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Journal Article

The Communication of Intellectual Capital … Prevalence and relationship with Organizational Performance  pp38-50

Janet Wee, Alton Chua

© Jun 2015 Volume 13 Issue 1, Editor: Meliha Handzic and John Dumay, pp1 - 100

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Abstract

Abstract: While intellectual capital (IC) as an asset is long noted, one area that has begun to attract attention is the communication of IC. The past decade of increasing global competition and economic downturns have enhanced the importance of the com munication of IC, in particular, how IC supports organizational performance (OP). Current literature on the communication of IC is limited to reporting metrics, which does not provide sufficient insights on OP. Yet, the need for the communication of IC is growing globally as investors are demanding for more non‑financial information to reflect organizations sustainability. Hence, the objectives of this study are three‑fold. First is to ascertain the prevalence of the communication of IC, where past s tudies have reported low occurrence. Secondly, the study aims to examine the communication of IC in terms of content; and finally, to investigate the correlation of the communication of IC with OP. The dataset used in this study was drawn from annual repo rts and supplementary corporate disclosure (ARS) published for FYE2011 in English by 299 banks listed on the stock exchanges globally. The communication of IC was reviewed from three angles, human capital, relational capital and structural capital; and OP encompasses business continuity, risk management and organizational productivity. Content analysis was used to evaluate the communication of IC and to highlight nuances and trends. Findings showed that the communication of IC was prevalent in more than half of the banks in the dataset, where the communication of Human Capital content was most widely reported. Smaller banks, in particular, were found to be lacking in the communication of IC. Three peculiarities were also identified, namely inclusion of information on women, importance of training to organizational productivity, and extensiveness of risk management processes in banks. The significance of this study lies in its effort to highlight relevance of the communication of IC from the perspective of IC components and its correlation to OP.

 

Keywords: Keywords: intellectual capital, communication of intellectual capital, organizational performance, correlation, annual report and corporate disclosures

 

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