Practical experiences in developing and introducing performance measurements systems for measuring and managing knowledge capital have shown that these instruments do not sufficiently fulfil the expectations of their users. Some authors even point out that the fundamental understanding of methodological and conceptual issues is inade‑quate. Therefore, we suggest that instead of creating further new instruments, an explanation of how and when Perform‑ance Measurement Systems (PMS) become effective is necessary. We argue that highlighting their potential production of "blind spots" and comprehending the use of PMS more reflexively will bring more sustainable effects. As a result, the concept of First and Second Order Reflection of PMS is introduced.
Keywords: Knowledge capital, performance measurement systems, organisational practices, first and second order reflection
Every public organisation faces the challenge of improving productivity. In this effort, productivity measures are essential managerial tools. However, the task of measuring service productivity has proven to be challenging. A key reason for the challenges seems to be related to the intangibility of services. The objective of this paper is to identify and apply a productivity measurement method satisfying the information requirements of public managers. The study is carried out using a qualitative case study approach. The paper consists of two parts: first, the current knowledge of the issue is examined by reviewing the literature on (service) productivity and performance measurement; second, an action research is carried out in the context of four case services of the City of Helsinki, Finland. A disaggregated approach to productivity measurement is applied. Three different measurement frameworks and methods are evaluated in light of practical criteria for measurement. Finally, a matrix method is chosen and applied in practice. As a result the paper provides more understanding of the process of applying the disaggregated productivity measurement approach in the context of public welfare services.
As organisations become increasingly aware that knowledge is among their most valuable strategic assets, they will be forced to re‑evaluate the way in which they engage with the source of that knowledge to underpin their sustainable development. This will create a fundamental change to established practice; a change that results in a paradigm shift from the traditional operational approach to a more strategic involvement in knowledge management. This change is promoted by the knowledge management maturity model (KM3). KM3 is founded on the idea that successful knowledge management comprises four forms of integration, namely cultural, organisational, procedural and methodical. Despite an emphasis on one of these forms by many organisations, it is understood that all forms of KM integration should be considered in parallel to implement knowledge management practices in an integrative manner. Key indicators that measure the performance of knowledge management integration are needed. They need to measure both effectiveness and efficiency. In many cases, organisations having, and actively executing, a knowledge management strategy tend to focus on the efficiency dimension because it can be evaluated more easily than the effectiveness dimension. Yet this path is fraught with danger because, as with many other aspects of business, the management of knowledge has to be effective before it may provide efficiency gains. Nevertheless, organisations require appropriate forms of measurement. Those that are unwilling, or unable, to develop effective measuring and reporting systems are likely to suffer from product or service quality decreases, lower productivity growth and a reduced ability to compete because they will be less successful in acquiring and using relevant knowledge resources. Key performance indicators that are developed to assess the progress of organisations in this compelling activity need to be aligned with one or another of the four forms of integration and may be either qualitative or quantitative in nature. The balanced scorecard concept is used to measure performance of the KM3 where the balance between the four forms of integration is the prime consideration. Each of these is represented by one segment of the knowledge management monitor (KM2) to facilitate a better understanding of the cause‑and‑effect relationships. It does so by providing structured information about an organisation's knowledge resources: how they are nurtured and how they contribute to organisational sustainability. At the same time, use of KM2 is related to organisational economy. Good economy means good resource management, which for many organisations translates to how they manage individual and accumulated organisational knowledge. This has become so important that they are looking for a more integrated way of managing the three interdependent and complementary pillars of knowledge management, which are organisational learning management, organisational knowledge management and intellectual capital management. Although these three concepts lack a unifying vision, they all relate to each other by informing one another and provide the pathway for a knowledge‑based orientation of strategic management.
Volume 4 Issue 1 / Jan 2006 pp1‑90
Keywords: Active learning, Africa, Business intelligence, Case study, Cognitive diversity, CommonKADS], Communication, Complexity, Complexity representation , Complexity theory, Complexity thinking, Cross-functional teams, e-Commerce, Enterprise semantic web, First order reflection, Group dynamics, Human capital, Intellectual capital, Knowledge acquisition, Knowledge acquisition, Knowledge capital, Knowledge cooperation, Knowledge co-production, Knowledge creation, Knowledge flows, Knowledge learning, Knowledge sharing, Knowledge transfer, Knowledge transfer cycle, Lightweight ontologies, Organisational practices, Performance measurement, Predictive maintenance, Relational capital, Second order reflection, Semantic information retrieval, Semantic interoperability, Social networks, Social Software, Software development, Structural capital, Tourism, Value creation, Weblog, Wiki
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