TitleThe purposeful utilization of intellectual capital and its implications for management accounting
Publication Type04. Conference Papers
Year of Publication2012
AuthorsFritzsche, A.
Conference NameThe 4th European conference on intellectual capital

Intellectual capital has the reputation to be immeasurable. The real problem, however, is not that there is no way to measure intellectual capital, but that there are too many different ways to do it. The results of the measurement are often quite diverse and often contradicting. The statement that intellectual capital is immeasurable is one possible conclusion from this phenomenon, if it is assumed that all different approaches measure the same thing. If they do not, the problem is not the measurement, but the notion of intellectual capital itself. Based on theoretical reflections about industrial operation and technology, it is possible to distinguish two different roles of capital in economic activity. On the one hand, capital is a necessary prerequisite to perform a given operation. On the other hand, it enables a company to engage in new activities in the future. Both roles have to be taken into account in balancing the value of a company. Different approaches to intellectual capital measurement, however, consider the role of intellectual capital as a prerequisite and as a potential unequally. In particular, those that focus on market performance give preference to its role as a potential, while those that focus on expenditures tend to favor its role as a prerequisite. Case studies from managerial practice show that business strategies usually take precedence over decision making about intellectual capital. Human talent management is subject to explicit job descriptions, the creation of supply networks in driven by practical business requirements, delivery structures are developed according to certain models of co-operation. Although long-term strategic considerations take place, they only play a secondary role. Management accounting usually disregards business strategies in the assessment of intellectual capital. Instead, it considers intellectual capital as something with value of its own, making it impossible to gain insight into the difference between its roles as a prerequisite relatively with respect to the business strategies it serves. Recent efforts to introduce a relative notion of intellectual capital have been made in patent management. Instead of trying to evaluate how much a patent is worth on its own, these efforts focus on different ways how patents and combinations of patents can serve strategic purposes in specific competitive moves. On this basis, it becomes possible to evaluate a) if a company has the necessary patents in its possession to realize its strategy and b) if the strategy itself has been successful or not. A similar concept can be applied to human resources, information technology etc. as well. For the workforce of a company, for example, it can be measured a) to what extent a company has the necessary skills at its command to pursue its business and b) if these business processes themselves have turned out to be successful. Different ways of putting these measures together can explain the different notions of intellectual capital we know today.