Metrics for the elements of intellectual capital in an economy driven by knowledge

March 14, 2014 Editor 0

Abstract

Purpose – This paper explores the plausibility of six elements of IC and justify the measurement ability of a set of indicators based on publicly available data for each of the proposed element in order to provide tools to managers for their decision making process in knowledge management (KM).Design/methodology/approach – Core company’s intangibles are combined into six intellectual capital (IC) elements that appear after the division of each of the traditional components (human, structural and relational capital). The human capital includes management and human resources capabilities. Structural capital is divided into innovation and internal process capabilities. Relational capital contains networking capabilities and customer loyalty. In drawing on the relevant literature each element is described through a set of indicators collected from publicly available data. The validity of proposed IC model is justified through structural equation modeling. Each element is tested on a sample of more than 1650 listed European companies over the period of 2004-2011.Findings – The study gives empirical support of three component IC structure and its decomposition into second level. The findings reveal that implementation of knowledge management plays a significant role for human resources capabilities as well as for internal process capabilities.Research limitations/implications – The analysis was conducted for a particular sample that may restrict the conclusions.Practical implications – The proposed measurements for intangibles can be applied by any company for benchmarking and comparative analysis in knowledge management.Originality/value – The study provides empirical justification of metrics for intangibles allowing a better route in an economy driven by knowledge.
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Categories: Interlectual Capital