Abstract
The aim of the article is to present the current state of knowledge concerning Intellectual capital (IC) and its measurement methods. Although IC may be estimated on the micro, macro and industry level, this paper deals with the IC measurement on the enterprise level explicitly. First part of the article is concentrated on the introduction to the IC and its main forms, second presents the most common IC measurement methods, while the third part is the analysis of controversies and usability of chosen methods.
TopBackground
First use of the term Intellectual capital took place in 1958 when two financial analysts recognized as the most important element in the information technology companies their Intellectual capital. As a result of changes in the structure of economies in many countries, the term has become a subject of interest and study of a wider group of researchers.
Abeysekera (2006, pp. 61) recognizes Intellectual capital as a form of knowledge that is not posted in the traditional financial reporting. Brooking (1998, pp. 12) believes that Intellectual capital are combined intangible resources that allow organizations to function. Stowe (2001, pp. 86), in turn, argues that Intellectual capital is the ability to use the knowledge possessed by a person or a company to make better use of human and natural resources. In the discussion on the importance of Intellectual capital it is often emphasized that it may have a significant impact on achieving and maintaining a competitive advantage. Stewart (2003, pp. 32) considers the Intellectual capital as a sum of all knowledge the company staff has and what can provide a competitive advantage, manifested in market value which excesses book value. Edvinsson and Malone (2001, pp. 17) argue that Intellectual capital may be recognized as the difference between the market value and the book value. Intellectual capital may include: patents, processes, people skills and experience, technologies, information about customers and suppliers (Stewart, 1997, pp. 71).
To sum up IC shall be perceived as intangible assets created by human and his knowledge that have not been entirely disclosed in the balance sheet but play a crucial role in the contemporary business environment in terms of enterprises competitive advantage. Moreover, there shall be stated the difference between the commonly used terms of: Intellectual capital and intangibles. IC is a broader notion than Intangibles - Intangibles shall be associated with these knowledge-based assets that can be reported and valued in the financial statements of the enterprises. In this sense Intangibles are part of IC.
Defining Intellectual capital is a complex activity, as it has several dimensions and may be presented in many ways. Figure 1 provides one of the most common and widely accepted classification of IC.
Figure 1. Forms of Intellectual capital (Edvinsson & Malone, 2001, p. 45)
Key Terms in this Chapter
Book Value: Value of Total Assets less Liabilities.
Intellectual Capital: Hidden intangible assets based on the human knowledge that are not entirely reported in the financial statement of the enterprise and are playing significant role in the knowledge-based economy.
Knowledge-Based Economy: Economy which is directly based on the production, distribution and use of knowledge and information.
ROA: Return on assets; the formula is calculated as the ratio of net profit/loss to total assets.
Financial Statement: Corporate document presenting company performance during studied period, typically consisting of: balance sheet, cash-flows and income statement.
Organizational Capital: Enterprise policy and procedures, software applications, research and development programs, patents and training courses.
Market Value: Value of an enterprise calculated as a number of shares multiplied by unit share price.
Customer Capital: Relationships with customers, suppliers, industry associations and market channels.
Human Capital: Employee’s collective knowledge, competencies, abilities and the power of brain.
Efficient Market Hypothesis: Assumption stating that existing share prices always incorporate and reflect all relevant information and thus are traded at a fair value.