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Intellectual capital management and the innovation process: does one size fit all?
Abstract
Intellectual Capital Management (ICM) research has focused predominantly on demonstrating the link between ICM and innovative performance from a general, context-free perspective. This paper analyses deeper implications of ICM showing the inadequacy of this one-size-fits-all approach, and introduces a more realistic view of the role of ICM on innovation process. We propose an analytical framework where differences in ICM strategies are explained by differences in the environment faced by firms and characterized by disparate levels of threats posed by potential imitators. Although legal protection of intellectual property rights has been traditionally the centre of attention on this topic, the firm’s strategy might be far more complex involving alternative ICM activities guided by the incentives of the environment. Using panel data for Spanish SMEs over the 7-year period between 2008 and 2014, we provide evidence consistent with this approach. Empirical analysis shows that certain ICM strategies are profitable in specific environments, but might be very unattractive in other contexts where other strategies prove to be more efficient. These findings contribute to the development of a more nuanced interpretation of the role played by ICM on the innovation process.
... Their mutual relations are unique for each organization. A recent study by López López and Salazar -Elena (2017) has also shown that the activities of intellectual capital management have different impact across various industrial sectors, and that they should be adapted to a particular context. ...
The main objective of this exploratory study was to identify and analyse the indicators of
intellectual capital in food industry of Serbia. The study investigated managers’ perceptions
of their usefulness, practical application, and factors that influence them. The respondents
were surveyed by means of a questionnaire. They were mainly top managers from 18 food
organizations, committed to the bioeconomy paradigm. The survey items were divided into
three subcategories, namely human, structural, and relational capital. The data were
analysed by the SPSS 21 statistical software. The results show that all indicators were
perceived as very important, relational capital indicators being the most useful of all. Of all
individual items, employee motivation, market share, and employee satisfaction were
perceived as the most important. This study provides a perspective on managing intellectual
capital in bioeconomy
The aim of this exploratory study was to determine most useful indicators of intellectual capital in Serbian food industry. The study investigated managers' perceptions of indicator usefulness and practical application. They were top and middle managers from 18 food organizations, committed to the bioeconomy. The survey items were divided into human, structural, and relational capital. A closed-ended questionnaire was used to collect data, later analysed by SPSS 21 statistical software. The results have demonstrated that all indicators were seen as very important, with relational capital being the most useful of all.
The purpose of this paper is to review and critique the field of Intellectual Capital Accounting Research (ICAR). The literature indicates that an organisational and business revolution is in progress concerning the need to understand the value of knowledge resources and how to manage them. The paper explores the field of ICAR by examining a decade of published research since Petty and Guthrie's (2000) seminal paper on ICA, “Intellectual capital literature review: Measurement, reporting and management” as published in the Journal of Intellectual Capital.The paper has four specific contributions. The first contribution is to identify the field of scholarship associated with ICAR. The second is to provide a comprehensive picture of what has happened in the field of ICAR over the past decade. Third, it provides evidence as to how and why the field of ICAR is changing. Fourth, it highlights areas for future research and policy developments.From these four contributions our definition of Intellectual Capital Accounting (ICA) emerges. That is, ICA is an accounting, reporting and management technology of relevance to organisations to understand and manage knowledge resources. It can account and report on the size and development of knowledge resources such as employee competencies, customer relations, financial relationships and communication and information technologies. Additionally, the analysis highlights several interesting patterns and worrying trends in the field of ICAR.
Purpose
The purpose of this paper is to examine intellectual capital research (ICR) methods and critically analyse how they have been utilised. The data set for this analysis is based on examining IC papers published in specialist IC and important generalist accounting journals from the years 2000 to 2011.
Design/methodology/approach
The basis of the analysis is Alvesson and Deetz's critical management framework of “Insight”, “Critique” and “Transformative redefinition” with the goal of widening the discourse about how to research IC. This paper is motivated by Guthrie et al. , who identify a third stage of ICR which is “based on a critical and performative analysis of intellectual capital (IC) practices in action”.
Findings
This paper argues that there is an increasing performative research agenda however many researchers appear caught in an “evaluatory trap” (Olson et al. ) whereby the researchers’ approach to ICR remains stuck in an ostensive approach (see Mouritsen) that characterises second stage ICR (see Petty and Guthrie). The paper also identifies how many accounting researchers are impacted by a “dominance structure” and suggests that they need to break free from the dominance of “accounting” practice before they can understand and realise the potential of IC.
Research limitations/implications
The implication of this paper for ICR and practice is to create a continued discourse about evolving approaches to ICR so we can continue communicating leading edge, third wave ICR, which develops IC theory in practice and effective IC management through praxis.
Originality/value
From 2004 onwards, Guthrie et al. claim the third stage was gaining impetus and thus this paper is novel because it investigates how ICR has transitioned and how ICR might continue to develop.
Purpose
The purpose of this paper is to answer the question “What are the barriers to the use of IC concepts?” by discussing and critiquing two contemporary grand theories about IC, being market‐to‐book ratios as a representation of IC and that disclosing IC leads to greater profitability.
Design/methodology/approach
The paper reviews contemporary IC literature and explores reasons why these grand theories of IC hinder its adoption.
Findings
The research finds that these grand theories mislead because they cannot be proven empirically. Therefore, managers should attempt to better understand the possible causal relationships between their people, processes and stakeholders (human, structural and relational capital) rather than adopting someone else's mousetrap.
Practical implications
In order to improve the use of IC concepts they should be examined as differentiation theories of practice that take into account the agent (people) as a unit of analysis, the actual practice of IC and the resultant changes within an organisation, rather than trying to achieve the impossible generalisations of IC grand theories. Researchers need to conduct more critical and performative research into IC rather than ostensive research.
Originality/value
Allows academics and practitioners to understand the barriers to implementing IC in organisations, potentially allowing for the development of better engineered IC practices rather than the development of additional IC models.
This article studies the relative impact on product innovation of R&D collaborations with universities, suppliers, customers, and competitors. It argues that each type of R&D collaboration differs in terms of the breadth of new knowledge provided to the firm and in the ease of access of this new knowledge, resulting in a different impact on product innovation. As a result, it proposes that R&D collaborations with universities are likely to have the highest impact on product innovation, followed by R&D collaborations with suppliers, customers and, finally, competitors. The tests find that R&D collaborations with suppliers have the highest positive impact on product innovation, followed by collaborations with universities. Surprisingly, R&D collaborations with customers do not appear to affect product innovation, and collaborations with competitors appear to harm it. Moreover, the positive influence of R&D collaborations with universities and suppliers is sustained over the long term, but the negative influence of R&D collaborations with competitors is, fortunately, short-lived. These findings indicate that ease of knowledge access, rather than breadth of knowledge, appears to drive the success of R&D collaborations for product innovation.
Managerial flexibility has value in the context of uncertain R...D projects, as management can repeatedly gather information about uncertain project and market characteristics and, based on this information, change its course of action. This value is now well accepted and referred to as "real option value." We introduce, in addition to the familiar real option of abandonment, the option of corrective action that management can take during the project. The intuition from options pricing theory is that higher uncertainty in project payoffs increases the real option value of managerial decision flexibility. However, R...D managers face uncertainty not only in payoffs, but also from many other sources. We identify five example types of R...D uncertainty, in market payoffs, project budgets, product performance, market requirements, and project schedules. How do they influence the value from managerial flexibility? We find that if uncertainty is resolved or costs/revenues occur after all decisions have been made, more variability may "smear out" contingencies and thus reduce the value of flexibility. In addition, variability may reduce the probability of flexibility ever being exercised, which also reduces its value. This result runs counter to established option pricing theory intuition and contributes to a better risk management in R...D projects. Our model builds intuition for R...D managers as to when it is and when it is not worthwhile to delay commitments---for example, by postponing a design freeze, thus maintaining flexibility in R...D projects.
Innovating firms in new industries face a number of technological and market risks, especially appropriability and competence destruction. However, the relative significance of these varies between different sub-sectors, and so do managerial ways of dealing with them. These in turn are influenced by institutional frameworks, particularly those governing skill formation systems and labour markets. Consequently, the relative success of firms in fields with different appropriability and competence destruction risks is likely to vary between countries with contrasting patterns of labour market organisation. In the biotechnology and computer software industries, there are major differences in the dominant risks faced by innovating firms such that we would expect their relative success to differ between Germany, Sweden and the UK. While the UK and, to a limited extent, Sweden, have developed institutions similar to those found in the US that help govern “radically innovative” firm competences, Germany has invested in institutional frameworks associated with “competency enhancing” human resource practices that give its firms an advantage in more generic technologies in which organisational complexity is higher. While the distribution of public companies across sub-sectors broadly follows these expectations, Sweden has developed considerable strength in middleware software. This results from changing property rights and personnel policies at Ericsson.
In modern knowledge driven economies, firms are increasingly aware that individual and collective knowledge is a major factor of economic performance. The larger the firms and the stronger their connection with technology intensive industries, the more are they likely to set up knowledge management (KM) policies, such as promoting a culture of information and knowledge sharing (C), motivating employees and executives to remain with the firm (R), forging alliances and partnerships for knowledge acquisition (A), implementing written knowledge management rules (W). The French 1998-2000 Community Innovation Survey (CIS3) has surveyed the use of these four knowledge management policies for a representative sample of manufacturing firms. The micro econometric analysis of the survey tends to confirm that knowledge management indeed contributes significantly to firm innovative performance and to its productivity. The impacts of adoption of the four surveyed KM practices on firm innovative and productivity performance are not completely accounted by firm size, industry, research & development (R&D) efforts or other factors, but persist to a sizeable extent after controlling for all these factors.
I find that a firm's innovation output increases with the number of collaborative linkages maintained by it, the number of structural holes it spans, and the number of partners of its partners. However, innovation is negatively related to the interaction between spanning many structural holes and having partners with many partners.
Research and development (R&D) collaboration with various types of external stakeholders is becoming increasingly important for firms pursuing innovation-related goals. However, collaborating with actors such as customers, suppliers, competitors, and research organisations involves risks related to knowledge leakage and the possible misappropriation of the created value. It is therefore logical to employ mechanisms that safeguard effective knowledge protection and innovation appropriability. In order to shed light on this issue, we conduct an empirical investigation of appropriability mechanisms in R&D collaboration based on a multi-industry sample from Finland. The results of the study provide novel evidence concerning the relationship between different appropriability mechanisms (intellectual property rights, contracts, labour legislation, human resource management practices, lead time, secrecy, and tacitness) and the firm's propensity to engage in R&D collaboration with various stakeholders.
Taking advantage of the peculiar features of the service-intensive Luxembourgish economy, this work extends to the service sector current empirical research on knowledge management (KM) and innovation. Using firm-level data from the Community Innovation Survey 2006 (CIS2006) for Luxembourg, the econometric analysis reveals that the number of adopted KM practices is positively related to the probability of introducing product innovation. In a comparative perspective, this is aligned with findings from Kremp and Mairesse (2004) for the considerably different context of the French manufacturing sector. The research also shows that implementation of internal KM practices precedes external knowledge acquisition. This indicates a positive association between KM intensity and strategy complexity in terms of knowledge sourcing. KM intensity and complexity appear related to the economic sector: financial companies and knowledge intensive business services (KIBS) implement more articulated KM strategies and manage external knowledge more actively than other sectors.
Purpose – The aim of this paper is to present the findings of a qualitative investigation of intellectual
capital (IC) in the engineering industry in the UK within the context of a recession.
Design/methodology/approach – Due to the fact that IC involves tacit knowledge which can often
be “non-verbal” or in some cases “non verbalable”, intuitive and unarticulated (Hedlund), qualitative
methodology was chosen as it allows the flexibility to explore the IC in the target population in greater
detail and to explore area/ideas of interest that may have developed during the data collecting process.
Ten interviews were conducted on companies chosen from the Reed Business database’s classification
of precision engineering. Data collection was via a semi-structured interview, the results were coded
into Nvivo and analysed.
Findings – It was discovered that there is an interrelatedness of the components of IC, knowledge of
IC management as a strategy in the engineering industry is low and the academic discourse on IC is
in to transferring into practical implementation.
Practical implications – There is greater need to address the practical implications and barriers to
the implementation of IC management strategy within industry.
Originality/value – The author having examined the data collected and the characteristics of the
responding company and the dominant element of IC within each have coined the phrases Sector of
Innovative Potential (SoIP), Sector of Collaborative Potential (SoCP) and Sector of Operating Efficiency
(SoOE).
We argue that the debate regarding the performance implications of demographic diversity can be usefully reframed in terms of the network variables that reflect distinct forms of social capital. Scholars who are pessimistic about the performance of diverse teams base their view on the hypothesis that decreased network density--the average strength of the relationship among team members--lowers a team's capacity for coordination. The optimistic view is founded on the hypothesis that teams that are characterized by high network heterogeneity, whereby relationships on the team cut across salient demographic boundaries, enjoy an enhanced learning capability. We test each of these hypotheses directly and thereby avoid the problematic assumption that they contradict one another. Our analysis of data on the social networks, organizational tenure, and productivity of 224 corporate R&D teams indicates that both network variables help account for team productivity. These findings support a recasting of the diversity-performance debate in terms of the network processes that are more proximate to outcomes of interest.
Research on the impact of human resource management (HRM) on firm performance has increased since the end of the nineties. Despite the pile of studies and results, critical assessments of this literature stream point to several empirical and theoretical gaps. We focus on two empirical gaps. First, there is a lack of attention to innovation as a measure of firm performance outcome. Most articles use financial (e.g., return on assets (ROA)), organisational (e.g., productivity) and employee related (e.g., commitment) performance measures. Yet, Western knowledge economies consider innovation to be a driving force of economic growth, and international competitive advantage. Moreover, innovation is a function of a firm's ability to create, manage and maintain knowledge. Because knowledge is created by and stored within individuals, human resources as well as HRM may play an important role as drivers of innovation. Second, HRM is considered to be a large company phenomenon. Yet, small businesses provide a great environment to study the HRM-performance relationship because of their transparent nature and the small distance between an individual's and a company's performance. Next, human resources and HRM are crucial to small businesses because they have less tolerance for inefficiency. We examine a sample of small start-ups that aim for an innovation strategy, but are not necessarily successful in terms of innovative output. We expect start-ups with superior human resources and HRM to produce more innovative output. The results show that both human capital (of owners/managers and employees) and HRM are important determinants of innovation in start-ups.
The appropriability regime represents a combination of available and effective means of protecting intangibles and innovations, their profitability, and the increased rents due to research and development. It has a central role in appropriating returns on investment, but the nature of appropriability and the strategies for appropriation may not be fully known to managers, or even to researchers. The aim in this study, therefore, is to categorise the appropriability regime by extending, combining and complementing previous research. We also conducted a survey among 299 companies in order to determine the roles, availability, strength and efficiency of appropriability mechanisms. Such mechanisms offer institutional protection in the form of intellectual property rights, contracts and labour legislation, tacitness of knowledge, lead-time, practical secrecy and human-resource management. As a result, we suggest a conceptual clarification of the appropriability regime, and offer empirical evidence to increase understanding of the appropriation of returns on innovation.
Profiting from rapid innovations plays a central role in the knowledge-based economy, and establishing an effective appropriability regime can crucially facilitate this endeavor. It is not an easy task for strategic management, however. The basic elements of appropriability, i.e., the very nature of knowledge (tacit vs. codified) as well as the legal means (such as patents, copyrights, trademarks) could be seen as a double-edged sword: they both increase the protection of intellectual capital, but on the other hand they also make learning and the utilization of intangibles more challenging by decreasing the transferability of knowledge within the company and the network to which it belongs. This also makes it hard to utilize knowledge-related positive externalities. Additionally, the difficulty of transferring knowledge diminishes the probability of creating profit-generating standards. In sum, managers’ discretionary decisions to emphasize either protection or knowledge sharing affect the boundaries of the appropriability regime. The purpose of our study was to analyze the characteristics of the Janus-faced nature of the appropriability regime and to focus on issues that have been overlooked so far by reviewing previous research and providing empirical evidence from Finnish industry. The data collected among 299 companies reveals that the different mechanisms within the appropriability regime have different effects on knowledge flows within companies, on the benefits derived from positive network externalities, and on standardization.
This paper attempts to explain why innovating firms often fail to obtain significant economic returns from an innovation, while customers, imitators and other industry participants benefit Business strategy — particularly as it relates to the firm's decision to integrate and collaborate — is shown to be an important factor. The paper demonstrates that when imitation is easy, markets don't work well, and the profits from innovation may accrue to the owners of certain complementary assets, rather than to the developers of the intellectual property. This speaks to the need, in certain cases, for the innovating firm to establish a prior position in these complementary assets. The paper also indicates that innovators with new products and processes which provide value to consumers may sometimes be so ill positioned in the market that they necessarily will fail. The analysis provides a theoretical foundation for the proposition that manufacturing often matters, particularly to innovating nations. Innovating firms without the requisite manufacturing and related capacities may die, even though they are the best at innovation. Implications for trade policy and domestic economic policy are examined.
We analyse the impact of R&D cooperation on firm performance differentiating between four types of R&D partners (competitors, suppliers, customers, and universities and research institutes), and considering two performance measures: labour productivity and productivity in innovative (new to the market) sales. Using data on a large sample of Dutch innovating firms in two waves of the Community Innovation Survey (1996, 1998), we examine the impact of R&D cooperation in 1996 on subsequent productivity growth in 1996–1998. The results confirm a major heterogeneity in the rationales and goals of R&D cooperation. Competitor and supplier cooperation focus on incremental innovations, improving the productivity performance of firms. University cooperation and again competitor cooperation are instrumental in creating innovations generating sales of products that are novel to the market, improving the growth performance of firms. Furthermore, customers and universities are important sources of knowledge for firms pursuing radical innovations, which facilitate growth in innovative sales in the absence of formal R&D cooperation.
Sumario: The Marxian doctrina -- Can capitalism survive? -- Can socialism work? -- Socialism and democracy -- A historical sketch of socialist parties -- Prefaces and comments on later developments
This study focuses on the impact of innovation policies and R&D collaboration in Germany and Finland. We consider collaboration and subsidies as heterogeneous treatments, and perform an econometric matching to analyze R&D and patent activity at the firm level. In general, we find that collaboration has positive effects. In Germany, subsidies for individual research do neither exhibit a significant impact on R&D nor on patenting, but the innovative performance could be improved by additional incentives for collaboration. For Finnish companies, public funding is an important source of finance for R&D. Without subsidies, recipients would show less R&D and patenting activity, whilst those firms not receiving subsidies would perform significantly better if they were publicly funded. Copyright © 2007 John Wiley & Sons, Ltd.
The transfer of knowledge in alliances entails risk to partners, whose willingness to accept it presumably relies on the trustworthiness that they perceive in their partners. We investigate the extent to which the perceptions of trustworthiness and the willingness to take risk determine the transfer of knowledge between alliance partners and their ultimate impact on alliance success. The results show that the transfer of tacit versus explicit knowledge have very different trust and risk profiles. Whereas explicit knowledge is closely associated with the firm's willingness to take risk, tacit knowledge is intimately related to high trustworthiness. The results support the important role of trust and the transfer of tacit knowledge on the success of learning alliances. Copyright (c) Blackwell Publishing Ltd 2008.
This article presents a new sectoral taxonomy that combines manufacturing and service industries within the same framework. This exercise is relevant because it aims at greater integration between the study of sectoral patterns of innovation in manufacturing and services, stressing the increasing importance of vertical linkages and inter-sectoral knowledge exchanges between these interrelated branches of the economy. The relevance of the new taxonomy is illustrated with reference to the innovative activities and economic performance of manufacturing and service industries in Europe. This empirical evidence, which presents fresh results from the Fourth Community Innovation Survey, supports the relevance of the taxonomy by showing the great variety of sectoral patterns of innovation in European industries.
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