Why Measure Knowledge Assets?

Organisations are struggling to understand what benefits can be realised through the measurement of their knoweldge assets even though many performance managers understand the importance of establishing causality between knowledge assets and business performance. This chapter discusses whether companies are truly realising benefits against the cost of spending time in creating, collecting and analysing knowledge asset data and if so, do those same companies understand what specific measures afford the greatest insight into improving their organisational efficiency and effectiveness.

ORCI

As more and more organizations have to compete in turbulently changing environments, the ability for continuous renewal, learning and innovation has become a key driver of organizational success. However, the existing research on IC has failed to create scientifically validated methods for assessing organizations’ dynamic capabilities or “renewal capital”. This paper presents the ORCI (Organizational Renewal Capability Inventory) method for measuring dynamic capabilities and illustrates how the method can be used for developing organizational ability for continuous learning and innovation.

Intangible Assets

This chapter develops an economic approach to estimating the value of intangible assets that are not recorded on the firm’s balance sheet. The authors demonstrate that their approach provides economically meaningful and useful estimates for the value of intangible assets. Their results indicate that investments in R&D, advertising, brands, and information technology are important drivers of intangible capital, and in turn corporate value. Their approach is shown to be useful to investors seeking information on future performance of intangible-intensive firms. They document evidence that the intangibles-based measures can effectively distinguish between overvalued and undervalued stocks. They believe the intangibles measures described here can add an essential, and hitherto missing, valuation tool for managers and investors concerned with intangible assets.

Ethos as Enablers of Organisational Knowledge Creation

This chapter considers knowledge creation in relation to improvements on the production line in the manufacturing department of Nissan Motor Company and aims to clarify the substance that enables such knowledge creation. For that purpose, firstly, embodied knowledge observed in the actions of organisational members who enable knowledge creation will be clarified. By adopting an approach that adds a first, second, and third-person’s viewpoint to the theory of knowledge creation, this research will attempt to define enablers of knowledge creation. Embodied knowledge, observed in the actions of organisational members who enable knowledge creation, is the continued practice of ethos (in Greek) founded in ethics and reasoning. Ethos is knowledge (intangible) assets for knowledge creating companies. Substantiated analysis classifies ethos into three categories: the individual, team and organisation. This indicates the precise actions of the organisational members in each category during the knowledge creation process and it is easier to commit further to knowledge creation activities.

Knowledge Assets and Value Creation Dynamics

Today’s business landscape is increasingly complex and turbulent, forcing firms to develop their capabilities in order to be able to face macro-forces such as globalization, hyper-competition, reduced product cycles and continuous innovation. In such a competitive scenario, firms have to identify and manage the crucial resources and sources for competitive advantage. The management literature has identified knowledge assets as critical drivers of performance and value creation. However, the understanding of how these strategic resources contribute to shape the organisational value creation dynamics still remains a concern to be fully disclosed. Especially the dynamic nature of knowledge assets and how they contribute to firm performance need to be clarified. This chapter, on the basis of a systematic literature review, aims to define a theoretical framework to explain how knowledge asset define the pillars to shape organisational capabilities and provide firms with a sustainable competitive advantage and long-term superior performance.

The Problems and Challenges of Researching Intellectual Capital

The chapter presents an overview of the present state of thinking and research around intellectual capital (IC). I explore IC’s potential as a concept and/or a path towards improved organizational measurement and performance. I distinguish theorizing IC as an alternative form of capital that can be summed with tangible capital (TC) from thinking of IC as that which mediates the economic value of TC. This suggests two quite different IC-engaging theories of the firm. I conclude that IC is simply a metaphor for our experience of sometimes dealing successfully with Knightian uncertainty. If this view can be sustained it follows that there is no way of measuring IC and our community’s principal project - to correct our accounting methods’ failure to do this - is deeply misguided.

IC Management

The objective of this chapter is to understand why companies do not apply models that are commonly known in the IC literature i.e. to explain the gap between the theory and practice. The general research objective is divided into four research questions taking different perspectives on the same phenomenon: the importance of IC and its management, the applicability of IC management models, the suitability of typical general management approaches for IC management and factors affecting the application of IC management models. The research questions are studied adopting diverse research methods. The empirical material includes interviews, a large amount of quantitative data from the financial statements of companies, and case studies in which action research was used.

How Knowledge Assets are Transformed into Value

This chapter concentrates on exploring the knowledge asset value creation in the context of a specific type of business activity, services, and a specific value creation aspect of productivity. The paper utilizes knowledge flows as a novel conceptual tool to analyze and better understand the knowledge asset value creation dynamics. The chapter clarifies the knowledge flows of service production and proposes that the recognition and management of these flows facilitate productivity improvement. This argument is based on the assumption that by removing the possible obstacles or bottlenecks of knowledge transfer, organizations can increase both their internal efficiency and through a better customer satisfaction also their external productivity.

A Knowledge Assets Mapping Methodology to View Organizational Knowledge-Based Value Creation Dynamics

Nowadays knowledge assets are widely recognized as organizational resources that play a pivotal role in company’s value creation. However the mechanisms through which these assets take part in value creation are not yet well understood. This critical issue must be faced to enable managers to make better informed decisions with regard to knowledge assets allocation and management. This chapter describes a methodology aimed both to identify a company’s knowledge assets that significantly contribute to create value and analyze how these assets, through cause-and-effect mechanisms, activate value creation dynamics. The proposed methodology draws upon cognitive mapping principles and gathers insights from the strategic management literature. Moreover, it is based on the application of multicriteria decision support methods. The chapter presents three illustrative case examples that show how the proposed methodology can be applied in practice.

Managing and Measuring Knowledge Assets Dynamics for Business Value Creation in Organisations

The ability of an organisation to govern knowledge assets dynamics lies at the core of an organisation’s value creation capacity. A key challenge both for researchers and for practitioners is to understand how to manage and measure knowledge assets dynamics. In this chapter three fundamental management processes affecting the knowledge-based strategies for business value creation are introduced. They provide the conceptual background to understand how to measure and manage knowledge assets within organisations. The three processes are ‘identification and measurement of knowledge assets’, ‘mapping knowledge assets’ and ‘managing knowledge assets flows’. The ability of an organisation to gain sustainable competitive advantages is related to the capacity of mastering these processes. Each process is analysed introducing the possible frameworks which can inspire both scholars investigating the microfoundations of organisational knowledge dynamics, and for practitioners looking for approaches for leveraging knowledge assets to drive the enhancement of organisational value creation.