Book Review: The Routledge Companion to Intellectual Capital

The Routledge Companion to Intellectual Capital aims to offer a ‘wideranging overview of an important field that has seen a diverse range of research developments in recent years’ (preface). To achieve this objective, the book covers several topics related to intellectual capital (IC) in different sectors and geographical regions. Consequently, it offers a thorough understanding of theory and practice in the field and provides case studies as illustrations.


Does intellectual capital help predict bankruptcy?

In this paper, we explore whether intellectual capital performance can help predict bankruptcy. Using a sample of US public companies in the period 1985-2015, we test whether the intellectual capital performance reduces the probability of default. We also test whether the inclusion of intellectual capital performance in bankruptcy prediction models improves their predictive ability. We use VAIC as an aggregate measure of corporate intellectual capital performance. Our findings show that the intellectual capital performance is negatively associated to the probability of default. Our findings also show that the bankruptcy prediction models including intellectual capital have superior predictive ability compared to standard models. To the best of our knowledge, this is the first study to explore how intellectual capital contributes to predict the firm’s probability of default. Our research highlights that intellectual capital reduces bankruptcy risk creating long-lasting value. Our research has also practical implications. Bankruptcy prediction by banks, investors and analysts can benefit from the consideration of intellectual capital.

Key-Words: Intellectual capital, bankruptcy prediction, intellectual capital, VAIC, future performance


The contribution of business model mapping to intellectual capital measurement: a case study

Although several frameworks for measuring and reporting Intellectual Capital (IC) have been developed over the past two decades, their actual use in practice is still limited. The Business Model (BM) concept has been recently identified as a holistic and overall platform within which to refocus the IC debate. Despite several conceptual linkages between IC and BM concepts, both the contribution of BM to IC measurement and the process that leads from BM mapping to building IC measures need to be investigated. The purpose of this paper is to explore how BM mapping can support and favor IC measurement. In order to achieve this objective, the paper presents a reflective analysis of a single, in-depth case study referred to an Italian company which leveraged on its BM to design and implement IC measures. The actual research project was conducted using an interventionist approach. The case analysis shows the benefits of using BM to build IC measures. The paper points out that BM clarifies which IC elements are of utmost importance and what role they play in the company’s value creation process, thus ensuring that IC indicators are tightly connected to the company’s conception of value creation. Moreover, the paper sheds light on the process that leads from BM to measurement. More specifically, the paper points out how strategic themes play a crucial role by acting as a bridge between BM and the items to be measured. It also shows an additional contribution of the BM to the measurement process; BM and related strategic themes ensure a high level of integration and consistency between departmental measurement systems and a company-wide measurement system, and among the departmental measurement systems themselves.

Key-Words: Intellectual capital, business model, business model configurations, strategic themes, departmental reports, case study




Lights and shadows of IC reporting: the italian case

In the last two decades, Intellectual Capital (IC) measurement and reporting has been promoted with the idea that it can lead to internal (managerial) and external (disclosure) benefits (Edvinsson, 2013; Edvinsson and Malone, 1997; Guthrie, et al., 2001; Guthrie, et al., 2012; Lev, 2001; Mouritsen, 2006; Mouritsen and Larsen, 2005). These ideas have led to the design of a plethora of IC measurement and reporting methods and tools that nonetheless, are rarely applied in practice (Dumay, 2013; Guthrie, et al., 2012; Marr and Chatzkel, 2004). Indeed, the fact that some IC pioneer companies, like Skandia, have abandoned IC reporting have contributed to raise questions about whether IC was something relevant or just a managerial fashion (Dumay, 2012; Fincham and Roslender, 2003; Mouritsen and Roslender, 2009). Moving from these considerations, some argue that there is the need to understand whether and how measuring IC can help to realize the benefits usually attributed to it and thus, which are the levers and the obstacles that can influence their fate (Catasús, et al., 2007; Catasús and Gröjer, 2006; Chiucchi, 2013b; Chiucchi and Montemari, 2016; Dumay, 2012; Lönnqvist, et al., 2009). The aim of this paper is to analyse the levers and barriers to the adoption and use IC measurements and reports from a longitudinal perspective, i.e. from their introduction up to date, in order to understand what happened in the companies that joined the IC discourse and the reasons why it happened. In order to achieve this aim, a field study (Kaplan, 1986; Roslender and Hart, 2003) involving Italian companies that have measured and reported IC over the last 15 years has been conducted. In comparison to the extant studies, this study is not focused on single or few cases but it offers insights collected from several organisations could permit to have a broader view on levers and obstacles to the development of IC in practice (Chiucchi, 2013b; Giuliani, 2013). In addition, by adopting a longitudinal perspective, from the first implementation up to date, our research does not offer a “snapshot”, i.e. referred to a specific moment, of the practical use of IC measurements and reports (Chaminade and Roberts, 2003), but permits to highlight both levers and obstacles which may arise during different phases of IC frameworks’ implementation and evolution. Thus, this paper contributes to the existing literature answering to the call for IC studies developed adopting a temporal lens (Giuliani, 2009). Finally, the Italian case, which presents some peculiarities if compared, for example, to the Danish one, offers also the possibility to identify different levers/obstacles related to the different genesis of the adoptions of IC reports.

Key-Words: Intellectual capital, intellectual capital reports, levers and barriers, Consultants, Italy



Business succession and Intellectual Capital Management in family firms

Family businesses are institutions in which two seemingly disparate social units (i.e., families and businesses) are highly integrated. This connection extends to succession across generations and while natural, this can be a difficult process. The founder, thanks to his long stay in the family business, has a substantial amount of tacit knowledge related to the firm which can often determine business success. In the succession process it is important to diffuse and manage overall knowledge, or intellectual capital, to the successor. This study attempts to contribute to the literature casting some light on the business succession in a family firm informed by an intellectual capital perspective. Starting from these theoretical principles, through a case study analysis approach, the research investigates how human and relational resources are managed in the business succession process and how the process is communicated to the external environment and therefore how small family firms can maintain and increase their competitive advantage thus reducing the risk of failure during the succession process.

JEL Classification: M10, M12, M13, M40


Managerial Integrated Reporting Evidence from practice

This study concerns a global player company operating within the Aerospace and Defence field which has first developed and then deployed a managerial integrated reporting, which attempts to combine traditional financial metrics with Intellectual Capital (IC) and Sustainability performance indicators.

The qualitative research approach underlying our investigation is Interpretivism. More specifically, the study was conducted in the light of action research. Data were gathered from in-depth interviews with managers as well as from group discussions.

The assumption underlying the present research is that intangibles are the mediating variables which allow to better understand the link between sustainable management and corporate financial performance.


Intellectual Capital and Management Control: Human Capital Valuation and other challenges

In this contribution, we start discussing the definitions of intellectual capital, management control, performance measurement management, and the intersection between the research areas, closing with the identification of a few challenges. Next, human capital valuation will be briefly discussed and three major challenges and four major dilemmas will be deliberated. Finally, the six papers in this special issue will be introduced.

Keywords: Intellectual Capital, Management Control, Performance Measurement Management, Human Capital Valuation, Challenges and Dilemmas




The design, implementation and use of intellectual capital measurements: a case study

Some would argue that during the last few decades the studies on IC measurements have mainly been focused on the design and implementation of accounting concepts, methods and tools while little attention has been devoted to the understanding of what happens to the measurements after they are ‘produced’, i.e. how measurements are used.

Stemming from these considerations, the aim of this paper is to reflect on the relationship between design, implementation and use of IC measurements in practice. In order to achieve this aim, we present a longitudinal case study referred to the design, implementation and use (or non–use) of an IC measurement and reporting system.

The main findings are the following. First, measuring can lead to the emergence of new managerial objects. Second, it seems that in the IC discourse numbers are relevant not only for sizing but also for creating an IC dimension to be managed. Third, the use of measurements do not necessarily follow their production but can be instead, simultaneous. With reference to single indicators, the following considerations emerge. First, the inclusion of ‘old’ indicators within the IC measurement system can lead to a change in their meaning. Second, the use of the measurements depends on how they are labelled, too. Third, in an IC project, more than the ‘result’ it is the activated understanding and learning process that matters.


Combining different components of intellectual capital within clinical teams

This paper applies an integrated methodology to combine different components of intellectual capital. We focus on specific metrics of social network analysis that provide an overview of the social capital growth in the context of clinical care teams working with chronically ill children. The use of an integrated method to combine social network metrics with tangible and intangible indicators has a great potential to complement the view provided by traditional strategic scorecards. The ultimate goal of our research is to build a framework for integrating social network indicators with intellectual capital metrics.


Balancing on a Tightrope: Customer Relational Capital, Value Creation and Disclosure

This paper documents and compares the perceptions of key functional specialists regarding the contribution of 16 customer relational capital components to value creation and the motivations underlying its external disclosure. Findings of questionnaire surveys to samples of UK listed company marketing directors (who create customer relational capital) and finance directors (who report customer relational capital) are supplemented by follow-up interviews. Marketing directors and finance directors broadly agreed on the relevant importance of the components to value creation. While companies attempted to internally collate information on those components of most value creation importance, there was a lack of correlation between perceived value creation importance and the extent of external disclosure. This suggests that external disclosure is a poor proxy for value creation importance. In terms of disclosure incentives, marketing directors prioritise trust creation among a range of stakeholders whereas finance directors take a more share holder-centric perspective. External disclosure attracts new customers and informs other stakeholders, yet may adversely affect relationships with existing customers and/or breach specific non-disclosure agreements or generic industry restrictions and regulations. Harming competitive position is considered the major disclosure disincentive. In the view of marketing directors, managing the external disclosure of relational capital is akin to balancing on a tightrope.


Keywords: Customer relational capital, intellectual capital, value creation, marketing directors, disclosure.

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La misurazione del capitale intellettuale nel settore universitario. Un modello di analisi basato sulla logica fuzzy

Nell’economia attuale, basata sulla conoscenza, il capitale intellettuale (CI), definibile come sistema di risorse cognitive ed intangibili in grado di garantire differenziali competitivi sostenibili e duraturi alle organizzazioni, è visto come elemento essenziale per la creazione del valore in ogni tipo di organizzazione. Esiste un crescente interesse nell’applicare l’approccio basato sul CI per gestire le università, i cui principali obiettivi sono la produzione e diffusione della conoscenza. In linea generale, i metodi per misurare il CI possono essere distinti in due filoni, quello misurazionale, teso a sviluppare metodi in grado di assegnare un valore economico al CI e quello gestionale, focalizzato sulla creazione, utilizzazione e gestione del CI. L’articolo ha l’ambizione di combinare le due differenti scuole di pensiero, attraverso l’utilizzo di un metodo, la fuzzy logic, che utilizzando indicatori per lo più qualitativi produce come output finale un numero. Il modello è stato creato ad hoc ed applicato al settore universitario austriaco, in considerazione del fatto che le università austriache sono obbligate per legge (UG 2002) a pubblicare i propri report del CI.


In the current knowledge-based economy, intellectual capital (IC), definable as the system of cognitive and intangible assets able to guarantee sustainable and durable competitive advantages to an organization, is viewed as an essential condition for value creation in any kind of organization. Recently, there has been a growing interest in applying an IC approach to the management of universities, whose main goals are the production and diffusion of knowledge. In general, IC assessment methods can be divided into two streams: the measurement stream, aimed at producing a number expressive of the IC’s economic value, and the management stream, mainly focused on IC creation, management and utilization. This article has the ambition to combine these two different schools of thought by singling out an index, based on IC qualitative indicators, that returns a numeric value through a fuzzy logic methodology. The model has been created ad hoc and applied to the Austrian university sector, due to the fact that Austrian public universities are the first institutions worldwide obliged by law (UG 2002) to publish IC Reports.


Key words: Intellectual capital, Universities, Fuzzy logic