Showing papers in "Journal of Intellectual Capital in 2012"

Intellectual capital and financial performance of Indian banks

Abstract: Purpose – The purpose of this study is to investigate empirically the relationship between intellectual capital and financial performance of 65 Indian banks for a period of ten years from 1999 to 2008.Design/methodology/approach – Reserve Bank of India's database and Annual reports, especially the profit and loss accounts and balance sheets of the banks for the relevant years have been used to obtain the data. Value added intellectual coefficient (VAIC™) method is applied for measuring the value based performance of banks. Return on assets (ROA) and return on equity (ROE) are used to measure the profitability and productivity of Indian banks, measured by assets turnover ratio (ATO). The intellectual capital (human capital and structural capital) and physical capital of selected banks have been analyzed and their impact on corporate performance has been measured using multiple regression technique.Findings – The analysis indicates that the relationships between the performance of a bank's intellectual capi...

Intellectual capital as competitive advantage in emerging clusters in Latin America

Abstract: Purpose – Emerging clusters, formed by small to medium‐sized enterprises (SMEs) of slow growth and embryonic management systems present a different competitive advantage scheme. The purpose of this paper is to analyze relationships among components of intellectual capital within a model of competitive advantages in emerging clusters in a region of Latin America.Design/methodology/approach – An intellectual capital model in a competitive advantage scheme is defined. A sequential method based in PLS technique is suggested to select the model and estimate the parameters. A sample of 113 wood manufacturing SMEs in a region of Argentina was selected.Findings – The competitive advantage scheme in emerging clusters of SMEs proposes that resources affect organizational capabilities; territory and organizational capabilities affect strategic factors which improve performance. In this scheme, human capital affects structural capital and structural capital generates relational capital. SMEs organize tangible resourc...

Intellectual capital and corporate performance in Iranian pharmaceutical industry

Abstract: Purpose – The purpose of this study is to empirically study the relationship between intellectual capital (IC) components (human, structural, and physical capitals) with the traditional measures of performance of the firm (profitability, productivity and market valuation) within the pharmaceutical sector of Iran.Design/methodology/approach – The empirical data were drawn from pharma companies listed in the Iranian Stock Exchange (ISE), over the six‐year period of 2004 to 2009. The analysis of correlation, simple linear multiple regression and artificial neural networks (ANNs) were applied for analyzing any existing relationship between variables in the present study.Findings – The analysis indicates that the relationships between the performance of a company's IC and conventional performance indicators are varied. The findings suggest that the performance of a company's IC can explain profitability but not productivity and market valuation in Iran. Also the empirical analysis found that physical capital (...

Grand theories as barriers to using IC concepts

Abstract: Purpose – The purpose of this paper is to answer the question “What are the barriers to the use of IC concepts?” by discussing and critiquing two contemporary grand theories about IC, being market‐to‐book ratios as a representation of IC and that disclosing IC leads to greater profitability.Design/methodology/approach – The paper reviews contemporary IC literature and explores reasons why these grand theories of IC hinder its adoption.Findings – The research finds that these grand theories mislead because they cannot be proven empirically. Therefore, managers should attempt to better understand the possible causal relationships between their people, processes and stakeholders (human, structural and relational capital) rather than adopting someone else's mousetrap.Practical implications – In order to improve the use of IC concepts they should be examined as differentiation theories of practice that take into account the agent (people) as a unit of analysis, the actual practice of IC and the resultant chang...

IC performance of Indian pharmaceutical and textile industry

Abstract: Purpose – The purpose of the present study is to make a comparison of intellectual capital performance between Indian pharmaceutical and textile industry. Further, the study attempts to investigate association between intellectual capital efficiency with financial performance and market valuation.Design/methodology/approach – An empirical study was carried out on data collected from CMIE database Prowess. VAIC was calculated on a select sample of 105, pharmaceutical companies and 102, textile companies. Correlation and OLS regressions models are used on panel data for the analysis.Findings – Results indicated that profitability and intellectual capital are positively associated but no significant relationship is observed between intellectual capital with productivity and market valuation in both industries. In spite of the growing importance of intellectual capital, its reflection is not proportionally observed in the financial performance of the select sample of companies.Research limitations/implication...

Value relevance of voluntary disclosure: evidence from Turkish firms

Abstract: Purpose – The purpose of this paper is to examine whether or not listed Turkish companies’ voluntary disclosure practices are value‐relevant in the capital marketDesign/methodology/approach – The sample consists of 129 manufacturing companies listed in the Istanbul Stock Exchange (ISE) for the year 2010 Data regarding voluntary disclosure level and other variables have been collected by analyzing the contents of annual reports Through multiple regression analysis, the authors investigated whether or not voluntary disclosure level impacts firm valueFindings – The main finding of the study is that voluntary disclosure is value‐relevant; ie impacts firm value This implies that market participants value voluntary disclosure The more information firms disclose voluntarily, the higher value they have in the eyes of investors Therefore, this finding might be accepted as a signal to corporations to disclose more information to the stakeholders However, the finding varied based on the dependent variable

Intellectual capital and corporate performance of mncs in serbia

Abstract: Purpose – The purpose of this paper is to empirically investigate if intellectual capital (IC) has an impact on organizational performance as well as to identify the IC components that may be the drivers of the traditional indicators of business success. The study sought evidence from the multinational companies which conduct their business in Serbia.Design/methodology/approach – By using data from 37 multinational companies which established their business in Serbia from 2006 to 2008 and applying the VAIC methodology for generating independent variables which reflect IC, regression models were constructed to examine the relationships between the efficient use of MNCs' human and structural capital and corporate performance measures: return on assets, return on equity and productivity.Findings – The results of this study reveal that human capital is positively associated with all three corporate performance measures. The hypothesis regarding a positive association between structural capital and MNCs' profi...

Linking knowledge processes with firm performance: organizational culture

Abstract: Purpose – The purpose of this paper is to report the results of a matched sample comparison group study of elements of organizational culture that enable knowledge processes to drive superior firm performance.Design/methodology/approach – A matched sample comparison group approach was used to compare firm performance among matched pairs of public companies. Companies demonstrating high levels of trust (benchmark group) were matched with firms of similar size in the same industries demonstrating lower levels of trust (control group).Findings – The benchmark group generated significantly superior value, operating performance, and had higher average annual growth rates than matching firms in the control group. Firms with higher relative levels of trust embedded in the organizational culture are more likely to outperform similar firms with lower levels of trust.Research limitations/implications – The findings are based on surveys and financial performance of companies with securities traded on stock exchanges...

Analyzing intellectual capital information in sustainability reports: some empirical evidence

Abstract: Purpose – The purpose of this paper is to investigate the content, frequency and quality of intellectual capital voluntary disclosure (ICVD) and the changes that took place over two years (2005 and 2006) in a sample of 37 sustainability reports published by Italian listed companies.Design/methodology/approach – The intellectual capital framework consists of three levels: “IC categories”, “IC items” and “IC indicators”, while content analysis was performed using a quality multidimensional scheme composed of three disclosure profiles, namely, time orientation, nature of information and type of information.Findings – The findings evidence a high and increasing incidence over time of ICVD, with strong emphasis on human capital disclosure, which represents the most reported category, followed by relational and organisational capital. ICVD is mainly expressed in non‐financial, quantitative and non‐time‐specific terms with a low level of forward‐looking information.Research limitations/implications – This study ...

Intellectual capital disclosure trends: some Malaysian evidence

Abstract: Purpose – The purpose of this paper is to examine the trend of intellectual capital disclosures (ICD) over a three‐year period (2008‐2010), when the Malaysian business environment was characterized by a number of major events such as the recent 2008/2009 global financial crisis and corporate governance restructuring.Design/methodology/approach – A checklist was constructed to measure the extent and quality of ICD in Malaysian corporate annual reports. The extent of ICD was measured on a dichotomous basis (0, 1) while the quality of ICD was measured using a four‐point scale (0‐3).Findings – The results showed an increasing trend of the ICD and a significant overall increase by the sample Malaysian companies. The results also revealed that there are significant differences between the categories of the IC disclosures, with external capital related information accounting for the largest portion. However, only human capital disclosures significantly increased over time.Practical implications – The time series...

A methodology to assess value creation in communities of innovation

Abstract: Purpose – The purpose of this paper is to present a methodology to assess the capacity of communities of innovation (CoI) to improve the value creation process. The methodology consists of a sequence of successive steps, which aim at identifying the characteristics, the influence, and the relationships between the intellectual capital (IC) elements, and finally evaluating their performance.Design/methodology/approach – The proposed methodology has been defined through the joined activity of academic researchers, experienced consultants, and community managers and is grounded on an interview‐based approach. The methodology has been implemented into the CoI of Finmeccanica, the Italian leading company in the industry of high technology for aerospace, defence and security.Findings – The methodology has been shown to be suitable in singling out the factual contribution of every IC element and its direct and indirect influence on the economic performance of the CoI.Originality/value – The implementation of the...

Intellectual Capital Transformation Evaluating Model

Abstract: Purpose – The purpose of this paper is to present a framework that is developed for analysis of intellectual capital transformation into companies’ value, including an identification of the key factors of this process.Design/methodology/approach – The paper employs intellectual capital on the intersection of value‐based management (VBM) and the resource‐based view (RBV). Starting from a review of the results provided in the literature regarding intellectual capital (IC) evaluation and its link with firm performance, a system of proxy indicators related to IC transformation in both concepts has been designed. The evaluation ability of the developed model was justified using regression analyses.Findings – A detailed algorithm for intellectual capital evaluation in terms of input‐outcome transformation. The intellectual capital transformation evaluating model (ICTEM) provides a holistic view of intellectual resources as companies’ strategic investments.Research limitations/implications – The paper emphasizes...

Managing intellectual capital in Nigerian telecommunications companies

Abstract: Purpose – The purpose of this study is to assess how telecommunications companies in Nigeria leverage intellectual capital as a strategic resource for creating competitive advantage.Design/methodology/approach – A previously published research instrument was administered and survey data were collected from 320 managers in 29 telecommunications companies.Findings – Hypotheses related to the relationship of human, structural and customer capital and its influence on business performance were tested. Results show that Nigerian telecommunications companies have mostly emphasized the use of customer capital, exemplified by market research and customer relationship management to boost their business performance.Practical implications – The over‐emphasis on customer capital to the detriment of other intellectual capital components is found to be undermining the productivity of Nigerian telecommunications companies.Originality/value – This is the first published study of intellectual capital development in Nigeria.

IC disclosures in IPO prospectuses: evidence from Malaysia

Abstract: Purpose – This study aims to investigate the factors influencing the disclosure of intellectual capital (IC) information in the Malaysian initial public offering (IPO) prospectus using multiple regression analysis.Design/methodology/approach – The sample consists of 130 companies in the technology and industrial products sectors of Bursa Malaysia that went through an IPO between 2004 and 2008. Initially, the extent of the IC disclosure index is quantified using content analysis methodology. The multiple regression analysis is then used to examine the associations of nine potential explanatory variables with IC disclosure level.Findings – In general, the results provide evidence that board size, board independence, age, leverage, underwriter and listing board significantly influence the extent of IC disclosure in an IPO prospectus. Nonetheless, the effect of each explanatory variable may vary in each estimated parameter of the multiple regression models. Three variables, board diversity, size and auditor, ...

Analysis of intellectual capital disclosure – an illustrative example

Abstract: Purpose – The purpose of this paper is to provide an analysis of intellectual capital (IC) disclosures in annual reports (mandatory and voluntary) and draw attention to the specific issues related to the methodology used i.e. content analysis. The focus is to incorporate all forms of IC disclosure – narratives, numbers, and visual images – into the analysis as well as highlight the need to study both quantity (extent) and quality of disclosure.Design/methodology/approach – Using content analysis, this paper analyzes 30 of Malaysia's largest public‐listed companies from the IC disclosure of 2008 annual reports. The results are used to discuss specific methodological issues such as the usage of an IC index, choice of unit of analysis, quantity versus quality, presence/absence versus multiple disclosures, and the usage of narratives, numbers, and visual images.Findings – This paper proposes that themes are the most appropriate recording and counting unit to analyze IC information combining narratives, number...

National intellectual capital performance: a strategic approach

Abstract: Purpose – The paper concerns the research problem of how to analyse the performance of a knowledge society as a whole, and in particular, of how to analyse national intellectual capital. The paper aims to build a conceptual foundation for national intellectual capital performance, and based on this, to construct a multidimensional measurement system for Finland and to investigate its usefulness.Design/methodology/approach – The framework and measurement system of national intellectual capital performance is constructed on the basis of the intellectual capital and knowledge management research literature. The illustration of the measurement system is carried out using empirical data from various institutions.Findings – The paper argues for the strategic, dialogic and societal measurement of national intellectual capital.Research limitations/implication – There was neither an exact purpose of measurement nor a detailed strategy for the knowledge society to aim at. Because of this, the measurement system ser...

The determinants of HC disclosures of Indian firms

Abstract: Purpose – Human capital (HC) disclosures by firms are voluntary as per the GAAPs in most of the countries including India. Therefore, a wide discrepancy exists across Indian firms with respect to their HC disclosures. This paper aims to investigate the extent and determinants of HC disclosure levels of the Indian listed firms in a two‐stage analysis.Design/methodology/approach – In the first stage, a 12‐item index is developed and is used to measure the extent of HC disclosures of 97 listed firms. In the second stage, a regression analysis is carried out to ascertain the determinants of HC disclosure levels of the Indian listed firms.Findings – The results point out that HC disclosure levels have high variations among the sample firms with information technology firms having highest average HC disclosure levels. Further, regression results indicate that a firm's “size” and “employees' expenses as a proportion of its total operating expenses” have a significant positive bearing on its level of HC disclosur...

Intellectual capital disclosures by Indian and Australian information technology companies : A comparative analysis

Abstract: Purpose – The purpose of this paper is to investigate and compare the voluntary reporting of intellectual capital (IC) by the top 20 software and technology sector companies in a developing nation, India, and a developed nation, Australia. The paper aims to highlight the differences in IC disclosure practices of the companies operating in two different economies.Design/methodology/approach – The study investigates the top 20 firms by market capitalisation listed on the Bombay Stock Exchange in India and the Australian Stock Exchange in Australia in the year 2007‐2008. Using the content analysis method, the paper reviews the annual reports of these firms to determine IC disclosure trends in India and Australia. Statistical tools and graphs have been used to compare and contrast ICD disclosures in two countries.Findings – The study has identified IC disclosure differences between Indian and Australian firms, and reports disclosures by Indian companies are on a higher scale than Australian Software and Techn...

Intellectual capital disclosure commitment: myth or reality?

Abstract: Purpose – The purpose of this paper is to compare intellectual capital disclosure in the prospectus of an initial public offering (IPO) with the intellectual capital disclosure in the subsequent annual report. The first objective was to investigate whether companies make a commitment toward intellectual capital disclosure. The second objective was to investigate whether companies report more on intellectual capital in the prospectus.Design/methodology/approach – This study investigated the prospectus and annual report using a sample of 55 firms that applied for an initial listing in Belgium and The Netherlands from 2005‐2009. A coding framework of 86 items was used to perform the content analysis.Findings – The existence of intellectual capital disclosure commitment was confirmed. Moreover, the results demonstrated that companies report more extensively on intellectual capital in their prospectus in comparison to their annual reports.Originality/value – This paper documents the first study to provide empi...

Intellectual capital risks and job rotation

Abstract: Purpose – This study aims to shed light on the phenomenon of intellectual capital (IC) risks. More precisely, the perception of such risks in the context of the job rotation process often applied in multinational corporations (MNCs) is to be investigated.Design/methodology/approach – Eleven semi‐structured interviews are conducted in an exemplary knowledge‐intensive MNC operating in the construction industry. Six interviews among top managers and five interviews among participants in the job rotation process are carried out to gain insights from different perspectives.Findings – The study underlines the influence of time pressure on the perception of the variety of IC‐related risks in general and of those related to the job rotation process. As a result, the risks are not tackled even though the managers are aware of some of them.Research limitations/implications – The data were collected in one organization, making inferences about the findings not possible. Future studies should consider multiple organi...

Intellectual capital information and stock recommendations: impression management?

Abstract: Purpose – The purpose of this paper is to investigate what and how intellectual capital information (ICI) conveyed through analyst reports varies by the type of stock recommendation. It draws on the theory of impression management.Design/methodology/approach – Content analysis is used to investigate ICI in the full text of sell‐side analysts’ initiating coverage reports. It categorises ICI by type and three qualitative characteristics: evidence; time orientation; and news‐tenor. It explores how the extent, types and qualitative characteristics of ICI found in analyst reports vary by the type of stock recommendation accompanying the analyst report.Findings – Given the conflicting interests facing analysts and relative amenability of ICI, it was found that analysts use ICI to manage perceptions. In particular, analysts attempt to use ICI in their reports to subdue the pessimism associated with an unfavourable recommendation, increase credibility of favourable recommendations and distinguish sell from hold r...

Consumer interaction as intellectual capital

Abstract: Purpose – The purpose of this paper is to categorize customer‐to‐customer (C2C) interaction as a sub‐component of relational capital and conceptualize C2C interaction adding value to business‐to‐customer (B2C) relational capital.Design/methodology/approach – This work empirically tests the concept of C2C interaction and its added value to a firm's B2C relationship within the movie industry. Both business data and consumer interaction from blockbuster movies are collected to test their impact on movie sales.Findings – The results support the hypotheses that C2C interaction (user messages on Yahoo movie message board) adds more explanation to movie sales than B2C interaction (advertising budget) alone, and that there is an inverse relationship between the impact of a firm's B2C interaction and C2C interaction on a firm's sales performance, with the former diminishing over time and the latter increasing over time.Research limitations/implications – For intellectual capital (IC) researchers, the main implicat...

The influence of intellectual capital on export performance

Abstract: Purpose – The purpose is to analyze the impact of intellectual capital (IC) on export performance of firms and industries.Design/methodology/approach – This research used value added intellectual coefficient (VAIC) to measure intellectual capital as an independent variable. An export performance, as dependent variable, was measured as growth of exports. The sample consisted of 134 firms in Bosnia and Herzegovina (B&H). Empirical analysis was done by linear regression analysis.Findings – The results of regression analysis show a significant (p<0.01), positive influence of the value added intellectual coefficient and its components on the export growth in the sector of food and beverages and manufacturing of furniture and wood products in B&H. For other sectors there is no significant relation of independent and dependent variable.Practical implications – The results correspond with the results of the EU project that determined competitive advantages of B&H by Michael Porter's methodology. Results of this r...

Exploring the policy relevance of national intellectual capital information

Abstract: Purpose – National intellectual capital (IC) measurement models produced by academics provide potentially valuable information for policy making. However, there is a lack of research explaining how policy makers actually deal with issues related to national IC. The purpose of this paper is to examine the phenomenon of national IC from the perspective of policy makers. The aim is to understand how they perceive the concept of national IC and how it manifests in the actual work processes they perform.Design/methodology/approach – The empirical data comprise interviews from eight ministry officials representing six ministries in Finland. These ministries are expected to be the main potential users of national IC information.Findings – The findings show that the policy makers are not familiar with the concept of national IC. However, the elements of national IC (e.g. competence level, national brand) are easily identified and highly valued. The information the policy makers have on the different elements of n...

Integrated performance measurement system for firm's human capital building

Abstract: Purpose – The purpose of the study is to explore the relationship between performance measurement systems (PMSs) and organizational learning (OL) and the impact on firm human capital building.Design/methodology/approach – Data were collected using a survey instrument. Then, a structural equation model (SEM) was used to test the proposed model.Findings – The results reveal that PMS, which is designed with three main qualities – valid, comprehensive, and coherent with its environment – has an overall positive relationship with OL and firm's human capital (employee satisfaction and work‐related competencies). First, the validity of the individual performance measure is found to be positively linked to employee satisfaction. Second, the comprehensiveness of the PMS and work‐related competencies are positively associated. Third, the coherence of the PMS with its environment has a positive relationship with OL but not directly with the human capital indicators. Thus, OL, which is positively associated with both...

Towards measures of national intellectual capital: an analysis of the CHS model

Abstract: Purpose – The paper aims to provide an assessment of a tool for the macro‐level measurement of intellectual capital developed by Corrado, Hulten and Sichel (CHS model).Design/methodology/approach – The aim paper assesses the validity and accuracy of the CHS model in measuring intellectual capital in general and to see whether it has application at the national economy level.Findings – The model's new accounting ideas have great potential, but some serious question marks remain. The key advantage of the model is that it accumulates capitalized intangibles over time. On the other hand, the elements of intellectual capital, i.e. spending on innovative property and economic competencies, software and other computerized information, are too vague and problematic.Originality/value – CHS model is a rather frequently used method for measuring intellectual capital. However, its validity has not been under critical analysis or examination earlier. Therefore, the results of this paper bring important and valuable in...

Use of IC information in Japanese financial firms

Abstract: Purpose – The purpose of this paper is to explore the perceptions of: how Japanese financial firms (JFF) acquire and use company intellectual capital (IC) information in their common routine equity investment decisions, how this activity contributes to knowledge creation in the JFFs, and how investee company knowledge creation is affected by the JFFs.Design/methodology/approach – The research employed a multi‐case design, using four JFF cases. The investigation was performed in terms of Nonaka and Toyama's “theory of the knowledge creating firm”.Findings – IC information contributed to earnings estimates and company valuation. Emotional information contributed to JFF feelings and confidence in their information use and valuation. JFF knowledge was an important component of the key interacting and informed contexts used by JFFs. This generated opportunities to improve disclosure and accountability between JFFs and their investee companies. Common patterns of behaviour across the JFFs were counterbalanced b...

Towards a critical societal knowledge management

Abstract: Purpose – The purpose of this paper is to tackle the problem of societal knowledge management from the perspective of critical management research. The focus is on national intellectual capital analysis as part of societal knowledge management. First, the aim is to identify the dominant discourse that governs the discussion around national intellectual capital and its measurement. Second, the aim is to explore the prospects for an alternative conceptualisation and to propose a heuristic tool through which it is possible to approach national intellectual capital and its measurement in a critical, informed and analytic way.Design/methodology/approach – The study takes a critical standpoint and leans loosely on the methodology of critical discourse analysis by Norman Fairclough.Findings – The paper argues for the emancipation of national intellectual capital from the orthodoxy that relates it to economic growth, quantitative measurement, objectivity and universality towards a discourse that regards the value...

Dynamics of Chinese emerging multinationals in cross‐border mergers and acquisitions

Abstract: Purpose – China's emerging multinationals (CEMs) have gained attention for their increasing activities in mergers and acquisitions (M&As) within the global arena. Harnessing previous studies about the significance of their cultural baggage and an underlying strategic intent in reverse technology transfer through cross‐border M&As, the purpose of this paper is to explore the dynamics of CEMs in their process of cross‐border M&As through the perspectives of intellectual capital.Design/methodology/approach – Building on an interdisciplinary literature review, a theoretical framework is devised to exemplify such dynamics within a CEM during the course of reverse technology transfer and swift transformation into a global enterprise for technological innovation through M&As. A longitudinal case study is adopted to examine how two technology‐based CEMs continue to modify and reconfigure their respective committed intellectual capital resources while undergoing cross‐border M&A transactions.Findings – The study s...