IC is alive and well yet still seeking relevance John Dumay Intellectual Capital is alive and well across Europe and of course the rest of the world. I feel I obliged to make this opening remark to this special edition (SE) of the EJKM because of my recent experiences, not only at the ECIC 2012 conference, but also my subsequent travel experiences to the other parts of Europe, Asia and Australia I have visited already this year. So far this year I have presented papers on IC at four conferences, five research seminars at different Universities, a practitioner presentation for the Hong Kong Knowledge Management Society and a workshop for an international bank’s KM interest group. Each of these presentations has been well attended and I have had the opportunity to meet and answer questions about IC from students to practitioners and eminent professors. On top of this I am currently visiting at the Hong Kong Polytechnic University where I have met the likes of Stephen Selby who managed the what I would consider to the largest IC project involving SMEs in Asia if not the world along with Prof. Rongbin Lee and his IC research team which is part of the Knowledge Management Research Centre at Hong Kong Polytechnic . IC is truly alive and well. The international interest in IC is also reflected in the origins and nationalities of the authors and settings of the papers included in this SE. Included here is an eclectic mix of papers from the Caribbean (Carrington and Tayles, 2012), Switzerland (Eggs, 2012), Germany and China (Fritzsche, 2012), Italy and USA (Massaro et al., 2012), Romania (Suciu et al., 2012)and Poland with international overtones (Wiśniewski, 2012) and not to forget an editor who is based in Australia. This is important because IC is not just a local phenomenon because it touches individual organisations right through to nations themselves (see Lin and Edvinsson, 2009). So while the papers have an international flavour they also reflect the growing trend to investigate IC from a practice perspective (Guthrie et al., 2012) with five of the six papers in the SE being base on single or multiple case studies. Investigating IC from this perspective is important because IC has been criticised for being stuck at a metaphorical crossroads of relevance (Chatzkel, 2004) and what is needed are actual examples showing both academics and practioners how IC can be utilised and how it makes a difference. From these five papers two papers focus on the development of “trust” as part of IC (Eggs, 2012; Suciu et al., 2012) a theme which has been central to several previous IC papers (Moeller, 2009; Dumay and Lu, 2010; Reychav and Sharkie, 2010). In the Eggs (2012) paper a case study about how to build trust in a online Community of Practice (CoP) is presented using an IC lens. The paper finds that while technology is an important enabler of IC and CoP attention must be paid to how the technology is deployed and that “needs must drive the technology” rather than technology driving solutions. I think this is important for IC practitioners not only from the technological perspective but from the IC practice perspective because all too often IC practices are seen as “solutions in search of a cause” (Andriessen, 2004, p. 230) rather than being used to resolve problems in organisations using a different lens. The paper is also important because it deals with building trust in an online environment whereby people need to trust the technology as well as the people they interact with through the likes of social media which is these days becoming a ubiquitous form of communication and collaboration. In the second “trust” paper, Suciu et al. (2012) offer a theoretical framework linking “trust, culture, reputation and intellectual capital”. Utilising research performed in the Romanian tertiary education sector using qualitative and quantitative data. As a result of their study they find that “there is an observable cycle in the formation of intellectual capital, where trust, cooperation, reputation, innovation and creativity are the triggers and fuel at the same time”. This is very much in line with my own thinking of how IC is created because of the additive nature of IC and intangible resources (Andriessen, 2006, p. 103) and that socially constructed concepts, such as IC, have duality of structure (see Giddens, 1984), meaning their inputs become their outputs which in then become the new inputs. This allows for people to “become involved, rather than just the accountants, managers and stakeholders who understand the meaning of ... IC” (Dumay, 2008, p. 12). As Suciu et al. (2012) elaborate it then becomes the “job of the company management staff to establish achievable objectives ... and to make sure they follow through” because IC just doesn’t happen on its own, it needs to be enabled by people. Moving from the theme of “trust” to the involvement of “people” is the paper by Fritzsche (2012) who presents a case study based on research at German and Chinese car manufacturers to investigate how people make decisions involving IC between what Fritzsche (2012) identifies as the modes “of potentiality and actuality”. This is an important distinction between how people actually theorise about IC and put IC into practice because often we think about the potential of IC (what are IC’s benefits) and may not later be able to determine what IC has actually done for our organisation. However, Fritzsche (2012) identifies that it is important to make decisions about IC from both perspectives. If we consider the how IC is linked to strategy then it makes sense to involve considerations about the potentiality of IC while later we should then measure the actual impact of IC. The benefit for us as practitioners is that we have a wide variety of IC accounting tools (frameworks) at our disposal (see Sveiby, 2010; and Dumay and Roslender, forthcoming) which “allows an adaptation to the requirements of the given situation” (Fritzsche, 2012). I also believe this is important because as I have discovered in my own research it allows managers to choose the IC tools best suited to resolving managerial problems (Dumay, 2008) and deal with ambiguity (Dumay and Cuganesan, 2011). There isn’t just one right IC tool (framework) for every situation (see Dumay, 2009, for a critique). The fact is IC is a tool that is utilised by many of us in our research and practice and I suspect that nearly every person who is reading this paper for the first time has some understanding of what IC is if not a reasonably in depth knowledge. Often I believe that when we attend conferences such as ECIC we are preaching to the converted. As a colleague recently wrote in an email that “I find [IC] not being practiced by managers far as much as it’s being preached by us academics…” Thus examining how IC is involved inside particular industries and how we might be able to get the message across to managers who may not have heard of IC is to my mind useful and important. This is the approach taken in the paper by Carrington and Tayles (2012) who present two case studies exploring “the relevance and awareness of IC in two hotel chains in the Caribbean”. The major outcome of their study showed that there was no formal recognition of IC however there were many relevant management practices at the hotels which suggested that IC was present. This is along the same argument of Ordóñez de Pablos (2003, p. 62) who outlined that while today we (us IC academics) call it IC and think it is a new phenomenon for managing in the “knowledge economy” in fact we have been managing IC for some time because management topics such as “human resources, organizational development, change management, information technology, brand and reputation management, performance measurement and valuation” have collided to form IC as a conceptual framework. The Carrington and Tayles (2012) paper is important because it shows that we don’t necessarily need managers to understand what the terms intellectual, human, relational and structural capital are in order to implement practices aimed at improving these areas in the pursuit of better management and value creation. This is important when we as “preachers” of IC roll out IC to the unconverted masses. Because if we start speaking in these terms under the assumption everyone knows what we are talking about we are likely to meet dumbfounded stares and resistance to our message. Carrington and Tayles (2012) then go on to recommend not increased reporting of IC as is commonly recommended and concluded in many IC studies but rather increased IC education “so as to enlighten them [managers]on the theoretical framework of IC and its attributes” because “managers were engaging in practices related to IC without any knowledge of its relevance and importance in developing a firm’s competitive position.” This is a position I recently discussed with Goran Roos who outlined why thinking about IC was engrained in the psyche of Scandinavian mangers because IC was taught in University courses as an integral part of managing organisational strategy. However many other parts of the word, such as the Caribbean, seem not to have caught up with this mode of thinking and had an IC enlightenment. Thus, instead of preaching to unconverted practitioners, maybe we should concentrate more on converting the educators. The last of the case study papers is by Massaro et al. (2012) who outline how the role of knowledge development though Appreciative Inquiry (see Cooperrider et al., 2005) can be integrated into Management Control Systems (MCS) for managing creative processes and innovation in organisations. They base their new framework on the levers of control model made popular by Simons (1995) in response to the changing dynamics of business in the 1990s. Their model linking MCS to the development of the creativity steps required for innovation is itself innovative and easily understood. This is important for two reasons. First, the model provides managers with a logical way in which to promote the behaviour of an organisation’s human capital towards creativity by recognising that different levers of control are required to promote different types of creative processes. Second, it recognises that the creativity process has different stages and managers need to be able to change their approaches from more formal and structured processes during the early phases of creativity to more open processes which are aligned with implementing ideas. The last paper for the special edition is as much a social commentary on the prior “frantic pace of innovation in the financial services industry” and how this has been “socially disruptive” (Wiśniewski, 2012). What I like about his paper is that is argues how innovations in the financial services industry were rampant and did not have sufficient checks and balances to ensure that the “finacialisation” of society did not cause negative social effects. Today the world is still reeling from the impact of these failed innovations and many countries at the time I am writing this paper such as Italy, Spain and Greece are yet to realise the full ramifications. Thus a paper which openly talks about the impact of failed innovation is appropriate for this SE just as was Karl‑Erik Sveiby’s keynote speech at ECIC 2012 called Challenging the Innovation Paradigm where he also questioned the so called “unquestionable” benefits of innovation whereby a pro‑innovation bias always claims that innovation is a good thing (see also Sveiby et al., 2012). Reading the Wiśniewski (2012) paper confirms that this is not the case and that rampant unchecked financial innovations which fail can have deep and lasting impact on society just as failed innovations can have a detrimental effect on organisations. In line with my previous comments on the espoused benefits of IC as lauded by the “preachers” we should also be cognisant of taking a more critical stance (see Guthrie et al., 2012) and begin to question the benefits of IC by building on what is good and by recognising that there may also exist “intellectual liabilities” alongside our “intellectual assets”. Maybe a more appropriate term should be “intellectual equity” whereby we take a balanced view of the social, utility and economic value created by managing IC rather than just blindly preach only its benefits. Doing so could help overcome some of the relevance lost by our current implementation of IC practices so that one day IC will become a useful and integrated part of the way that organisations and thus society is developed and improved. References Andriessen, D. (2004), “IC valuation and measurement: Classifying the state of the art”, Journal of Intellectual Capital, Vol 5 No 2, pp. 230‑42. Andriessen, D. (2006), “On the metaphorical nature of intellectual capital: A textual analysis”, Journal of Intellectual Capital, Vol 7 No 1, pp. 93‑110. Carrington, D. and Tayles, M. (2012), “Intellectual Capital in the Caribbean Hospitality Industry: Two Case Studies ”, Electronic Journal of Knowledge Management, Vol 10 This issue. Chatzkel, J. (2004), “Moving through the crossroads”, Journal of Intellectual Capital, Vol 5 No 2, pp. 337‑9. Cooperrider, D. L., Whitney, D. and Stavros, J. (2005), Appreciative Inquiry Handbook, Crown Custom Publishing, Euclid, USA. Dumay, J. (2008), “Narrative disclosure of intellectual capital: A structurational analysis”, Management Research News, Vol 31 No 7, pp. 518‑37. Dumay, J. (2009), “Intellectual capital measurement: A critical approach”, Journal of Intellectual Capital, Vol 10 No 2, pp. 190‑210. Dumay, J. and Cuganesan, S. (2011), “Making sense of intellectual capital complexity: Measuring through narrative”, Journal of Human Resource Costing & Accounting, Vol 15 No 1, pp. 24‑49. Dumay, J. and Lu, J. (2010), “Disclosing improvements in human capital: Comparing results to the rhetoric”, Journal of Human Resource Costing & Accounting, Vol 14 No 1, pp. 70‑97. Dumay, J. and Roslender, R. (forthcoming), “Utilising Narrative to Improve the Relevance of Intellectual Capital”, Journal of Accounting and Organisational Change. Eggs, C. (2012), “Trust building in a virtual context: Case study of a Community of Practice”, Electronic Journal of Knowledge Management, Vol 10 This issue. Fritzsche, A. (2012), “Implicit evaluations of intellectual capital in practical decision making”, Electronic Journal of Knowledge Management, Vol 10 V. Giddens, A. (1984), “The Constitution of Society: Outline of the Theory of Structuration”, University of California Press, Berkeley, CA. Guthrie, J., Ricceri, F. and Dumay, J. (2012), “Reflections and projections: A decade of intellectual capital accounting research”, British Accounting Review, Vol 44 No 2. Lin, C. Y.‑Y. and Edvinsson, L. (2009), National Intellectual Capital: A Comparison of 40 Countries, Springer, New york. Massaro, M., Bardy, R. and Pitts, M. (2012), “Supporting creativity through knowledge integration during the creative processes: A management control system perspective”, Electronic Journal of Knowledge Management, Vol 10 This issue. Moeller, K. (2009), “Intangible and financial performance: Causes and effects”, Journal of Intellectual Capital, Vol 10 No 2, pp. 224‑45. Ordóñez de Pablos, P. (2003), “Intellectual capital reporting in Spain: A comparative view”, Journal of Intellectual Capital, Vol 4 No 1, pp. 61‑81. Reychav, I. and Sharkie, R. (2010), “Trust: An antecedent to employee extra‑role behaviour”, Journal of Intellectual Capital, Vol 11 No 2, pp. 227‑47. Simons, R. (1995), Levers of control, Harvard Business School Press, Boston, USA. Suciu, M.‑C., Picioruş, L. and Imbrişcă, C. I. (2012), “Intellectual capital, trust, cultural traits and reputation in the Romanian education system”, Electronic Journal of Knowledge Management, Vol 10 This issue. Sveiby, K.‑E., Gripenberg, P. and Segercrantz, B., Eds. (2012), Challenging the Innovation Paradigm. Routledge Studies in Technology, Work and Organizations. New York & London, Routledge. Sveiby, K. E. (2010, 27/4/2010), “Methods for measuring intangible assets”, Retrieved 22/8/2010, http://www.sveiby.com/portals/0/articles/IntangibleMethods.htm. Wiśniewski, P. (2012), “Intellectual Capital (IC) in financial services organisations: Is it possible to make it socially responsible?”, Electronic Journal of Knowledge Management, Vol 10 This issue.
The Research Management Unit of Swiss Distance University for Applied Sciences (Fernfachhochschule Schweiz FFHS) has experienced trust building processes in virtual environment amongst others in their work with Community of Practice (CoP). The estab lishment of CoPs has become their core business, that means that they have have planned and implemented such kind of learning communities for international companies and for university groups. According to the author, CoPs are perceived as laboratory for creating intellectual capital for which trust building is a pre‑conditioned success factor. To identify trust building methods in a research environment in particular and in CoPs in general, using new technologies is the main aim in this paper. So, the br oad subject CoP and intellectual capital will be constricted and the focus put on trust. A special focus is put on the virtuality element which has become very important with the raise of social media platforms in the business world. Following questions will be addressed in the paper: How is trust defined in a virtual environment, especially among researchers? How can you build trust in a CoP? How can the community leader influence this trust building? What is the role of different group members? Which influence does a deep organizational trust have on the success of a community? To answer this question, foremost a theoretical analyses model for trust and its processes will be developed based on the three domains of intellectual capital which most auth ors have identified for the division of intellectual capital: human capital, structural capital and relationship capital. To cope with the technical dimension of virtuality, a new approach to the intellectual capital domains is elaborated. In the first pl ace, at the level of human capital, the author describes personal characteristics and competencies (knowledge management skills) which enable trust building. Secondly, the level of structural capital focuses on technical aspect of the community and acti vities which foster trust building. Last but not least, the relationship level studies the trust building process linked to different roles and a new collaborative culture. As a case study for this paper, serves the community of researchers at the FFHS wh ich collaborate through a virtual platform called eDolphin. The researchers, working for a future‑oriented institution and eUniversity, come from different disciplines and promote an eLearning and eCollaboration approach in team activities and project man agement. The findings of the theoretical approach lead to its adaptation to the practical example of eDolphin. How was trust build in this case? What are the lessons learned which we identified during this community building process. Last but not least, some theories and findings concerning community building on social media platforms are described.
Keywords: eCollaboration, Social Media, Communities of Practice, intellectual capital, trust building, new collaborative culture.
Intellectual Capital, trust, cultural traits and reputation in the Romanian education system pp223‑235
The contemporary approach to the concept of intellectual capital has transformed. The three components (human, relational and organizational capital) are not enough to reflect reality, as the static perspective was replaced by an integrative vision: i ntangible resources, actions and process that contribute to sustainable competitive advantage. However, this theoretical division provides solid ground for explaining the close bond between trust, cultural identity and cooperation, soft concepts, and in tellectual capital in knowledge‑based organizations. Therefore, we consider it is of high interest to identify the nature of the relational and organizational capital, and trust association. Is it first trust and then the two intellectual capital componen ts, or the other way around? Also, we can take one step further and consider the intellectual capital formation process and architectural scheme behind it. This paper aims firstly at offering a theoretical framework for the liaisons between the concepts p reviously mentioned and intellectual capital, underlying specific characteristics for the Romanian educational system, especially for tertiary /higher education. The second objective is to provide new research directions, comparing the findings with situa tions of other cultures, like Japan and USA. The research methodology comprises a thorough literature review of scientific studies and of the 2011 National Romanian Education Law. It focuses on the changes and challenges for the intellectual capital forma tion phase. Also, it involves an empirical investigation of an evaluation of the current intellectual capital formation route. The research instrument is a questionnaire, collecting information for both quantitative and qualitative research purposes. The findings of this paper seek to identify the structure and dynamics of the intellectual capital formation process in the Romanian higher education system. As well, we hope to lead to concrete solutions for improving general dynamics, and acknowledgment of trust, cooperation and cultural aspects as corner stones in education intellectual capital formation area.
Keywords: Intellectual Capital, trust, cooperation, education, organizational culture, human capital, sustainable competitive advantage.
A lot of the confusion about the measurability of intellectual capital can be explained by a neglect of the difference between an object, the capital it provides, and the profit from the application of this capital. An analysis of this difference leads to the distinction between the potential of intellectual capital for economic process and its actual realization. Case studies from different areas of managerial practice show that decision making about intellectual capital considers it both in the mode of potentiality and actuality. However, the level to which the difference of modality is made explicit varies a lot. Talent management and network planning tend to minimize reflections about potentiality. This is possible because these reflections are an imp licit part of the preceding activities in the company that provide the basis for the decision situation. In intellectual property management, decision makers have more freedom to consider the further potential of the capital in question. In the applicatio n of different methods to evaluate intellectual capital, it therefore seems important to look for a strong consistency between the way how actuality and potentiality are taken into consideration by the structure of the business practice and the approach o f the method.
Keywords: theory of action, business strategies, IC management in practice, human resources, supply networks, intellectual property
This paper explores the relevance and awareness of IC in two hotel chains in the Caribbean. A qualitative exploratory case study method was used to gain an in‑depth understanding of the constructs relating to IC within indigenous Caribbean hotels. The dat a collection procedures employed were documentation, archival records and twenty interviews with top managers. Content analysis was used as the major technique for analyzing the data. The major finding is that there is no formal recognition of the constru ct of IC, but the embedded practices within the organisations suggested the presence of such. The data clustering and analysis of the evidence suggested two themes for HC ‑personal competencies and human resource praxes; three themes for RC ‑ customer ca pital, brand and community capital; and three themes for SC ‑ information systems, innovation and organization. The case studies further revealed that the chains had embedded human resource practices and well established customer relationship management systems which created linkages among the components of IC.
Supporting creativity through knowledge integration during the creative processes. A management control system perspective pp258‑267
Organizations require an intensive knowledge integration mechanism that supports creativity within all the phases of its process in order to analyze, understand, select, and integrate ideas into a business model. Management Control Systems, as a part of t he structural capital, can be utilized as knowledge integration mechanisms to provide: i) a dialog among internal or external actors of the creative process; ii) a knowledge repository for data and other information required in the selecting process; ii i) representation of the new ideas into a business model. Using a multi‑method case study, this article analyzes the role of knowledge integration played by Management Control Systems (MCS). Within the perspective of the Levers of Control (Simons, 199 5), MCS are recognized as the sum of belief, boundary, diagnostic and interactive systems that could be used to manage the creative process. We apply the Appreciative Inquiry model of creativity (Cooperrider, Srivastva, 1987) which recognizes four step s: Discovery, Dream, Design, and Destiny. Creativity is then classified based on the problem's characteristic using Unsworth's model (2001) which separates closed and open problems. Results show that in the early phases of the creativity process problem s are more structured and are faced using diagnostic and boundary tools. In the design phase, a dynamic tension between interactive and diagnostic systems is always preferred. The final phase (Destiny) requires diagnostic approaches in all cases. On th is foundation, the paper aims to contribute to the literature on innovation and intangible assets. It is our opinion that the results could also be used by managers and entrepreneurs involved in the creative process in order to improve a companies abilit y to face change.
Intellectual Capital (IC) in Financial Services Organisations: Is It Possible to Make It Socially Responsible? pp268‑278
Financial companies worldwide are blamed for having precipitated the gravest global economic meltdown since the Great Depression of the 1930s. While the aftershocks of the last turmoil are still palpable and some observers prophesy that another sharp econ omic downturn might be in the offing global policymakers, analysts, researchers and the public at large ruminate how to redress the balance of powers to ensure socially sustainable financial and macroeconomic growth. This paper reviews the expansion of worldwide financial industries relative to real economies (financialisation), exemplifies its social ramifications and indentifies the root causes of socially disruptive innovation undertaken in financial institutions. Finally, the paper highlights th e prerequisites of social equilibria in financial organisations, of which most are endogenous in nature.
Keywords: intellectual capital, innovation, financial organisations, financial industry, social responsibility