Measurement and Management of learning and growth related Intellectual Capital

Abstract

Due to the increasing pressure of global competition, companies must look at new value drivers of performance beyond the tangible assets, such as intellectual assets. Companies must measure and manage these intellectual assets in order to use them as value drivers of performance. There is a significant gap between development of intellectual capital models and the application of them in practice, therefore they need to be studied further. Companies state that the biggest challenge in measuring and managing intellectual capital emerges in the fact that there are no common guidelines on how to conduct it. The study examines methods that can be used to measure and manage learning and growth related intellectual capital, by focusing on the strategy map by Kaplan and Norton. The strategy map suggests companies to focus on the identification and aligning the valuable intellectual assets to the strategy before measuring the readiness of assets and managing them.

This study follows a qualitative research approach, collecting the empirical data by five semi-structured interviews of Finland based companies. The objective is to examine how the companies measure and manage their learning and growth related intellectual capital and if they utilize academically established frameworks. Qualitative methods are used when analyzing the measurement methods of the interviewed companies.

The results conclude that the majority of interviewed companies perceive that there are no common guidelines to measuring intellectual capital and therefore they wish for further research and development of measurement frameworks to guide them in the future. The smallest companies perceive that there are no known frameworks guiding them through the process and they see measuring as an activity that hinders their intellectual capital such as innovation. The bigger companies that use support from frameworks do not perceive the measurement and management process as challenging, but they acknowledge the challenges in measuring intellectual capital due to its unquantifiable nature. The biggest challenge for all companies is the identification of what should be measured and with what measures. Companies should utilize frameworks such as the strategy map to assist them in identifying the strategically important intellectual assets and aligning them to the strategy to understand the full chain value creation. After the identification and alignment of assets companies can more efficiently investigate what measures can be used to answer the questions that the company wants to answer by measuring.