved in the life of the company as well as the survival and reputation of the company itself. The paper offers adequate points for reflection for future examination regarding the relationship between investments achieved in intangibles and the creation of company value. Moreover, it confirms what the was previously stated, that up to now, studies on intangibles have not arrived at a universally accepted definition. Therefore, we hope for this in the near future.