Intellectual Capital of the European Union 2008: Measuring the Lisbon Strategy for Growth and Jobs pp489-500
In 2004 we published the report Intellectual capital of the European Union (Andriessen & Stam, 2004). In this report we provided insight in the value of the intellectual capital of the 15 countries of the European Union, in relationship to the goals set by the European Council in March 2000. The main Lisbon goal was to become "the most competitive and knowledge‑based economy in the world" in 2010. Since our previous report, the EU grew from 15 to 27 countries and the Lisbon goals were reformulated in 2005. The aim of this paper is to measure the IC of the competitive and dynamic knowledge‑based economy, the EU decided to focus on "delivering stronger, lasting growth and creating more and better jobs" (CEC, 2005d, p.7). In this paper we translate this overall goal in 38 indicators. As the data was not available for all the new member states, we decided to limit our paper to the so‑ called EU‑19. Based on our measurements we conclude that the EU‑19 is still behind Japan and far behind the USA, however the EU is catching up as both Japan and the USA have considerably lower growth figures than the EU‑19. From an IC perspective, the EU is geographically divided. The Nordic countries are still the best performing countries. The southern European countries and the new member states stay behind. However, as the new member states invest more in their IC, it might be expected that their positions will improve in the future. Of all the new member states the Czech Republic has the best potential. The aim of our paper was to measure the progress of the Lisbon Agenda for growth and jobs. Based on our measurements we conclude that the EU‑19 is successful in terms of creating more and better jobs, but not successful in terms of delivering stronger, lasting growth. In order to further close the competitiveness gap, the EU should primarily focus on strengthening its SC and RC.
Keywords: Intellectual capital, intellectual capital of nations, European Union, Lisbon strategy for growth and jobs, Lisbon goals, IC monitor, measurement, multidimensional value measurement
Volume 7 Issue 4, ECIC 2009 / Jul 2009 pp397‑534
European Conference on Intellectual CapitalIntroduction
Today, almost 80% of economic value creation is based on intellectual resources. However, most organisations still do not know how to reveal the value of these resources and how to give direction to future value creation. The concept of intellectual capital gives intangible reources ‘a body’ and therefore makes it possible to measure, communicate and interpret them.
In June 1999 The Netherlands hosted the OECD international symposium on: ”Measuring and reporting intellectual capital; experiences, issues, and prospects”. This symposium turned out to be a milestone in the development of the intellectual capital movement. For the first time in history researchers and practitioners from all over the world joined together to discuss the progress made in the field of measurement and reporting of intellectual capital. Many of today’s IC initiatives are rooted in this OECD symposium (e.g. Danish Guideline, the MERITUM project and others). In 2009 it is ten years since this groundbreaking symposium took place and it is time to take stock of the developments over the last ten years. What progress did we make in raising awareness, developing robust measurement and reporting methods, and helping organisations to better manage their IC?
In April 2009 our Centre for Research in Intellectual Capital (CRIC) hosted the International Conference on Intellectual Capital (ECIC) in collaboration with Academic Conferences Ltd. The aim of this conference was to give a state‑of‑the‑art overview of intellectual capital measurement and management and contribute to the further advancement of IC theory and practice. The congress – which took place in Haarlem, The Netherlands – was attended by 150 participants from 37 countries. Based on almost 70 papers, we designed a conference program that consisted of more than 90 sessions. This special issue is based on a selection of the best papers of our conference.
In our call for papers we invited researchers, practitioners and academics to present their research findings, work in progress, case studies and conceptual advances in the field of intellectual capital (IC) measurement and management.
From the main program of the conference we included two papers in this special issue. First, the paper by Durst and Gueldenberg, The meaning of intangible assets: new insights into company succession in SME’s. This paper was selected as best paper. This paper sheds an important new light on a growing problem within the European Union. It is based on the state of the art in IC theory, it uses a well describes mixed‑method methodology, contains a good discussion section that shows the importance but also some of the limitations of the research. The European Commission estimates that one third of all EU entrepreneurs will leave within the next ten years and the changing demography of the EU will reduce the pool of potential successors. This paper shows intangible assets have a remarkable influence on the external successor’s decision making, in particular brand, partners, key‑employees, knowledge retention and corporate culture. The second paper is a by Van Winkelen and McKenzie, Using scenarios to explore the potential for shifts in the relative priority of human, structural and relational capital in generating value. [samenvatten]
Special trends in the field
In addition to the general papers, the conference included papers on the following trends that we see in intellectual capital theory:
1. Benefits and limitations of the intellectual capital metaphor
2. Intellectual capital of nations, regions and cities
3. Social capital
4. The dynamics of intellectual capital
5. Intellectual capital for universities and research organisations
6. Measuring the effect of knowledge management
7. Measuring and reporting intellectual capital
8. IC centres across the globe
The mini track on the benefits and limitations of the IC metaphor resulted in five papers. The starting point of this mini track was that the concept of intellectual capital (IC) is based on the metaphor “Knowledge as Capital” (Andriessen, 2008). The way this works is that characteristics of the source domain of capital are used to describe the target domain of knowledge. These characteristics of capital include: capital is valuable and important, capital is an asset for the future and not an expenditure, capital can be capitalized, capital allows for a return and capital resonates with managers and CFO’s. In this track we explored the benefits and the limitations of capital as a metaphor for knowledge and other intangibles. From this track we included three papers: Andriessen et al., Pictures of Knowledge Management, developing a method for analyzing knowledge metaphors in visuals; Andriessen and Van den Boom, In search of alternative metaphors for knowledge: inspiration from symbolism; and Bratianu, The frontier of linearity in the intellectual capital metaphor.
The second mini track about IC of nations, regions and cities also generated five papers. Intellectual capital of nations is the concept that applies the principles of intellectual capital measurement on a macro‑economic level (Bonfour and Edvinsson, 2005). The main motivation for measuring the IC of nations is to get insight into the relative advantage of countries or regions. This insight should help to develop policy in order to give direction to future economic developments. From this track we included two papers in this special issue: Stam and Andriessen, Intellectual capital of the European Union 2008; and Yodmongkon and Chakpitak, Applying intellectual capital process model for creating a defensive protection system to local traditional knowledge: the case of Mea‑hiya community.
The third mini track about social capital included seven papers. Social capital in the form of networks of trust has value for individuals, teams and organizations. It is an indicator for economic success, measurable through constructs like trust, reciprocity, shared norms and values. Social capital is a popular paradigm in organizational studies. The use of social capital theory in the fields of business studies has increased exponentially in recent times. It offers new insight in explaining organisational dynamics, knowledge sharing, learning processes and innovation. While there is an extensive body of knowledge on the benefits of social capital, less attention has been paid to understanding how and why social capital evolves within organisational settings. It is interesting to gain insights into why social capital changes and what the effect is on knowledge sharing, knowledge productivity, learning processes and innovation. From this track we included one paper in this special issue: Tamilina, The impact of welfare state development on social trust formation: an empirical investigation.
The fourth mini track about The Dynamics of IC included four papers. Value in organizations is not created by intellectual assets as such, but by combining intellectual assets in a dynamic process (Andriessen, 2004). According to Kianto (Kianto, 2007), the dynamic dimension of IC relates mainly to three issues: 1) practice‑based approach to IC; 2) dynamics of IC‑based value creation; and 3) renewal, change and innovation of IC.
The fifth mini track about IC for universities and research organizations generated seven papers. In recent years, IC management and reporting have gained importance for research organisations and universities across Europe. Some university departments and research organisations have implemented IC reports and Austrian universities are even obliged by law to publish IC reports. IC management systems provide comparable information for the universities’ management but also for external stakeholders such as industrial partners or science and education policy. However, to exploit its potential in this sector, the specific characteristics of the science, research and innovation process should be addressed. IC management systems should enhance strategic development, innovativeness and knowledge sharing within research institutions and have to be linked to other instruments and tools for management and governance such as evaluation, performance measurement, and benchmarking.
The sixth mini track about measuring the effect of knowledge management included eight papers. A large variety of methods, models and practices for managing an organization’s knowledge assets have been produced by academics and practitioners. There are even different fields of research, e.g. knowledge management, intellectual capital and business intelligence, focusing on different types of knowledge and information management tasks. It seems clear that there is a need for many of these managerial tools. Also, it seems likely that the utilization of these tools would result in concrete business benefits. However, there is so far limited evidence of the actual impacts of knowledge management activities. In addition, it is not clear which management approach would provide the best results in a specific case. From this track we included the paper by Kujansivu and Lonnqvist, Measuring the effects of an IC development service: Case Pietari Business Campus.
The seventh mini track about measuring IC generated 13 papers. The measurement and assessment of intellectual capital and intangible assets is one of the most important and challenging issues for research and practice today. Many argue that without measures we can know nothing and understand nothing. Without measures we can’t do any research, organizations can’t manage their intangibles and they can’t produce meaningful IC statements. However, when it comes to measurement we are facing a real dilemma: we can’t really measure our intangibles in the same way we can measure tangible aspects of performance. When it comes to intangibles we often have to rely on proxy measures or need to find new ways of measuring performance (Marr, 2005). This in turn has important implications of how we can use those measures. From this track we included the paper by Cabrilo, IC‑based inter‑industry variety in Serbia. During the conference this paper received an honourable mention. The author of this paper comes from a research group that is very actively promoting intellectual capital within their developing country. She has produces some important contributions in the past. This paper gives us important new insights into the differences between industries regarding the importance of several intellectual capital components. The author was able to collect data from 642 managers from 80 firms with a response rate of 90% (!) making full use of her teams’ relational capital.
The eight mini track about IC centres across the globe included five papers. In more and more countries organisations are set up to stimulate intellectual capital management. Examples are The Arab Knowledge Economy Association, The developing China IC Support Network, CIP Gothenburg, The Hong Kong based Asia Pacific IC Centre, The IA Centre Scotland, The Indonesia IC Research Centre, InHolland University Centre for Research in IC (CRIC), Lund University IC Centre, The Taiwan IC Research Centre, The Croatian IC Research Centre, The Finland Futures Research Centre, The IP Academy of Singapore, and The Syrian Economic Business Centre. These organisations are driven in some cases predominantly by the desire to create new knowledge and in others by the desire to apply knowledge and IC to foster economic development. This track was set up to facilitate learning between people from all over the world who are involved with IC Centres. From this track we included the paper by Russel, Business model evolution in IA/IC support centres and their role in market making.
Finally, in addition to the academic mini tracks, we also organized a Doctoral Consortium. From this consortium we selected two papers for this special issue: Jaaskelainen, Identifying a suitable approach for measuring and managing public service productivity; and Kot, How to conduct the audit of intellectual capital in Polish tourism business?
Design‑based research as a promising methodology
We noticed an increase of papers that use a so called design‑based research as their research methodology (Andriessen, 2004; Van Aken, 2005; Stam, 2007). Design‑based research is a type of research methodology in which practical managerial tolls are designed and tested for their effect in real life cases. This is a powerful type of research as it addresses both the practical needs of organizations and the academic search for underlying theory. For example, the paper by Kot, included in this special issue, on How to conduct the audit of intellectual capital in polish tourism business, aims at designing an algorithm for an IC audit for Polish tourism companies that they can use to specify the IC structure and diagnose IC assets of their business. Other papers that use this methodology and that are included in this issue are the paper by Kujansivu and Lonnqvist on Measuring the effects of an IC development service: Case Pietari Business Campus, and the paper by Jaaskelainen, on Identifying a suitable approach for measuring and managing public service productivity. All three papers are good examples of how research in the field of IC can both benefit practice and academia when a Design‑Based Research methodology is used.
Andriessen, D. G. (2004), Making sense of intellectual capital, Elsevier Butterworth‑Heinemann, Amsterdam.
Andriessen, D. (2008) Stuff or Love, How metaphors direct our efforts to manage knowledge in organizations, Knowledge Management Research & Practice (2008) 6, 5–12
Bonfour, A. and Edvinsson, L. (2005), Intellectual capital for communities, Butterworth‑Heinemann. Elsevier, Oxford.
Kianto, A. (2007), ""What do we really mean by dynamic intellectual capital?"" International Journal of Learning and Intellectual Capital, Vol.4, No.4, pp.342‑356.
Marr, B. (2005), Perspectives on intellectual capital, Elsevier Butterworth Heinemann, Burlington, MA.
Stam, C. D. (2007), ""Knowledge productivity. Designing and testing a method to diagnose knowledge productivity and plan for enhancement"", Ph.D. thesis, Universiteit Twente, Enschede.
Van Aken, J. E. (2005), ""Management research as a design science: articulating the research products of mode 2 knowledge production"", British Journal of Management, Vol.16, No.1, pp.19‑36.
Keywords: analysis, business models, capital, commercialisation, community, company succession, crowding-out, de-commodification, effect, European Union, IC audit, IC monitor, Indicator, intangible assets, intangibles, intellectual assets, intellectual capital, intellectual capital development, intellectual capital of nations, intellectual capital reporting, intellectual capital value driver, inter-industry variety, knowledge, linear space, linear thinking, linearity, Lisbon goals, Lisbon strategy for growth and job, market-making, measurement, metaphors, multidimensional value measurement, nonlinearity, performance measurement, Poland, productivity management, psychological contract, public services, scenarios, Serbia, small and medium-sized enterprises, strategic management, stratification, symbolism, Thailand, tourism, traditional knowledge, trust, visuals, welfare states