Many Research Questions Remain about Intellectual Capital
This year the 12th Annual International Workshop on ‘Intangibles, Intellectual Capital and Extra-Financial Information’ was held in Russia for the first time. The workshop was organized by the European Institute for Advanced Studies in Management (EIASM) in cooperation with HSE and the University of Ferrara.
The topic of intellectual capital has long been a focus of research in Europe, although in Russia it has only recently begun to gain traction. This year’s workshop provided ample opportunities for both foreign and Russian scholars to discuss the latest trends in intellectual capital and intangibles research, as well as map out possible future projects.
Several keynote speakers spoke with the HSE News Service to share their view on what the key trends in intellectual capital research will be in the near future and how research directions vary from country to country.
Manfred Schwaiger, Dean of Studies of the Munich School of Management, Ludwig-Maximilians-Universität München
Trust in companies has gone down consistently over the last decade. There is one question, one item – ‘Whom do you trust in the long run?’ – and the only category that is rising is peers – people around us. People trust other people, but they have lost trust in CEOs, heads of corporate communications, academics, and, of course, politicians. People’s loss of trust has even accelerated due to the financial crisis in 2007-2008. This is probably the thing that has changed.
What people now are working on are the questions ‘How do we re-establish trust?’ and ‘What can we do to regain that lost trust?’ Research has not come very far in this respect. We know how to measure it, we know how to analyze its effects, and we know all about the effects trust has on stakeholders. But we cannot be sure if we really feel trust. This is the central issue in marketing and management now.
My individual perception is that intellectual capital research does not differ at all because all academics must get published in the same excellent outlets, which means they follow pretty much the same style. I cannot say, for example, that in the US they do this and in Germany we do that. We do pretty much the same thing and hope to contribute to this sphere. I cannot see any country-specific differences.
John Dumay, Macquarie University, Sydney
We published a paper in 2012 that talked about what we call the ‘practice turn’ or ‘third stage’ of intellectual capital research, so we're getting more practical. I think we've started a real trend of looking at how organizations can internally manage their resources for better performance.
We've introduced into intellectual capital the whole concept of value. When Thomas Stewart started talking about it in the 1990s it was always about economic value. Nowadays, organizations must contribute more than just economic value for shareholders. They must contribute to the environment, and they must contribute to society, and they must contribute to the well-being of everything. So there are different types of value. There is economic value and utility value, but there is also the social and environmental value that organizations create. We have to be cognizant of all that takes place, and I think that's the other area where intellectual capital is going into.
There is what we call four-stage research where we're looking at contributions to local areas, cities towns, regions, and national economies, and even international economies - the global sphere. You have to look at the bigger picture. Too often we're looking at the trees and not at the forest. We've got to look at both perspectives. We grow healthy trees to have healthy forests, and we've got to have healthy forests to have healthy trees. There are certain differences in how intellectual capital is treated in various countries. For instance, if we take the concept of corporate governance and disclosure, in Russia that is an absolute infancy compared to where it is internationally. This is because we have completely different economic constructs in different countries. Another example is the EU directive on non-financial reporting, which will soon become law in many countries. The biggest opposition to the law came from Germany. But then, if you look at how the German economy is and how they raise capital for the companies, they're very much a closed shop. The capital comes from completely different sources. If those providers of capital want information they don't need an integrated report or an annual report. They just ask for it because they own the company. They have access to information. So the whole concept of corporate governance in the British or Anglo-American kind of model for corporate governance is totally inapplicable to the German context. And yet what we're trying to do internationally, with globalization, is not harmonization anymore, but rather convergence. We're trying to make a global one-size-fits-all standard and yet we still have completely individual contexts - economic and social contexts, while we try to live by a standard.
Mario Abela Gather, London, and Queen Mary, University of London (former Research Director, EFRAG)
There are trends that show an impact of intellectual capital and all the things that come with integrated reporting are having an impact on the companies’ valuations. It also influences the price of companies’ stock. I think that is very powerful because otherwise it’s an interesting academic idea. From a practitioner point of view, the question is ‘So what? Who cares?’
Financial reporting has not coped well with the whole idea of intellectual capital. Integrated reporting is trying to bring intellectual capital to prominence, trying to make it an important part of what companies report because it’s an important part of their business models. We know that intellectual capital has a massive impact on the values of companies. You take companies like Apple or Facebook, and they are all basically intellectual capital companies. There isn’t much physical capital in those companies. It’s a very relevant topic, and I think there are still many research questions still to be answered.