Ten years after: the past, the present and the future of scholarly investigation on intangibles and intellectual capital (IC)

Citation

Zambon, S. (2016), "Ten years after: the past, the present and the future of scholarly investigation on intangibles and intellectual capital (IC)", Journal of Intellectual Capital, Vol. 17 No. 1. https://doi.org/10.1108/JIC-11-2015-0093

Ten years after: the past, the present and the future of scholarly investigation on intangibles and intellectual capital (IC)

Article Type: Guest editorial From: Journal of Intellectual Capital, Volume 17, Issue 1.

Introduction

On September 18-19, 2014 the 10th edition of the EIASM Workshop on “Intangibles, Intellectual Capital, and Extra-Financial Information” took place at the University of Ferrara (Italy), where also the 1st edition of the series was held in 2005. This is quite certainly the oldest continuing academic event in Europe in the field, and it has nowadays reached a widespread visibility in the scholarly as well as – to some extent – the professional community.

Over the years, the Workshop has been organized in diverse European universities and business schools. In detail:

2005: University of Ferrara (Italy);

2006: University of Maastricht (the Netherlands);

2007: University of Ferrara (Italy);

2008: University of Hasselt (Belgium);

2009: Technical University Dresden (Germany);

2010: University of Catania (Italy);

2011: Kozminski University, Warsaw (Poland);

2012: Grenoble École de Management (France);

2013: Copenhagen Business Schools (Denmark); and

2014: University of Ferrara (Italy).

In September 2015 the 11th edition of the Workshop was held at the Athens University of Economics and Business (AUEB), while the 12th edition will be held in St Petersburg (Russia) at the Higher School of Economics (HSE). The 13th and 14th editions are planned to take place, respectively, at the University of Ancona (Italy) and at the LMU Munich in collaboration with the University of Passau.

Over the years the format of the event has remained quite similar with Inaugural and Conclusive Plenary speeches on the most important issues of the field, paper presentations in parallel sessions, and ad hoc Panels centered on emerging topics and perspectives. Along the ten editions of the Workshop, approximatively 550 papers have been presented and more than 30 key-note speakers have delivered their thoughts and opinions.

Since its inception, the standing coordinator of the Workshop series has been the writer that has collaborated each year with different university colleagues who have co-chaired and locally co-organized the event[1].

The Ferrara 2014 Workshop featured the following qualifying elements[2]:

1. 97 registrants.

2. 54 papers presented (out of the 82 submitted).

3. 18 parallel sessions.

4. Four special panels on emerging topics.

5. Five key-note speakers:

• Professor Stefano Zambon (University of Ferrara) who delivered a speech entitled “Intangibles and the EIASM Workshops: Ten Years After and Ten Years Ahead …” (on which this introduction is based).

• Professor Baruch Lev (Stern School of Business, NYU) who discussed the non-satisfactory state of the studies on intangibles and designed new exciting research avenues for the future.

• Professor Yasuhito Hanado (Waseda University, Tokyo, and WICI) who provided a speech on “Our Experiences of Intellectual Assets Based Management and its Future Development” with regard to the Japanese context.

• Dr Ian Ball (Board of Directors, International Integrated Reporting Council-IIRC) who gave a presentation on “Integrated Reporting <IR> – An Untilled Field”.

• Professor John Dumay (Macquarie University, Sydney) who delivered a talk on “The Future of Intellectual Capital: A Critical Perspective”.

6. An award for the “Best Junior Contribution to the Intangibles and IC Theory and Practice” that has been jointly attributed to Gaia Melloni (University of Verona) for the paper “Intellectual Capital Disclosure in Integrated Reporting: An Impression Management Analysis,” and to Christina Manthei and Wolfgang Schultze (Augsburg University) for the work “Conservatism and Endogenous Preferences: An Experimental Approach”.

7. A remarkable dinner in a medieval courtyard.

In consideration of the significant time period and academic reputation reached by these EIASM Workshops, and ten years after the publication of the special issue devoted to the 1st edition of this Workshop (JIC, Vol. 7, No. 4), the Journal of Intellectual Capital has agreed to have a new special issue drawing on the 10th edition of this series, by selecting some of the most significant and innovative papers presented at the Ferrara 2014 edition, with the aim to investigate and to bring attention on some of the current research trends and horizons, and hence to stimulate some thoughts on the evolution of this subject area over the last ten years and in the future.

The papers of the special issue

All the works published in the present special issue have been subject to a lengthy double blind review process and revised quite largely before their acceptance for publication.

As aforementioned, the papers selected offer insightful views on what is largely the today's state-of-the-art of the research on intangibles and related topics and issues[3]. Actually, four of them deal with different aspects of intangibles disclosure, one with the historical roots of the debate on intangibles, one with the IC management issues, one with their measurement and its opportunistic use, and one with a “new” form of intangible capital which has been often overlooked thus far.

Laura Girella (Ca' Foscari University of Venice), Carlo Bagnoli (Ca' Foscari University of Venice) and Stefano Zambon (University of Ferrara) in their paper “Exploring the conceptualisation of intangibles in law and accounting in the USA: a historical perspective” investigate an almost forgotten issue, i.e. is the emergence of the conceptual category of intangibles out of a dialogue that took place between corporate, personal and inheritance law on the one hand, and tax regulation on the other, in the USA at the turn of the twentieth century. Only later, after the 1940s, the academic and professional accountants fully joined the debate on intangibles and started characterizing it in terms similar to those currently known. Accordingly, the work tries to highlight the importance of historical and broader interdisciplinary perspectives in order to appreciate the origins, rationales and evolutionary trajectories of concepts that are currently taken for granted.

Moving from the explicit recognition of the poor state of research in the field of IC management within SMEs, Giuseppe Marzo and Elena Scarpino (University of Ferrara and Edeos Consulting) in their work “Exploring intellectual capital management in SMEs. An in-depth Italian case study” provide a contribution to fill this knowledge gap by focussing on the generation, development and management of IC in an Italian SME. Adopting a case study methodology and a dynamic approach, the authors deepen the relationships between the three well known “boxes” of IC (human, organizational, relational), highlighting the perceptions that the managers of the selected SME have about these IC components and their interactions. While recognizing the impossibility to sharply divide all of the knowledge-related elements of a firm into the three categories mentioned above, the authors point out that in the SME analyzed the legal boundaries of the firm lose importance when observing it from a knowledge flows perspective, and that the management of IC is indirect, sequential and jeopardized in the examined entity.

Stefan Schaper's (formerly at University of Chieti-Pescara) work titled “Contemplating the usefulness of intellectual capital reporting: reasons behind the demise of IC disclosures in Denmark” aims to stimulate reflections upon the low persistence of Intellectual Capital Statements (ICS) within organizational practices. In Denmark a large governmental-led project on IC reporting took place between the end of the 1990s and the beginning of 2000s. The author investigates the reasons of the demise of this type of reports after a few years since their implementation in the companies. He frames this phenomenon within a fashion/implementation and failure/abandonment cycle, in which also academics have had a role to play. As Schaper insightfully concludes, “ICS has not been able to manifest its value, at least partly because it was loosely coupled within the organizations and because it did not become a means for facing turbulent situations, such as organizational changes. On the contrary, the latter contributed to and accelerated its disappearance. Hence, while management's interest already decreased, its failed implementation contributed to manager's perceptions that ICS was not valuable enough to keep on working with it.” This paper recalls convincingly the need for new reporting practices to be rooted in organizations and be actually and effectively adopted in the decision-making processes, otherwise their fading in companies becomes virtually inescapable.

Drawing on a call for more research on the role of business models in driving company disclosures on IC resources and company value generation, Laura Bini, Francesco Dainelli and Francesco Giunta (University of Florence), in their work “Business model disclosure in the strategic report: entangling intellectual capital in value creation process”, respond to that call by analyzing the information on this subject included in the Strategic Report which has been mandated in 2013 in the UK replacing the “old” management report (or management commentary). The aim is that of investigating whether the BM disclosures allow for an understanding of what knowledge/IC resources drive corporate value creation. Using a manual content analysis applied to the Strategic Reports of 35 companies included in the FTSE techMARK Focus Index, and using an innovative classification system based on an ontological approach, the paper reveals that only a restricted number of UK companies take advantage of the legal requirement in order to communicate their value creation story. The Strategic Reports examined show essentially disconnected information without a comprehensive and unitary representational framework, this raising serious concerns about the effectiveness of a mandatory intervention – such as that occurred in the UK – with only loose specifications directed to at regulating business model disclosures, and with no clear connections indicated between IC resources and their usage.

In their paper “Intangibles disclosure in the management commentary regulation in Germany and Italy: a semantic approach”, Pierluigi Catalfo (University of Catania) and Inge Wulf (Clausthal University of Technology) address a relevant issue, i.e. the capacity of the current financial reporting disclosure regulatory system to cope with intangibles, also in the perspective of the implementation of the EU Directive No. 95/2014 on “Non-Financial and Diversity Information.” Adopting a fairly new methodological approach, based on semantics, they analyze the information requirements posed in Germany and Italy by the statutory law and accounting standards with regards to the Management Report (or Commentary), which is a relevant section of today's annual company report. Their results show that only a very limited part of intangible assets is today covered by the regulations on the Management Report, and that Germany and Italy follow a quite compatible approach to this reporting document. Yet, the coming implementation of the new EU Directive in the European space might not determine a substantial change in the situation of the two countries, owing to a restrictive interpretation of the concept of “sustainability” utilized in the European legislation.

One of the effects of the big financial crisis initiated on 2008 is the loss of value in company assets, including the intangible ones. In this respect, consolidation goodwill is certainly an asset whose value has been hit by the difficult business and financial conditions. Giuseppe Davide Caruso (University of Catania), Elisa Rita Ferrari (Kore University of Enna) and Vincenzo Pisano (University of Catania) in their work “Earnings management and goodwill impairment: an empirical analysis in the Italian M&A context” aimed to understand whether these variations in goodwill value in the Italian market have been instrumental to company policies of earnings management. For their study, they compare 2006-2013 data, i.e. before and after the beginning of the crisis, from a selected sample of Italian listed companies that went through M&A operations which generated goodwill amounts. Even though their analysis does not provide definite evidence of certain earnings management practices, it highlights very clearly that, after the adoption of IAS/IFRS in Italy in 2005, managers' behavior has deeply changed. The chance to decide if and to what extent to impair goodwill was indeed widely used by managers. They also found income smoothing cases, as well as income maximization and big bath situations, almost equally distributed. The paper shows that every firm pursues its own “strategy” in the area. Given this evidence, the authors conclude with a disquieting question: “Is it still appropriate to rely on financial reports as the main document of corporate communication to stakeholders?”

Even though nowadays intangibles are almost universally considered as the main value drivers for companies, the focus generally is on intangibles relating to human, organizational and relational capitals, basically “forgetting” that a firm enjoys economic benefits also from other forms of intangibles, such as the territorial capital. In their paper “Territorial capital as a company's intangible. Exploratory evidence from ten Italian multinational corporations”, Mariachiara Barzotto, Mario Volpe and Giancarlo Corò (Ca' Foscari University of Venice) make an innovative research effort to offer some provisional supporting elements of the importance of this capital for the management of ten multinational companies and their value creation processes. Their findings – elaborated from data collected from a number of in-depth interviews – suggest that the domestic surrounding environment has provided and still provides the sampled enterprises with intangible assets (in particular, workforce skills, education system and suppliers' network) that positively impact on their performance. This evidence should also be taken into account by policymakers when they have to decide which actions should foster at a territorial basis.

The collection of papers is closed by an intriguing piece by John Dumay (Macquarie University) deploying “A critical reflection on the future of intellectual capital: from reporting to disclosure”. The author addresses an important topic, i.e. what is the possible development scenario for the attractive, but problematic concept of IC. In the last 20 years, this concept has been often used or referred to for innovating corporate reporting and performance measurement. However, while discussing critically this approach by pointing out the wealth creation myth attached to IC, the author provides arguments and evidence to support an alternative view that, in the future, IC will be a notion useful for disclosure rather than reporting. In other words, according to Dumay, IC information is and will be an innovative significant piece of the corporate information system to reveal what “was previously secret or unknown” and to reconsider the stewardship role of companies to society, without concentrating only on wealth creation, but focussing instead on the provision of monetary, utility, social and environmental value.

The same questions after ten years?

After ten editions of the EIASM Workshop series on “Intangibles, Intellectual Capital and Extra-Financial Information” what are the lessons learned from the past and for the future of this research area?

Ten years ago, one of the main questions that was portrayed in the Introduction of the first JIC special issue (Zambon, 2006) was concerning whether a “disciplinary field” of Intangibles and IC could be said to exist. Evident was the need for legitimization of this then relatively new scholarly research area. What about today? Can we still propose the same question? Which have been the developments in the recognition of this field in research and practice? Is it useful or appropriate to talk today about Intangibles as a distinct disciplinary field?

In the 2006 Introduction it was observed that “in order to configure a fully-fledged disciplinary area, there seems necessary to have four fundamental constitutive elements:

1. an object and/or a shared set of problems;

2. a quite distinctive and defined language;

3. specialised outlets and publications; and

4. academic, professional and institutional interest and recognition” (Zambon, 2006, p. 436).

The conclusion of that analysis was “the subject area known as “intangibles and IC” does not seem to give rise at the moment to a fully accomplished disciplinary field […] Notwithstanding a good level of identifiability of the object and the connected issues, the area appears still to be lacking of a universally accepted language and shared definitions, a sufficient number of outlets and publication sites, and a solid and sufficiently general interest and understanding by the various relevant constituencies (managers, accountants, academics, consultants, policy makers and so on)” (Zambon, 2006, p. 438).

Let us examine specifically the evolution of the four above mentioned elements.

In comparison to ten years ago, it can be safely stated that the general interest by various categories of stakeholders has definitively increased. Today, many top managers, professionals, academics from different backgrounds, consultants, policymakers would recognize the role of intangibles at all the levels of the economy, not only within companies.

Accordingly, the object of this hypothetical disciplinary field is more and more shared and distinctively perceived. In particular, in the last ten years economists (e.g. Corrado and Hulten, 2010) and national statisticians have devoted an ever increasing amount of research on the role and weight of intangibles in a macro-economic perspective and for GNP calculation.

Also the interest by journals for this subject area, broadly conceived, has grown through the widening of publication opportunities not only for the strengthening and better reputation of the dedicated outlets (e.g. Journal of Intellectual Capital; International Journal of Learning and Intellectual Capital; VINE; Knowledge Management Research and Practice), but also for a higher level of attention accorded to the intangibles-related topics by generalist journals (e.g. Abacus; Accounting, Auditing, Accountability Journal). In a similar vein, it is easy to observe that, at a closer look, many of the most successful approaches in management studies in the last 10-15 years deal directly or indirectly with intangibles, such as:

• Leadership and Human Resource Management.

• Knowledge Management.

• Resource-based view of the firm (competences, skills, capabilities).

• Quality management.

• Management of Innovation (R&D, patents).

• Transfer pricing of knowledge-related services and assets.

• Networks and alliances.

• Brand and customer value.

• Corporate reputation and image.

• Corporate Social Responsibility and Sustainability.

Progress on definitions and accepted language has instead been much slower, if any. Yet, no generally accepted definitions of intangibles categorization can be said to exist. This is a question, though, that it is likely to be less crucial than ten years ago. Studies and research on intangibles and IC have continued, and indeed expanded not only in quantitative, but also in qualitative terms with the enrichment provided by new dimensions, methodologies and specific topics.

On the other hand, the terminology question seems to have recently registered a renewed interest by international organizations. In particular, the International Integrated Reporting Initiative (IIRC – www.integratedreporting.org), set up in 2010, provides partially new definitions and categorizations of intangibles in the context of its important and widely acknowledged Framework detailing the principles for Integrated Reporting (IIRC, 2013). It is interesting to note that the IIRC in its six capital model has decided to identify for reporting purposes the following categories of intangibles: “human capital,” “social and relational capital,” and “intellectual capital.” Hence, on the one hand it is significant that such a relevant international organization has decided to enter in the arena of definition and classification of intangibles, but on the other hand, it is easy to observe that the classes of intangibles utilized are not perfectly corresponding to those generally employed and recognized in the specialized literature. In fact, while “human capital” is a common notion, the definition of “social and relational capital” puts together two quite different intangible elements that are driven by distinct variables and that are diversely linked to the value creation processes of an organization. But the most remarkable variance in the IIRC definition/classification of intangibles with respect to the extant literature, is clearly that regarding the notion of “intellectual capital.” It is indeed well-known and accepted that, beyond the specific definitions that have been attributed to this concept, IC has something to do with knowledge stock, creation and management. In the definition and conceptualization by IIRC the notion of IC is essentially synonymous with that of organizational capital as appearing in the IC literature of the last 20 years. It is not difficult to foresee that this terminological mismatching may generate in the near future some further conceptual confusion and misunderstanding in the field.

Another important development in the arena of language and definitions of intangibles is the ongoing effort by the World IC/Assets Initiative (WICI – www.wici-global.com) aimed toward the establishment of a “WICI Intangibles Reporting Framework”. In 2016 this work is going to be published for public consultation. Since now, it appears that the three largely adopted categories of intangible capital mentioned above will be employed in their more “traditional” meaning and sense.

Also from the above considerations it can be drawn that the study of intangibles and IC is probably not even today a fully-fledged disciplinary field, but that this subject – or, if one prefers, the scientific research program à la Lakatos which deals with these topics (Zambon, 2006, p. 438) – represents rather a theoretical space for convergence of different disciplines. This area has clearly gone through a consolidation process in the last ten years and has become much more visible and recognized in the scholarly, professional and institutional world. Indeed, the energy, vitality and enthusiasm surrounding the research area of intangibles are still quite remarkable, as witnessed by the long standing Workshop series this special issue celebrates.

However, it should also be observed that the university and professional education on this area can still be largely improved. Only a few specialized master programs are actually devoted to Intangibles/IC management, measurement and reporting (e.g. Hong Kong Polytechnic). Understandably, the diffusion of educational initiatives centered on intangibles could give an important contribution to the further “istitutionalisation” of this subject.

Conclusive remarks

Over ten year time, the study of intangibles and IC has made undeniable advances and become more mature. The area is today much more recognized not only by academics from different disciplinary fields, but also by other important societal stakeholders (professionals, policymakers, managers, etc.).

Indeed, it could be said that just the different perspectives and knowledge aims insisting on this research arena make it stronger and represent an important “development engine” for its future. It is likely in fact that the topic of intangibles will not become – at least in the short term – a “discipline” on its own, but rather it will constitute a “scholarly hub” where researchers from various “established” disciplines can ideally gather together to address issues that are crucial for the growth of macroeconomic systems, industries, firms and local territories.

Notwithstanding that, a set of topics will probably continue to be recognized as “belonging” to this intangibles/IC study area, such the management, measurement, reporting, disclosure, and valuation of these resources and their interactions, which will constitute the “core” of this “scholarly hub.”

In light of the ever expanding relevance of intangibles, it cannot be excluded that also practice and institutions (e.g., IIRC, WICI, European Commission, OECD) will provide a significant “push” in the direction of a more pervasive recognition of the questions linked to the area, thus increasing its systemic importance.

In sum, as clearly emerges from the first ten years of experience of the EIASM Workshops, the multi and inter-disciplinary academic research on intangibles appears to have a quite long-standing and successful future ahead to the extent that it will be able to “capture” the new dimensions and contaminations from the various disciplines converging on the area, as well as to continuously reinterpret itself without posing rigid boundaries, but accepting the challenge of the thought diversity and recombination.

Stefano Zambon - Department of Economics and Management, University of Ferrara, Ferrara, Italy

Notes

1. The colleagues that have co-chaired, and collaborated to the organization of, the various editions of the Workshop are: Professor Philip Vergauwen, University of Maastricht and University of Hasselt (2005-2008); Professor Thomas Günther, TU Dresden (2009); Professor Pierluigi Catalfo, University of Catania (2010); Professor Dorota Dobija, Kozminski University (2011); Professor Bernard Gumb, Grenoble École de Management (2012); Professor Jan Mouritsen and Dr Cristiana Parisi, Copenhagen Business School (2013). After the 2014 Ferrara event the co-chairs are: Professor Sandra Cohen, Athens University of Economics and Business (2015); Professor Irina Ivashkovskaya, Higher School of Economics, Moscow-St Petersburg (2016); and Professor Stefano Marasca, University of Ancona (2017).

2. More detailed information can be found at www.eiasm.org/frontoffice/event_announcement.asp?event_id=1006

3. Indeed, also the paper by Gaia Melloni titled “Intellectual capital disclosure in integrated reporting: an impression management analysis” that has been published in 2015 on Journal of Intellectual Capital (Vol. 16, Issue 3, pp. 661-680), was presented at the 10th EIASM Workshop held in 2014 at the Ferrara University.

References

Corrado, C.A. and Hulten, Ch.R. (2010), “How do you measure a ‘technological revolution'?”, The American Economic Review, Vol. 100 No. 2, pp. 99-104

IIRC (2013), “International <IR> Framework”, International Integrated Reporting Council, London

Zambon, S. (2006), “Introduction: is there a disciplinary field called ‘intangibles and intellectual capital'?”, Journal of Intellectual Capital, Special Issue on the 1st European Institute for Advanced Studies in Management (EIASM) Workshop on “Visualising, Measuring and Managing Intangibles and Intellectual Capital, Vol. 7 No. 4, pp. 433-439