Intellectual Capital Measurement Research Articles

Underpricing and Intellectual Capital Disclosure: Evidence from Indonesia

In this study, we investigate the relationship between intellectual capital disclosure and underpricing. We did interviews and gave questionnaires to practitioners and academics to develop intellectual capital disclosure measurement methods (in this case, it is the weighted disclosure index). The analysis result of 189 companies which did initial public offerings in Indonesia during 2000–2014 shows that intellectual capital disclosure affects negatively on underpricing. It indicates that intellectual capital disclosure can reduce asymmetry information between the issuer and the potential investor. In addition, intellectual capital disclosure can assist potential investors in assessing the company’s quality and prospects.

Intellectual Capital, Profitability, and Productivity: Evidence from Pakistani Financial Institutions

The idiosyncratic and knowledge-intense nature of the financial institutions requires them to rely more on intangible than on tangible resources. Over the past two decades, researchers have been motivated to embark on the relationship between intellectual capital (IC) and performance of financial institutions. Considering the knowledge-based intellect as a critical skill of this era, the current study examines the impact of IC on the performance of 111 Pakistani financial institutions (PFIs) over the period 2007–2018. Two IC measures, i.e., value-added intellectual coefficient (VAIC) and modified value-added intellectual coefficient (MVAIC), were applied to examine the impact of IC on profitability and productivity. Robust results from the fixed effect regression and generalized method of momentum affirm the inverted U-shaped relationship between IC and performance, suggesting that the increase in IC performance of PFIs increases their profitability and productivity up to a certain level, and after that, a further increase in IC performance decreases profitability and productivity. The results further suggest that human capital is the most influencing intellectual resource which produces higher intellectual efficiencies and increases the performance significantly. The results of this study are likely to be helpful for management, regulators, policy makers, and academics and provide insights into the importance of IC and suggest that the investment in the IC improves the sustainable performance to a certain extent.

Factors for measuring knowledge management and intellectual capital in the public sector of Jalisco

In the public sector, stresses the importance of Knowledge Management and Intellectual Capital, as raw material in the generation and provision of services to citizens, depending on existing needs, as well as in the modernization of public administration. In this sense, the objectives of the present research are focused on identifying the necessary factors for the measurement of Knowledge Management and Intellectual Capital in the public sector of Jalisco, as well as explaining the behavior of the variables under study. For this, the scales of Rodriguez-Ponce (2007) and Chahal and Baskhi (2015) were used with six dimensions or factors, appropriate to the Mexican public context. With a cross-sectional study and a non-probabilistic sampling for convenience of 52 employees of middle managers and directors of the public sector of social assistance from Jalisco, who voluntarily accepted to participate, the results were obtained that allowed validating the instrument with necessary dimensions or factors in the explanation of the variables under study, by means of descriptive statistics and statistical tests of reliability, normality tests and correlations between elements by factor.

Intellectual Capital in Social Enterprises

Over the last decade, the phenomenon of social entrepreneurship has experienced impressive growth in different countries. Using a market- based approach, Social Enterprises (SEs) incorporate commercial forms of revenue generation (creating economic value) as a vehicle to accomplish their social mission (creating social value). Profits and wealth creation play a role in their business model, but they are rather considered as the means to achieve a social end, and not an end in themselves. Especially in Greece, the recent financial crisis has triggered the generation of several SEs with multifaceted purposes. The scope of the study is twofold; Firstly, to identify the Intellectual Capital (IC) of SEs in Greece. More specifically, to identify the Human Capital, Organizational Capital and Relational Capital existing in these SEs as well as the relationships existing among these IC subcategories. Secondly, to assess whether these components of IC exert an influential role on the performance of the SEs. Our analysis is based on answers provided by a sample of Greek SEs on a structured questionnaire. The measurement of IC is done through scales that borrow characteristics from both the private and the public sector literature. In our study, the performance of SEs is measured through their perceptions regarding the level of success in achieving the desired output, outcome and impact as well as well as quantified proxies of the above.

Mapping in Intellectual Capital Measurement in Creative Industries in East Java

In the context of global competition, competition not only occurs in the world of industry and trade, but also applies to creative businesses or more specifically creative industries which are industries that come from the utilization of individual skills, creativity and talent in creating welfare and employment use. Problems in managing SMEs and creative industries that have not been resolved are intellectual capital issues.One approach used in the assessment and measurement of knowledge assets (intellectual property / assets) is Intellectual Capital which consists of 3 main elements, namely Human Capital, Structural Capital, and Relational Capital. Creative industries are industries that are unique and emphasize creativity, innovation and utilization of individual talents need to get maximum management. The purpose of this study is to find a model, the appropriate components of intellectual capital, and to get a real picture of the rules of Human Capital; Structural Capital and Relational Capital for creative industries in East Java. The sample in this study is the owner / manager / leader of 5 creative industry sub-sectors in 9 cities in East Java (Surabaya, Pasuruan, Probolinggo, Mojokerto, Batu, Malang, Kediri, Blitar, and Madiun) with a sample of 45 as respondents. The analysis technique used in this study is the Spider Plot Diagram.Based on the results of the survey and studies, the aspect of mapping of intellectual capital in 5 (five) creative industry sub-sectors in East Java shows that relational capital is more dominant followed by human capital, and the lowest is structural capital.

Advances in intellectual capital performance measurement: a state-of-the-art review

Purpose The purpose of this paper is to present a review on the latest developments, approaches and methods in intellectual capital (IC) performance measurement. Design/methodology/approach A total of 53 research papers from high-ranking journals concerning the advances in IC performance measurement were thoroughly reviewed and classified to identify the advanced approaches and methods that have been used to evaluate IC performance. Findings It is clear that the current application of advanced or intelligent methods in IC performance measurement is still at the primary stage. The reviewed approaches mainly focus on two core applications. First is to assist the data collection or data handling process and second is to enhance the result computation process to obtain a more reliable and realistic value that represents the performance of IC. Research limitations/implications This study offers a foundation and guideline for the researchers who wish to integrate advanced methods into IC performance measurement based on the reviewed advanced approaches in terms of their respective functions, strengths and limitations. It stimulates the creation of new IC performance measurement models that use advanced approaches to cope with real-life problems and dynamic conditions. Originality/value This paper contributes to the literature on IC performance measurement, in light of advances in technology. In general, five advanced approaches were identified, analyzed and discussed. Future research directions were presented to provide new insights for researchers to apply advanced methods in IC performance measurement, together with theoretical and managerial implications.

Intellectual Capital Disclosure and Its Determinants: Empirical Evidence from Listed Pharmaceutical and Chemical Industry of Bangladesh

Purpose - The purpose of this study is to find out the intellectual capital disclosure (ICD) and its determinants in the pharmaceutical and chemical industry of Bangladesh. Research design, data, and methodology - This research study is conducted on the listed firms of pharmaceutical and chemical industry in Bangladesh during the period of 2016 to 2017. This study develops a self-structured intellectual capital disclosure index; and the proxies of determinants of ICD are used as board characteristics (board size, independent directors and female directors), ownership structures (institutional ownership and director ownership), and firm characteristics (firm size, leverage and performance). The study uses a content analysis to analyze the extent of ICD and a pooled cross-sectional method to find the determinants of ICD. Research Findings - This study finds that intellectual capital disclosure is positively associated with firm size, leverage, and firm performance and negatively associated with director ownership and institutional ownership. This study also finds that there is no significant association of ICD with independent director or female director. Conclusions - The study recommends that the regulatory authority should develop mandatory guidelines on ICD for ensuring proper and consistent disclosure about the intellectual capitals. Besides, the companies should include a separate section in the annual reports to disclose the measurement and management of intellectual capital.

Do Corporate Social Responsibility and Corporate Governance Influence Intellectual Capital Efficiency?

Using a large sample of public firms in 51 countries during the period from 2010 to 2015 and a two-stage least squares (2SLS) regression with an instrumental variable (IV), this study investigates how corporate social responsibility (CSR) and corporate governance (CG) mechanisms interact to influence a firm’s intellectual capital (IC) efficiency. The empirical results reveal that CSR engagement and CG structures influence the firm efficiency in managing IC. This study contributes to managerial practice by demonstrating the causal effect of CSR on value-added intellectual capital (VAIC) measures and the positive impact of CG on both CSR engagement and the efficiency with which firms manage their IC. Furthermore, the current study provides an additional understanding of the relationship among CSR engagement, CG practices, and the determining factors of IC efficiency within a comprehensive framework.

On intellectual capital management as an evaluation criterion for university managers: a case study

The purpose of this paper is to investigate whether universities performance management systems (PMS), consider intellectual capital (IC) management as a criterion for evaluating their managers. The issue has been addressed investigating the case study of the University of Calabria. The evaluation systems for managers of the University of Calabria were analyzed with a longitudinal approach, investigating two different systems (2012–2014 and 2015–2017). Two qualitative tools were employed: document analysis and semi-structured interviews. From a formal analysis of the evaluation systems for managers of the University of Calabria, it emerges that the reference to IC and its subcomponents is easier to identify within the individual performance component, which reduces its weight switching from the 2012–2014 to 2015–2017 evaluation system. From the analysis of semi-structured interviews, it emerges that the University of Calabria is far from considering IC substantially as a key criterion to evaluate its managers. Focusing on IC will require the development of an IC specific project addressed to make sense of this new object and of the consequent new managerial practices to give sense to IC measurements and diffuse them within the organization. The originality of the paper lies in the novelty of its aim, linking together the evaluation of universities managers, too often clouded by respect for the academicians in managerial roles, and the role of IC management as an evaluation criteria to assess their performance. The paper offers both theoretical contributions to different streams of the literature, namely the IC and PMS and public sector literature and practical contributions, filling the void between the evaluation systems of university managers as provided by theory and the application of these models in practice, a gap especially significant for public organizations.

Intellectual capital in Indonesia: dynamic panel approach

Purpose Intellectual capital (IC) has been considered as a valuable asset in the wealth creation and sustainability of the company; however, limited and mixed results are found on its impact on firm financial performance and market value (MV). This paper aims to investigate the influence of IC toward MV and financial performance of publicly listed firms in Indonesia. In addition, this research also presents the comparison of the high and low level of knowledge industries regarding IC performance. Design/methodology/approach A balanced panel data of 127 firms from 12 industries in Indonesia during 2010 until 2017 was evaluated using dynamic panel regression and administering a well-developed Blundell–Bond instrument (dynamic panel data estimator) to account for endogeneity problem. Findings The results of this study showed that IC had a significant and positive impact on firm performance. Specifically, structural capital efficiency and capital employed (CE) efficiency have been contributed to the value creation of the company, after controlling for firm size and type of industry. Different to the theoretical expectation, this research found no significant relationship between IC and MV of the firm. However, when the sample was clustered into high-level and low-level knowledge industry, CE displayed positive and significant relationship in high-level industry. Originality/value This research contributes to IC research by having a larger sample of Indonesian firms from all industries except banks and financial institutions and using Modified Value Added Intellectual Capital measurement model. To address the endogeneity problem, dynamic panel regression using system generalized method of moment was applied.

Bank technical, allocative and cost efficiencies in Africa: The influence of intellectual capital

This paper examines the effects of intellectual capital (IC) on technical, allocative and cost efficiencies for a panel of 339 commercial banks operating in 31 African countries over the 2005–2015 period. Our findings, which are based on Tobit and one-step system GMM regressions, provide evidence that IC exerts positive effects on bank technical, allocative and cost efficiencies. This finding, when significant, remains the same with the sample divided into various regional panels – East Africa, North Africa, Southern Africa, and West Africa. However, when our measure of IC is divided into its three components, namely human capital, physical capital and structural capital, only human capital is positively related to all the three efficiency measures across the panels. Our results suggest the need for African banks to place emphasis on human capital development.

English

The purpose of this paper is to extend the understanding of Intellectual Capital (IC) in the context of Italian listed firms. In this study, the Valued Added Intellectual Coefficient (VAIC) is employed as a measure of IC to investigate the relationship between IC, firms’ financial performance and market value. The empirical investigation is developed by using data drawn from a sample of 135 Italian listed companies for the period from 2008 to 2017 and performing different Ordinary Least Squares (OLS) regression models. The findings suggest that, when taken in its aggregated form, IC exerts a positive impact on firms’ financial performance measured as firms’ profitability and growth in revenues as well as on market value. However, when considering its components, only Human Capital efficiency shows a positive effect on firms’ financial performance while Structural Capital efficiency and Capital Employed efficiency exhibit a negative effect. Astonishingly, each of the individual IC components negatively influences firms’ market value. Key words: Intellectual capital, intangible assets, valued added intellectual coefficient (VAIC), Italian listed firms, market value, financial performance.

Merenje intelektualnog kapitala - teorijski i empirijski okvir

The concept of intellectual capital (IC) intends to identify and to define firms intangible strategic assets, to classify them and measure their contribution to the firm's process of value creation. Measurement of the IC enables the firm to obtain the information about the contribution of all strategic assets in the process of value creation, which significantly enhance the firm's decision-making process because the decisions can be based on the comprehensive and relevant information. The IC measurement is a complex process for its static and dynamic dimension of its elements. This paper aims to shed some light into this complex field, by synthesising and explaining all relevant aspects of research concerning measurement of the IC. The methodology used is a systematic literature review aiming to identify, appraise, select and synthesise high-quality research evidence and arguments relevant to the IC measurement, which includes theoretical and empirical contributions to this topic. The paper analyses research relevant to five main areas: firm motives for IC measurement; advantages of IC measurement; specificity and complexity of IC measurement; issues concerning IC indicators; most common approaches to the IC measurement and its methodologies. Since this paper in systematical and logical manner present all relevant aspects of research regarding the topic of IC measurement it generates, from very fragmented sources, an theoretical and empirical framework for this field of research. In that way, the paper contributes to the existing literature on these topics, it provides insight into the current state in the field of IC measurement and facilitates future research in this area.

A Critical Validation of the Value Added Intellectual Coefficient: Use in Empirical Research and Comparison with Alternative Measures of Intellectual Capital

The measurement of intellectual capital (IC) constitutes a major challenge in managing intangible resources. Among the various models proposed in prior literature, the Value Added Intellectual Coefficient (VAIC) is used by many studies to measure IC. Assuming a perfectly competitive market, this study decomposes the VAIC and demonstrates that it is not directly related to IC. Conversely, the main components of VAIC are the labor share, physical capital share, and interest rate. These results are extended to a non-perfectly competitive setting through a multivariate analysis of a cross-country panel of 50,310 firm-year observations for 2000-2017. The results show that the VAIC still largely depends on exogenous factors being negatively (positively) associated with the labor (physical capital) share. Nevertheless, in this non-perfectly competitive setting, the VAIC also captures a firm’s ability to generate profits, which may be attributable to multiple factors, including IC. To reduce potential measurement biases in empirical research using the VAIC, this study suggests controlling for a firm’s interest rate, labor and capital shares. Adopting this suggestion, this study investigates the association between VAIC and firm performance. The results show that this association is significantly weaker when including the interest rate, labor and capital shares. The theoretical and empirical results suggest future researchers to select the VAIC to measure IC after having conscientiously examined the alternative models proposed in recent literature.

The position of intellectual capital among Saudi banks

All intangible assets and various human-centred and the intellectual property rights (IPR) of organizations are considered as Intellectual Capital (IC). It includes all nonmonetary and nonphysical resources that are fully or partially controlled by the organization and contribute to the organization`s value creation. Since conventional factors of production are increasingly being replaced by intellectual assets, IC is now being increasingly recognized as the most valuable resource, which can provide the required impetus to take on the competition. Through appropriate management of IC, it is possible to enhance the earning capability, sustain the value and help the achievement of organizational goals. Organisations that manage IC would acquire the required competitive advantage and superior business performance in the current volatile and uncertain market. This study was conducted to investigate the position of IC of Saudi banks. Empirical evidence exists to suggest that efficient utilization of IC can contribute towards the success of the banking industry. Objectives of the study included finding the value of IC of the Saudi banking industry and examine the performance of Islamic banks. Two regression models were used to achieve the objectives of the study. The models examined the relationships between Return on equity (ROE) and Return on total assets (ROA) and the aggregate measure of IC. It also examined the different components like Human capital efficiency (HCE), the Capital employed efficiency (CEE), and Structural capital efficiency (SCE). The present study has thus helped in presenting some interesting findings of the IC of Saudi banks. It was observed that Saudi banks are fairly efficient and has generated the required value from the component of Human capital (HC) than other capital elements. Drastic improvement was evident during recent years, reflecting the cues about the stability evident globally in the industry. Overall it can be concluded that Saudi banks, especially the Shariah-compliant ones, are efficient in generating value from its IC. A comparison between Saudi banks, as well as Islamic banks and those in other countries where banking operations are not done as per Shari’ah rules, is suggested as it is sure to bring in interesting results. Keywords: intellectual capital, structural capital, banking industry, Saudi Arabia.

Management Knowledge Assets: A Review of the Models Used to Measure and Report Intellectual Capital

Contemporary organisations in both public and private sector are often examined not only in terms of their core functional business but also in how they have adapted to a knowledge-based and innovation-driven economy. As such, knowledge-based assets are considered as a source of sustainable advantage. The magnitude of change in the proportion of value creation by these intangible investments has caused a paradigm shift and the recognition of an increasingly important role for intellectual capital (IC). There is also a growing interest in developing business reporting models that are more comprehensive than that of traditional accounting-based reporting, which has been shown to be inadequate to report the value of intellectual capital. Researchers and academics have attempted to build models for IC reporting. In this paper, eleven IC measurement models are critically reviewed and a framework of IC valuation and reporting based on capabilities is suggested. The capabilities enhanced by IC could be reported in combination with the tangible assets in an IC capability balance sheet. The IC capability model offers a clear starting point for a new thinking in evaluating intangible assets as a firm business resource.

The impact of national intellectual capital on the economic growth in the South-Eastern European Countries

In the contemporary circumstances, intellectual capital has become the engine of the economic, social and cultural development. Mobilization and utilization of intellectual resources in enterprises create value, thus transforming and accelerating development of national economies towards the knowledge and innovation based economies. Due to these reasons, the most developed economies increase investments in education, information technologies and stimulate innovativeness. On the other hand, less developed countries do not have possibilities for significant investments in creating and employing national intellectual potential. This is reflected in their economic growth rates, as in the case of the Southeastern European (SEE) countries. In that regard, the paper investigates the impact of education, information technologies and innovations, as determinants of national intellectual capital development, on the economic growth in the SEE countries. The aim of this paper is to identify the contribution of the key intellectual capital determinants to the economic growth and development in the SEE countries and propose measures whose implementation lead to further development towards knowledge and innovation economies. The results of correlation analysis revealed positive and statistically significant correlation between GDP per capita and employed measures of national intellectual capital. The research has shown that increase in high-technology export, number of R&D researchers and mobile phone subscribers has a positive and significant impact on economic growth. The authors advise intensified cooperation between business community and institutes and universities to achieve synergetic effects in generating and utilising national intellectual potential.

Recognition and Accounting Measurement of Intellectual Capital in Profit-Oriented Organizations an Applied Study on a Selected Group of Iraqi Banks

Recognition and Accounting Measurement of Intellectual Capital in Profit-Oriented Organizations an Applied Study on a Selected Group of Iraqi Banks

Intellectual Capital and Organizations Performance in Financial Industry in Malaysia

As the economy has transformed globally into knowledge economy, many organizations have now changed their dependence on production asset to knowledge asset, which is also known as the intellectual capital. Effective utilization of these intangible resources is the driver for better performance for the organizations hence the issue of measurement is critical. Current measurement tend to focus more on the measurement of intellectual capital from the perspectives of ‘traditional accounting’ model which measure the past value creation rather than the utilization of the intellectual capital. This situation has inspired more empirical works in developing a more robust measurement of intellectual capital. This study measures the utilization of intellectual capital in the organizations using both the published financial data as well as the survey distributed to the senior management team. The sample size selection is the organizations within the Malaysian financial industry that comprises four major groups which are the insurance, banking and finance, capital market and development financial institutions. The objectives for the study is twofold; to examine the relationship between the components that make up intellectual capital and performance of the organizations and secondly to measure those components using the Value Added Intellectual Capital (VAIC) method and a new method of Utilized Intellectual Capital (UIC). The findings show that UIC measurement is more robust compared to VAIC. Both structural capital and transactional leadership components are significant towards the organizations’ performance and culture was found to act as a mediator in the model.

The fall and rise of intellectual capital accounting: new prospects from the Big Data revolution

PurposeAs Big Data is creating new underpinnings for organisations’ intellectual capital (IC) and knowledge management, this paper aims to analyse the implications of Big Data for IC accounting to provide new conceptual and practical insights about the future of IC accounting.Design/methodology/approachBased on a conceptual framework informed by decision science theory, the authors explain the factors supporting Big Data’s value and review the academic literature and practical evidence to analyse the implications of Big Data for IC accounting.FindingsIn reflecting on Big Data’s ability to supply a new value for IC and its implications for IC accounting, the authors conclude that Big Data represents a new IC asset, and this represents a rationale for a renewed wave of interest in IC accounting. IC accounting can contribute to understand the determinants of Big Data’s value, such as data quality, security and privacy issues, data visualisation and users’ interaction. In doing so, IC measurement, reporting and auditing need to keep focusing on how human capital and organisational and technical processes (structural capital) can unlock or even obstruct Big Data’s value for IC.Research limitations/implicationsThe topic of Big Data in IC and accounting research is in its infancy; therefore, this paper acts at a normative level. While this represents a research limitation of the study, it is also a call for future empirical studies.Practical implicationsOnce again, practitioners and researchers need to face the challenge of avoiding the trap of IC accountingisation to make IC accounting relevant for the Big Data revolution. Within the euphoric and utopian views of the Big Data revolution, this paper contributes to enriching awareness about the practical factors underpinning Big Data’s value for IC and foster the cognitive and behavioural dynamic between data, IC information and user interaction.Social implicationsThe paper is relevant to prepares, users and auditors of financial statements.Originality/valueThis paper aims to instill a novel debate on Big Data into IC accounting research by providing new avenues for future research.