Intellectual Capital Statements Research Articles

Does voluntary non-financial reporting matter for the evaluation of audit risk after a crisis period? Perceptions from Italian auditors

Purpose This paper aims to investigate the effect of voluntary non-financial reporting on the evaluation of audit risk from the auditors’ viewpoint in a post-crisis period. Furthermore, this paper analyses whether auditors perceive that voluntary non-financial reporting impacts audit risk differently for old clients as compared with new clients. Design/methodology/approach This study is conducted on a sample of Italian audit firms through a paper-based questionnaire. Both Big4 and non-Big4 audit firms have been included in the sample. Findings Results show that integrated reporting is perceived to be the most relevant reporting method and intellectual capital statement the least relevant. Surprisingly, empirical findings over the sample period show that auditors do not perceive statistically significant differences between old and new clients. Practical implications Auditors can identify opportunities to adapt their assessment model to include voluntary non-financial report information. Moreover, they can use different assessment models regarding the research variables in the case of new and old clients. Originality/value Empirical findings highlight the growing role of voluntary non-financial reporting in the auditors’ perception of their client’s audit risk. All the observed voluntary non-financial reporting forms, except for intellectual capital, are considered as relevant by auditors in the evaluation of their client’s audit risk when compared to an indifference point. In addition, findings reveal that female auditors perceive a reduced gap in the relevance between integrated reports and intellectual capital reports compared to their counterparts.

Intellectual Capital Statement (ICS) – A Case Study from a Hungarian non-profit Joint Venture

An Intellectual Capital Statement (ICS) is a strategic management instrument for assessing and developing the Intellectual Capital (IC) of an organization. The ICS shows how IC is linked to corporate goals, business processes and the business success of an organization using indicators to measure these elements. By identifying the causal relationships between the different types of capital, improvement potentials are discovered, which can then be used profitably for the strategic and operational development of the organization. Therewith, the ICS is an essential tool for preserving the competitive edge and keeping business successful in the knowledge-based economy. The workshop-based approach to creating an ICS helps participants to gain new insights into how their own organization operates. It also provides concrete results in the form of prioritized recommendations for action to foster their organization’s sustainable development and consistent reporting. Against this background, a case study to outline selected essential steps of the ICS creation for an applied research a non-profit joint venture for computer science and control in Budapest is presented.

20 Years of Intellectual Capital Research: A Bibliometric Analysis

Intellectual Capital (IC) study began over 20 years ago. But little mapping of this study has been done. “How many IC articles have been published and cited?” This is vital for future IC research. This study's goal is to map 20 years of IC research bibliometrically. This is significant because IC has been shown to boost company performance, competitiveness, and welfare. Bibliometric analysis is used because it is quantifiable, objective, avoids potential subjective bias, and confirms expert opinions in the field of IC. The results showed 3993 IC articles between 2000-2020. English is the most extensively used language in publications, accounting for 95.04 percent. IC and competitive advantage, IC statement, and IC perspective are the most researched themes. Nick Bontis, James Guthrie, and John Dumay are the most prolific. This study's findings will be useful to future IC researchers.

Lessons learned in intellectual capital management in Germany between 2000 and 2020 – History, applications, outlook

PurposeThis article reports on the background, the conceptual ideas and the lessons learned from over more than 20 years of IC Statements and Management with a country focus on Germany and some international developments. It calls for an integrated management approach for IC and offers case study evidence on how to accomplish this quest.Design/methodology/approachReport on the German initiative “Intellectual Capital Statement made in Germany” (ICS m.i.G.). A brief review of the literature describes the background and theoretical foundation of the German IC method. A short description of the method is followed by four detailed case studies to illustrate long-term impact of IC management in very different organizations. A discussion of Lessons Learned from more than 200 implementations and an outlook on current and future developments finalizes the article.FindingsIC Statements made in Germany (ICS m.i.G.) was successful in providing a framework to systematically identify IC, evaluate the status quo of IC relative to the strategic requirements, visualize interdependencies of IC, business processes and business results as well as to connect IC reporting with internal management routines and external communication. However, ICS is not an insulated method but delivers the maximum benefit when integrated with strategy development, strategy implementation, business process optimization accompanied by change management routines. Strong ties to human resource management, information technology departments, quality management, research and development teams as well as business operations as the core of an organization help to yield the most for ICS m.i.G. Over time, the focus of managing IC changes and maturity leads to deutero learning.Practical implicationsICS m.i.G. proved easy to apply, cost efficient for SMEs, larger corporations and networks. It helps to better accomplish their objectives and to adjust their business models. The guidelines in German and English as well as a software application released were downloaded more than 100,000 times. A certification process based on a three-tier training module is available and was successfully completed by more than 400 practitioners. ICS m.i.G. is supporting current standards of knowledge management, such as ISO 9001, ISO 30401 or DIN SPEC PAS 91443 and therefore will most likely have a continuing impact on knowledge-based value creation.Originality/valueThis paper reports lessons learned from the country-wide IC initiative in Germany over the last 20 years initiated and supported by the authors. Several elements of the method have been published over time, but so far no comprehensive view on Lessons Learned had been published.

Intellectual Capital Statement Model for Counties in Poland

The role of intellectual capital as a developmental factor has been constantly growing in both private and public sectors. World literature presents a variety of models for intellectual capital (IC) measurement, but so far IC in local government units such as counties (2nd tier local government unit in Poland) has been non-recognized. The purpose of this paper is to fill in this gap. The authors propose an original IC measurement concept developed on the basis of already existing models. The model was created following an analysis of the results of studies performed in local government units (counties) in Poland. The authors are of the opinion that the model can be used for developing IC measurement models for local government units in other countries.

Identification of intellectual capital (IC) within micro-, small- and medium-sized enterprises (MSMEs): a case study of Cibuntu Tofu Industrial Center in Bandung, Indonesia

As the ASEAN Economic Community's (AEC) inception has promoted and continues to promote deeper regional integration competition. Indonesia, as an AEC member enjoying significant commercial potential, represents a prospective marketplace for other ASEAN countries. Commercial competition between micro-, small- and medium-sized enterprises (MSMEs) is increasingly fierce because they constitute one of the business sectors that significantly enhance Indonesia's internal economic growth. Thus, MSMEs within the country must exploit their potential more fully by, among other things, improving their intellectual capital (IC) in order to prove competitive. IC is one means of achieving a knowledge-based economy. This study aims to identify the existing conditions of IC in the Cibuntu Tofu Industrial Center of Bandung, one of the leading players in the Indonesian MSME sector. Those conditions will be the basis of IC model design, one of the means of creating competitive advantage. The research methodology presented here consists of several components. The data used in this study is primary in nature, being collected through semi-structured interviews with various respondents. The data analysis technique employed the intellectual capital statement as a tool to describe and evaluate IC using quantitative, qualitative and systematic assessment and impact factors, with the results of the analysis expressed in the IC management portfolio. These showed that there were 15 IC factors in the Cibuntu Tofu Industrial Center. This study's results indicated that the company's human capital component falls within quadrant two (stabilise), structural capital within quadrant four (analyse), and relational capital within quadrant two (stabilise).

Intellectual Capital-Driven Technology and Innovation Management

The significance of intangible resources with regard to business success in general has evidently increased. This paper aims to draw conclusions on a broad empirical basis with regard to internal drivers of innovation and related differences between manufacturing and service enterprises. Measures to improve the enterprises’ innovation capability are studied on the basis of 38 intellectual capital statements. Furthermore, the data gained from a large scale survey among more than 1000 enterprises is analyzed with regard to product as well as process innovation. In subsequence, the results of both analyses are matched and compared.

Lessons for progressing narrative reporting: Learning from the experience of disseminating the Danish Intellectual Capital Statement approach

The case for the greater use of narrative disclosures within the annual report package continues to attract support from accounting academics. After a decade of comparatively limited attention, the topic of narrative reporting has returned to the accounting research agenda, in part in association with integrated reporting and a growing interest in accounting for business models, as well as a resurgence of intellectual capital research. In the light of a continuing optimism that narrative reporting will eventually assume its rightful place within financial reporting, the paper reports and reflects upon the findings of a study of the outcome of the Danish Guideline Project in the decade following its conclusion in late 2002. This initiative placed a heavy emphasis on the extension of narrative reporting in its principal output, the Intellectual Capital Statement, still widely regarded as a highly promising intellectual capital reporting framework. Based on insights derived from the study, the paper identifies a number of major obstacles that confront the advocates of narrative disclosure practices, the persistence of which is rooted in the contestable jurisdiction that characterises the accountancy profession itself.

インタンジブルズに基づく企業の価値創造 : BSC,知的資本報告書,統合報告の論点比較

インタンジブルズに基づく企業の価値創造 : BSC,知的資本報告書,統合報告の論点比較

MODAL INTELEKTUAL DALAM PENGEMBANGAN EKONOMI KREATIF: STUDI KASUS PADA SENTRA KERAJINAN SEPATU CIBADUYUT BANDUNG

The concept of Creative Economy is a concept in a new economic era which intensifies on information and creativity, by relying on the ideas and the stock of knowledge of Human Resources, as a major production factor in their economic activities. This case study aims not only to determine how is the image of the intellectual capital (IC) in Cibaduyut shoe craft centers in Bandung-Indonesia but also to find the appropriate alternative strategy that can be applied by SMEs in shoe Cibaduyut shoe craft centers in order to compete in the ASEAN Economic Community by 2015. The data collection technique is using triangulation and self assessment by using ICS (Intellectual Capital Statement) as an instrument that used to define the factors of IC, then evaluate it with QQS (Quality, Quantity, Systemetic) assessment and analysis with management IC portfolio. The results showed: (1). There are three additional of IC components in SMEs of Cibaduyut Shoes Centers Bandung, such as the skills, technology, and patents, (2). IC Human Capital is a weakness of SMEs Cibaduyut shoe craft centers while IC Relational Capital is the strength. As for to gain sustainable development of creative economy, it need to focus on the development of human capital

Moving from irrelevant intellectual capital (IC) reporting to value-relevant IC disclosures

PurposeInformed by the findings of a follow-up research study of companies originally involved in the Danish Guideline Project (DGP) for intellectual capital statements (ICS), the purpose of this paper is to provide valuable insights for a potential shift from intellectual capital (IC) reporting, largely informed by an accounting perspective, towards IC-related disclosures.Design/methodology/approachThe paper draws on data obtained from 21 semi-structured interviews with respondents in 16 companies. The respondents were contacted following a genealogical exercise carried out on the 102 companies involved in the DGP between 1999 and 2003.FindingsThe interviews suggested a rather critical perspective towards IC reporting using the ICS framework. Despite the attempt of the DGP to establish a reporting standard, a range of experiments resulted in changes to the framework’s original structure. Overall, a trend towards more integrated forms of reporting was discernible, in some part being motivated by the need to reduce the levels of reporting overload. Examples of integration designed to legitimise IC or corporate social responsibility reports, involving issuing them in tandem with a recognised reporting vehicle such as the annual report, were also encountered.Research limitations/implicationsThe implications of this study are that timely, value-relevant IC disclosures and compliant reporting, primarily for accountability purposes, have the potential to coexist. In addition to the usual limitations of a semi-structured interview research design, respondents’ difficulties in clearly recalling events during the project after some 10-12 years is a further potential limitation. Additionally, the use of internet-based communication channels for disclosure purposes was in its infancy at the time of the DGP.Originality/valueThe paper provides important insights into the mechanisms of IC disclosure and IC reporting as seen from a practitioner perspective. Implications relevant to the continued development of integrated reporting are also identified.

Explaining the demise of the intellectual capital statement in Denmark

PurposeThe purpose of this paper is to provide an overview of the Danish Guideline Project (DGP) and its subsequent fate within participating companies since its conclusion in late 2002. Particular focus is placed on the traction that the intellectual capital statement (ICS) approach to reporting, as the principal outcome of the project, was able to acquire in practice.Design/methodology/approachFollowing the reconstruction of the original sample of 102 companies that originally participated in the project, a survey using semi-structured interviews was pursued among 64 individuals who were identified as having some involvement with the guideline project and/or producing ICSs in these companies. In addition to the interviews, a range of secondary information has been used to supplement the primary data and research protocol.FindingsThe project was found to have enjoyed only modest success and thereby failed to achieve any substantial traction among the participating companies and related public stakeholders. On balance, however, respondents believed that the exercise had been a positive experience, with benefits for the internal management of the companies, as well as for human capital (employees). The obstacles that radical initiatives such as the ICS continue to face should not be underestimated.Research limitations/implicationsA single study of a specific initiative necessarily entails many limitations. It is conceivable that the views of some of the participants in the guideline project who are absent from the present sample may provide details of a different experience, although it is unlikely that these would seriously challenge the findings reported here.Originality/valueThis study is the first to explore the fate of the critically acclaimed ICS approach among companies participating in the DGP.

Identification of Intellectual Capital (IC) within Micro, Small and Medium-Sized Enterprises (MSMEs): A Case Study of Cibuntu Tofu Industrial Center in Bandung, Indonesia

As the ASEAN Economic Community's (AEC) inception has promoted and continues to promote deeper regional integration competition. Indonesia, as an AEC member enjoying significant commercial potential, represents a prospective marketplace for other ASEAN countries. Commercial competition between micro-, small- and medium-sized enterprises (MSMEs) is increasingly fierce because they constitute one of the business sectors that significantly enhance Indonesia's internal economic growth. Thus, MSMEs within the country must exploit their potential more fully by, among other things, improving their intellectual capital (IC) in order to prove competitive. IC is one means of achieving a knowledge-based economy. This study aims to identify the existing conditions of IC in the Cibuntu Tofu Industrial Center of Bandung, one of the leading players in the Indonesian MSME sector. Those conditions will be the basis of IC model design, one of the means of creating competitive advantage. The research methodology presented here consists of several components. The data used in this study is primary in nature, being collected through semi-structured interviews with various respondents. The data analysis technique employed the intellectual capital statement as a tool to describe and evaluate IC using quantitative, qualitative and systematic assessment and impact factors, with the results of the analysis expressed in the IC management portfolio. These showed that there were 15 IC factors in the Cibuntu Tofu Industrial Center. This study's results indicated that the company's human capital component falls within quadrant two (stabilise), structural capital within quadrant four (analyse), and relational capital within quadrant two (stabilise).

Does Intellectual Capital Disclosure Matter for Audit Risk? Evidence from the UK and Italy

Disclosure theory argues that better information quality reduces audit risk, by decreasing information asymmetry in the market and consequently, information risk for firms. Extant literature on voluntary disclosure analyzes the relationships between Corporate Social Responsibility (CSR) and audit risk, finding that auditors charge lower fees and issue less going concern opinions to firms with good CSR performance. In this study, we test the relationship between intellectual capital disclosure (ICD) and audit risk and we assess the effect of ICD and audit risk on audit fees. To do so, we use data from the ESG Asset4 database (Thomson Reuters Datastream) on 166 UK and 27 Italian listed firms that issue stand-alone social and intellectual capital statements. The audit risk is measured from both a qualitative and a quantitative perspective. Panel data analysis on 2004–2011 years has been used to test our research hypotheses. Empirical findings from a sample of UK and Italian listed companies show that auditors estimate a lower qualitative risk, albeit a higher quantitative one, for those companies reporting higher ICD scores, compared to those ones with lower disclosure scores on the intellectual capital. Furthermore, we find that reputation risk contributes to the relationship between ICD and audit risk.

Numbers versus Narrative: An Examination of a Controversy

AbstractCompeting actor interpretations of Intellectual Capital Statements (ICS) may explain diverse opinions on their effectiveness in practice. Adopting Callon's (1986) moments of translation, we find that actors in our case study adapt ICS numbers and narrative to create specific inscriptions, privileging one over the other to suit their interests. This allows IC controversy to survive rather than be resolved or the network to fail.

Contemplating the usefulness of intellectual capital reporting

Purpose– Dumay and Garanina (2013) asserted that, even though intellectual capital (IC) researchers would like to continue developing new models, existing models seem to not be used in practice. Nielsenet al.(in press) discovered that almost all companies that were originally involved in the Danish project of guidelines for intellectual capital statements (ICS) have abandoned their work with ICS a few years after the project ended. The purpose of this paper is to inquire the underlying reasons and conditions that drove these organisations to stop using the acquired framework.Design/methodology/approach– This study is based on both survey and in-depth interview data from key employees of 58 organisations. Qualitative content analysis employing thematic coding is used to crystallise aspects among the provided reasons, to categorise them, and to investigate possible relations. Results are interpreted through a conceptual framework containing elements diffusion theory, management fashion and fads theory and lifecycles as well as implementation failure of knowledge management (KM) techniques.Findings– A multitude of reasons and conditions are discovered as having affected companies’ decisions to interrupt their ICS practices. Underlying aspects principally refer to deliberately taken decisions but also to a substantial number of exogenous factors and conditions. Their common denominator is identified in the low perceived value of ICS, both internally from a KM perspective and externally in relation to the disclosure practice. This leads to the conclusion that ICS can be considered a hierarchically diffused management fashion whose implementation within these companies failed, and its lifecycle subsequently ended with rejection.Research limitations/implications– This study is limited due to the particular composition of the selected research sample, which, together with the qualitative nature of the research, restricts the possibility of any generalisations of the results to the broader field of IC and extra-financial reporting.Originality/value– It represents a large-scale attempt to directly investigate organisations’ and managers’ reluctances towards ICS measuring and reporting, its perceived value, and the failure of its persistent implementation.

Continuities in the use of the intellectual capital statement approach: Elements of an institutional theory analysis

The Danish Guideline Project and its principal output, the intellectual capital statement, have attracted only a very limited extent of empirical attention since the conclusion of the initiative in December 2002. The paper reports the findings of a series of semi-structured interviews with individuals employed in the small subset of companies that were found to have persevered with intellectual capital reporting during most of the following decade. Interviews explored three themes: motivations for initiating intellectual capital reporting; reasons for continuing to do so; and details of the implementation and evolution of these practices. The paper utilises a number of elements of institutional theory to organise the findings and to discuss the continuities in intellectual capital reporting practice documented therein.

Towards a Conceptual Template for Intellectual Capital Measurement and Reporting

In the current information age, Intellectual capital has become a type of critical resource that can create value as well as sustain a competitive advantage for firms. This paper reviews some key intellectual capital (IC) measurement and reporting models, comprising the Balanced Scorecard, Skandia Navigator Scheme, Intangible Assets Monitor, the DATI guideline, and the MERITUM project. Simultaneously, we synthesize these models to develop a conceptual template in the form of an IC statement, which can be used as a management tool for companies to measure and report their IC resources. It is expected that our paper should have some implications for companies and corporate reporting policy makers.

A critical examination of implementing government sponsored intellectual capital management and reporting programs for small and medium enterprises

Purpose – This study aims to examine the impact of implementation of government-sponsored intellectual capital (IC) management and reporting (ICMR) programmes in Hong Kong and Japan for small and medium enterprises (SMEs) for the purpose of issuing an IC statement (ICS). Design/methodology/approach – The authors present a critical analysis using semi-structured interviews with employees and owners of Hong Kong and Japanese SMEs who participated in their respective government’s ICMR programmes and who published an ICS. Findings – The authors conclude that many enterprises did not achieve the full benefit of participating in the ICMR programme because consultants funded by the government prepared the ICS. Instead, consultants should take on more of a “missionary” role, educating enterprises about IC, rather than doing the work for them. Research limitations/implications – This research is restricted to enterprises that published one or more ICS. Future research should include enterprises participating in the ICMR programme that failed to publish an ICS. Practical implications – Enterprises that are able to utilise IC in their daily business routine will think IC is useful and continue using it. Conversely, those enterprises that relied on consultants to prepare the ICS will not understand its benefits. Originality/value – Policymakers should not solely concentrate on creating new IC reporting frameworks or guidelines for enterprises to follow because this focus limits the understanding of how enterprises can utilise IC concepts with the consequence that they may eventually give up on IC reporting.

Relationships between Social and Intellectual Capital: Empirical Evidence from IC Statements

This paper investigates on the determinants of a firm's intellectual capital (IC). Acknowledging the literature on this topic, we focused on the effect that the assessment of social capital (SC) has on intellectual capital, according to the theoretical model put forward by previous studies. Starting from the concept of organisational advantage, they argued that three SC dimensions, namely, the structural, the cognitive and the relational dimensions, contribute to the creation of IC. Different facets of the three dimensions help in providing combination capabilities and motivating the exchange of IC that eventually produce new IC. This study extends this literature by empirically investigating on these relationships. By analysing the contents of the IC statements disclosed by 36 firms, we first identified which indicator, or measure, has been developed and assessed to monitor the facets of SC and the level of IC. Then, we performed a path analysis, using partial least square models, in order to uncover the effect that the single SC dimension has on the creation of IC. Sometimes results contradict the theoretical assumptions. Theory, in fact, predicts that cognitive and structural dimensions of SC enhance human capital, but empirical evidence did not support this hypothesis. Similar argumentations can be put forward for the empirical evidence from the path between the cognitive dimension of SC and organisational IC. On the other hand, as theoretically predicted, an increase in the assessment of the level of relational SC has a positive effect on the level of human capital. Copyright © 2015 John Wiley & Sons, Ltd.