UNIVERSITY OF CRAIOVA FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATION Doctoral School of Economic Sciences Domain Accounting
Cristina - Raluca Gh. POPESCU
INTELLECTUAL CAPITAL ASSESSMENT AND ITS INFLUENCE ON ECONOMIC PERFORMANCES
Doctoral Thesis Summary
PhD. Supervisor Professor PhD. Habil. Marian Ilie I. SIMINICĂ
Craiova 2021 Contents of the Doctoral Thesis Summary
CONTENTS OF THE DOCTORAL THESIS SUMMARY ...... 2
CONTENTS OF THE DOCTORAL THESIS ...... 3
ARGUMENTS AND KEYWORDS ...... 5
INTRODUCTION (FOREWORD) ...... 6
SUMMARY PRESENTATION OF THE CHAPTERS OF THE DOCTORAL THESIS ...... 18
CONCLUSIONS, OWN CONTRIBUTIONS, LIMITS AND PERSPECTIVES OF THE RESEARCH ...... 22
SELECTIVE BIBLIOGRAPHY ...... 27
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CONTENTS OF THE DOCTORAL THESIS
SUMMARY (ABSTRACT) AND KEY-WORDS 2 CONTENTS / TABLE OF CONTENTS 3 INDEX OF TABLES 5 INDEX OF GRAPHIC REPRESENTATIONS (FIGURES) 9 INTRODUCTION (FOREWORD) 12 CHAPTER 1. General and Specific Aspects Regarding Performance and 17 Organizations’ Performance Management 1.1. Performance - an overview 17 1.2. Performance in the specialized literature 24 1.3. Performance and business management 30 1.4. Performance management and measurement 32 1.5. Evolution of the value-based management concept 35 1.6. Influence of management decisions in increasing the wealth of shareholders 46 1.7. Interdependence between organizational management and intellectual capital 50 CHAPTER 2. Intellectual Capital and its Role in the Modern Economy 58 2.1. Intangible assets in terms of accounting approaches 58 2.2. The importance of intellectual capital 68 2.3. Characteristics and structure of intellectual capital 77 2.4. From intellectual property to intellectual capital 80 2.5. Intellectual capital in terms of the stages taken 97 2.5.1. First stage: establishing “what is intellectual capital” 99 2.5.2. Stage two: development of guidelines, standards, indices in measuring, 100 managing and reporting intellectual capital 2.5.3. Stage three: critique of intellectual capital approaches from 1990-2012 102 2.5.4. Stage four: the need for integrated intellectual capital reporting 106 2.5.5. Stage 5: “developing research on intellectual capital without limits - a 109 worthwhile endeavor” CHAPTER 3. Methods for Measuring Intellectual Capital and Performance at the 116 Micro and Macro Economic Level 3.1. Direct, financial, methods of estimating intellectual capital - with identification 121 and evaluation on organizational components 3.1.1. Brooking’s technological model 121 3.1.2. Inclusive evaluation methodology 122 3.2. Stock market capitalization methods - with organizational identification and 124 evaluation of intellectual capital 3.2.1. Coefficient (rate) Q of J. Tobin 126 3.2.2. Invisible balance sheet 127 3.3. Financial management methods and tools based on return on assets - with the 128 identification and evaluation of intellectual capital at the organizational level 3.3.1. Economic added value (EVA™) - management tool 129 3.3.2. Market added value - management tool 134 3.3.3. VAIC model™ of the value-added intelligence coeficient (IQ) 136 3.3.4. Capitalization of the profit generated by knowledge 138 3.3.5. Total intangible value - management tool 141 3.4. Scorecard estimation methods, non-financial - with identification and 145 evaluation on organizational components of intellectual capital 3.4.1. Balanced Scorecard 145 3.4.2. Skandia Navigator 150 3.4.3. Intangible asset monitor 156 3.4.4. Intellectual capital method - index (IC indexTM) 158
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3.5. Accounting regulations in establishing and using performance indicators 161 3.6. Rules in establishing and using performance indicators 165 3.7. Analysis and financial diagnosis of performance based on intermediate 166 management balances 3.8. Performance indicators 169 3.8.1. Relevant indicators in the activity of measuring the results of an entity 169 3.8.2. Relevant indicators in the activity of measuring the profitability of an entity 172 3.8.3. Relevant indicators in the activity of analyzing the profitability and 176 performance of an entity 3.8.5. Relevant indicators in the activity of analyzing results and performance at 179 macroeconomic level 3.9. Study on intellectual capital and performance indicators at the microeconomic 181 level CHAPTER 4. Empirical Research on the Impact of the Main Components of 187 Intellectual Capital on the Economic Performances at the European Union level 4.1. Research on the impact of the main components of intellectual capital on 190 synthetic performance in the European Union 4.1.1. Purpose of the research 190 4.1.2. Research objectives 191 4.1.3. Research methodology 192 4.2. Analyzes and results on determining the impact of intellectual capital 197 components on synthetic performance 4.2.1. O1. Analysis of the relationship between the dimensions that characterize the 197 components of human capital and the gross domestic product at EU level 4.2.2. O2. Analysis of the relationship between the dimensions that characterize the 218 components of structural capital and the gross domestic product at EU level 4.2.3. O3. Analysis of the relationship between the dimensions that characterize the 232 components of relational capital and the gross domestic product at EU level 4.2.4. O4. Analysis of the relationship between the dimensions that characterize the 243 components of innovative capital and the gross domestic product at EU level 4.3. Partial conclusions 268 4.3.1. O1. Analysis of the relationship between the dimensions that characterize the 269 components of human capital and the gross domestic product at EU level 4.3.2. O2. Analysis of the relationship between the dimensions that characterize the 270 components of structural capital and the gross domestic product at EU level 4.3.3. O3. Analysis of the relationship between the dimensions that characterize the 271 components of relational capital and the gross domestic product at EU level 4.3.4. O4. Analysis of the relationship between the dimensions that characterize the 272 components of innovative capital and the gross domestic product at EU level Final conclusions, personal contributions and research perspectives 276 1. Final conclusions 276 2. Contributions and published articles 284 3. Perspectives for further research 285 BIBLIOGRAPHY 286 Books (classic book or e-book) 286 Article published in a classic journal or on-line 290 Doctoral theses 300 International legal regulations 300 National legal regulations 300 Website 301 Statistical reports 302
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Arguments and Keywords
In the modern, knowledge-based economy, the abilities of mastering the methods and tools for assessing intellectual capital and capitalizing on its influence on economic performance are essential. In addition, the key issues of performance are directly related to those of its measurement, having to respond to the challenges of a new economy, durable and sustainable, built through alliances not only locally, regionally, nationally, but even internationally, capable, only from this perspective, to be able to approach the performance and the necessary, but sinuous and difficult road, to excellence. In order to assess intellectual capital and determine its influence on economic performance, it is considered extremely important not only a microeconomic analysis, but also a macroeconomic analysis, thus being able to capitalize on the elements specific to the general field: “Economic Sciences and Business Administration”, with emphasis on the specific field: “Accounting”. Thus, at the microeconomic level, the analysis undertaken focused on the link between intellectual capital and the economic performance of S.N. Nuclearelectrica S.A. – a company belonging to the energy industry, listed on the Bucharest Stock Exchange (BVB), and was carried out based on available indicators or calculated based on data between the years 2013-2020, published on the BVB website or, as the case may be, on the company’s website. At the same time, at the macroeconomic level, the analysis aimed at conducting a vast empirical research characterized by originality and novelty, on the impact of the main components of intellectual capital on economic performance in the European Union.
Keywords Accounting Intangible Assets Analysis of Variance Intellectual Capital («ANOVA») Business Management Intellectual Property Measuring the Profitability of an Company Performance Entity Company Wealth Measuring the Results of an Entity Comparative Advantage Organizational Effectiveness Competitive Advantage Performance Indicators Competitiveness Performance Measurement Contemporary Business Qualitative Approach Environment Correlation Analysis Quantitative Approach Correlational Analysis Relational Capital Financial-Accounting Analysis Simple Regression Analysis And Diagnosis Fisher Test SPSS Statistical Program Global Performance at European Strathclyde Scale (University of Union (EU) Level Strathclyde) Gross Domestic Product (Gdp) Structural Capital Human Capital Sustainable Development Innovative Capital Tangible Assets
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Introduction (Foreword)
I thank my doctoral supervisor, Professor PhD. Habil. Marian Ilie I. Siminică, from the Doctoral School of Economic Sciences, the Domain: “Accounting”, the Faculty of Economics and Business Administration, University of Craiova, for accepting me for guidance, thus having the opportunity to develop and research the Doctoral Thesis entitled “Intellectual Capital Assessment and its Influence on Economic Performances”, with a topic that, on the one hand, I had considered, from the very beginning, highly interesting and also, on the other hand, I had discovered – after the concrete approach through the studies and research that I have focused on, not only extremely vast and controversial, but also extremely appealing. I will further present, in a concise manner, the details of the Doctoral Thesis, the steps taken in the research process and the reason why I made certain decisions regarding both the topic and the direction of the study. First of all, for this topic I started the research with the study of the specialized works focused on the intellectual capital. I found that the issue of intellectual capital had created a lot of optimism and generated many expectations, especially from the moment when its valences were intuited, attributing to it many of the successful results, starting to occupy a central place of discussions and the concerns of the first promoters, some involved in business, others rather oriented towards the analysis of the differences that delimited the level of organizations with a similar field of activity. Their enthusiasm had captured the attention of a significant number of researchers, specialists and practitioners who become, in a short time, pioneers in the field of intellectual capital. Unfortunately, after deepening the study of the specialized works focused on intellectual capital, I found that even the most persevering and enthusiastic of them – in the mirage of study and analysis of intellectual capital, were little by little becoming increasingly skeptical about reaching a consensus on the definition, analysis and identification of instruments and methods for measuring it, which should be generalizable and unanimously accepted. In this sense, for example, we can refer to research belonging to specialists such as Sveiby, Robson, Smith, Roos, and so on, and so forth. Moreover, the peak of expectations was the one in which Leif Edvinsson was appointed, in 1991, intellectual capital (IC) manager of Skandia – the first position specially established for the identification and quantification of IC, based on the recognition of its particularly important role, starting from the premise that, by determining its defining but also measurable elements, it will be possible, with sufficient ease, to differentiate organizations and classify their position on the marketplace. The reality after this key moment triggered only a gradual decrease of the initial enthusiasm, reaching even, at the present moment, a certain degree of skepticism which is, in fact, as visible as possible. The first obstacle encountered by the intellectual capital specialists was related to accounting, which does not recognize the achievements of research and development of these invisible assets within their own entities, these results being recognized only when it is transferred or reorganized. „In today’s economy, the predominant activity is no longer the production of goods, but the production of knowledge, which is then integrated into goods and services. This is the starting point of any other economic analysis. […] As the value of products / services was once determined by the amount of raw materials and physical labor, today it is mainly determined by the content of knowledge embedded in goods / services” (Pulic, A., 2008; p. 4). As such, there has been great pressure on accounting to find regulations, both appropriate and sustainable, to recognize and evaluate intellectual capital. It is difficult to find reasonable solutions, given the existence of centuries-old principles and rules, which is why accounting has not been able to yield to these multiple pressures. In this context, researchers
6 specialized in intellectual capital continued their studies trying to define their own models and rules for calculating the intellectual capital. Thus, a series of models were formulated and presented, from the simplest ones, to the most complicated ones, regarding the evaluation of intellectual capital. Of course, as it turned out, this provocative approach was accompanied by a lot of enthusiasm at the beginning and a lot of skepticism at the end, one of the explanations being closely related to the fact that these models – created by very passionate specialists and totally dedicated to intellectual capital, found and proposed models according to the specifics of the activity and the organizational system of which the entities subject to analysis were part, losing sight of the need for a generalizable approach. And here we can list: Bontis, Brooking, Deming, Dragonetti, Drucker, Dumay, Edvinsson, Galbraith, Guthrie, Hiroyuki Itami, Kaplan, Lev, Marr, Nonaka, Norton, Rappaport, Roos & Roos, Foam, Stewart, Sveiby, Takeuchi, and so on, and so forth. Those models and methods ranged from the simplest to the most complicated, leading to the involvement of dozens of indicators in those measurements (for example, Skandia Navigator has over 160 indicators), not all applicable in entities with different profiles or much more complex activity. The difficulty and inconsistency of the use of those intellectual capital valuation models proposed by intellectual capital specialists was noticed when they were applied in practice to other companies by other specialists, less dedicated and less comparatively involved with their initiators. The findings did not meet their own expectations at all, as was clear from the actual studies presented in the literature, although, at least intuitively, they were considered to have the potential to generate concrete results. Thus, it was highlighted that the respective models and the effects they considered to delimit the role of intellectual capital, were not verifiable on the organizational structure of the respective entities, or on the applied field of activity. The delicate moment practically caused an additional minus to the initial enthusiasm. „Being efficient is not a great philosophy or art, but a very practical and applicable skill. Moreover, efficiency can be achieved and achieved by everyone, whether it is business managers or individuals in private life. [...] What is the main issue of efficiency today? The answer is that we face a similar situation when it comes to intellectual work, just as we do with manual labor before Taylor. The measurement of intellectual work still involves “general rules”, which means that everyone does it «in their own way»” (Pulic, A., 2008; p. 3). Given that, despite the pressure on accounting, it has failed to find a plausible mechanism for quantifying intellectual capital without identifying a viable solution, I have struggled to identify what impact intellectual capital has had on other professions, channeling my attention, from this point of view, on the ways of approaching other professionals, but from areas whose impact can be appreciated as similar. Thus, I asked myself how the specialists in the field of taxation treated this aspect, finding that even at this level, the hopes and enthusiasm with which the aspects related to intellectual capital were approached from a fiscal point of view, were not lacking. In this context, Germany and the United Kingdom propose and define the NEXUS method, which not only tried but also implemented, in the most correct way, a rule to recognize the results of research from the point of view of tax havens. Studying this approach from a fiscal point of view, I was extremely confident at first, being convinced that I found the key through which I could present and quantify the performance of intellectual capital. After two decades of ambiguity regarding the assessment of intellectual capital, firms, through their tax planning specialists (sometimes even aggressive), have found a solution, not very easy to apply, but as it has proven over time, difficult to stop. This is where the big companies prevailed, which resorted to some legal and seemingly harmless methods for the administrative units they belonged to: they set up a subsidiary specializing in intangible assets in a tax haven: usually in know-how or other non-quantifiable elements of intellectual capital. The greater the controversies regarding intellectual capital, the more the tax planning specialists took advantage, successively capitalizing on this weakness of the financial- 7 accounting system of valuation of IC, continuing the procedure to create through such subsidiaries, new such entities, also in tax havens, famous for the benefits of tax facilities granted mainly to intangible assets in general and for intellectual capital in particular, in the sense that, according to the laws to which they referred, the new entities were not required to pay taxes and fees for those activities. It is practically the well-known transfer of profit in such tax havens. Meanwhile, the Organization for Economic Co-operation and Development (OECD), the G7, the G20 and other non-member organizations (specifically, more than 132 countries actively participating through the BEPS plan1) have been concerned to reduce this transfer of profit in those tax havens that generally targeted intangible assets and, implicitly, valuable intellectual capital. The unprecedented stubbornness of the representatives of these bodies would seem to be currently being found in a solution, which we are trying to present in this context. This is one of the most anticipated and controversial topics on the list for the 47th G7 Summit, scheduled for 11-13 June 2021, in Carbis Bay, Cornwall, United Kingdom (while the United Kingdom holds the presidency of the G7), it is represented by the single taxation of multinationals and the introduction for this purpose of a profit tax for them of at least 15%2. In fact, in a press release issued on the 5th of June 2021, it was already transmitted, through Rishi Sunak – United Kingdom Minister of Finance, the unanimous decision of the G7 Group (consisting of the United States of America, Canada, France, Germany, Italy, Japan, the United Kingdom) on the single taxation of multinationals and the successful conclusion of a framework agreement at the end of the plenary session on the second day of the meeting of G7 foreign ministers in Lancaster House, in London, as follows: “It is crucial that multinationals pay the right taxes in the right places”3. Moreover, in the same context, it was stated that: “We will coordinate in such a way that the application of the new international tax rules is done in parallel with the elimination of all taxes on digital services and other similar measures that have recently been introduced for all companies”4. Thus, it should be noted that this agreement aims to prevent about 100 large corporations, including Google, Apple and Amazon, to move their profits, which are notable, in tax havens such as Bermuda or Cayman Islands or low-tax jurisdictions, such as Ireland. The objective of the agreement is, according to Biziday.ro (2021): “to tax multinationals in the countries where they make a profit, not only where they are registered. Among the most important companies that are targeted by this measure are Amazon, Google, Facebook. In addition to abolishing tax havens, the measure also aims to get governments to receive billions of dollars to cover their pandemic losses. At the same time, experts say that this decision can end a “competition” between countries to attract large companies with the help of low taxes”5. In addition, even though there has so far been no agreement on single taxation of multinationals, this has not meant that countries could not establish their own legal framework in this regard (Inman, Ph., 2021). From this point of view, for example, both the United Kingdom and France have imposed their own digital taxes for the past two years, thus setting out plans to impose a tax on digital services on the income of online companies in including Google and Facebook (Hern, Al., 2020). These measures are particularly aimed at the well-known key method used without exception by digital technology giants, by which it “outsmarts” legislation, managing
1 See, in this matter, the details on “Base Erosion and Profit Shifting” (acronym: BEPS) as presented by the Organization for Economic Co-operation and Development (acronym: OECD), available at: https://www.oecd.org/tax/beps/ and at: https://www.oecd.org/tax/beps/about/. 2 https://www.euractiv.com/section/economy-jobs/news/report-g7-is-close-to-agreement-on-taxation-of-worlds- largest-companies/. 3 https://www.biziday.ro/tarile-din-cadrul-g7-au-ajuns-la-un-acord-pentru-taxarea-unitara-a-multinationalelor- cu-cel-putin-15-din-impozitul-pe-profit-la-nivel-global-masura-urmareste-printre-altele-desfiintarea- paradisuri/?source=biziday. 4
6 https://en.wikipedia.org/wiki/2021_G20_Rome_summit. 9 perspective of timely reporting of the evolution of IC is also brought by the possibility to assess only a sequence of circumstances in which certain events took place, analyzing in addition both the duration and the gap between the moment of identifying the problem and the moment of solving it: between the initial and the later stage. Such a transition to a new phase in the study of IC, looks at and treats in a much more complete way the connections and interactions between human, social, relational, cultural and environmental capital, which unquestionably merges discreetly with knowledge, experience and intellectual property (intellectual ownership). The moment is crucial, say the specialists, because only in this way can IC be used, on a harmonious background of relationships in all aspects, to create that type of economic value, effective and efficient, complex integrated from a social and environmental point of view, on which we could analyze, research and manage as a unitary whole, for the benefit of all parties involved. In the fifth phase identified during the stages of IC analysis, it is no longer considered justified or very important to find an answer to the question expressly mentioned by Dumay et al. (2018, p. 34): “How much is IC worth for investors, customers, society and the environment? ”, an answer until recently sought with perseverance and hope by ambitious researchers and practitioners. It is essential to establish the extent to which “IC management is a worthwhile endeavor”. The social purpose of IC, developed in a protected and friendly environment in a more generous sense, seems to be the quintessence of the new period. Wealth no longer has the same connotation if it is broken by the social and environmental effects it affects during the obtaining processes. No matter how evolving the stage of development of IC research, the only thing that remains important is the extent to which the effort is justified by the harmony between the effects on a set of factors that no one should neglect. Good IC management requires an extremely responsible managerial act. As I have already pointed out, these approaches are not seen and accepted unanimously, part of the academic world still remaining rather anchored in the reality of the first two stages of the IC study, from a perspective that we could categorize as individualistic, by not accepting responsibility for reporting IC as a projection of a valuable component of the ecosystem. The article by Kianto, Ritala, Vanhala and Hussinki (2018) completes the topic, arguing that there is no need to give up the previous approaches in measuring IC. The authors appreciate that we are in an important moment, marked by a visible intensification of the need for a much more complete knowledge not only of the way the work is carried out, but also of the adjacent processes aimed at organizing it in order to create clearly superior values, which motivates and supports at a new, much more responsible level, the measurement of intellectual capital on the basis of more solid foundations that allow a better understanding first of all of “what is knowledge” in general, in order to delimit that knowledge on which IC creates within organizations and beyond. In a knowledge-based perspective, Kianto, Ritala, Vanhala and Hussinki (2018) argue that “four critical themes” should rather be “recognized in the measurement of IC”: “multidimensionality, generally doubled action and human action, contextually and temporality and dynamics”. Analyzing the measurability of IC based on these four benchmarks, but in light of the criticisms brought by researchers and professionals in the 2009 special edition on “Critical Perspectives on Accounting” (acronym: CPA) the authors build and propose a set of criteria and applications for a more accurate measurement of IC, starting primarily from “knowledge” and “characteristics of knowledge”, reviewing the challenges of measurements, summarized in a table of the four critical topics (themes) that deserve careful study and which we summarize below. Multidimensionality refers to the difficulty with which single-element IC indicators do not have the ability to “capture the multilevel nature of knowledge” that is actually multidimensional. The actual action involves: the existence and involvement of the human 10 factor, managed so as to promote the dissemination of valuable knowledge within the organization, combating the tendency to hide them, highlighting the achievement of performance based on the results generated by their use, promoting benefits without resorting to actions that underestimate their importance. The context in which the process of “tacit” dissemination of knowledge takes place at the level of the entire team is also very useful, this approach being considered a strategic one, all the more valuable and efficient as that knowledge meets the requirements of complementarity and interdependence. From here, the influential role of context on knowledge becomes obvious. The fact that everything around us is in a perpetual dynamic, conditioned by time, is obviously a reality that explains why not only the “value” but also the very “substance of knowledge” changes over time, taking different forms that contribute to substantially at permanent stages of adjustment and adaptability. Because everything changes over time, both the type of knowledge and that of knowledge change. The present remains only a form of reference for what will unfold in the future precisely because knowledge is also dynamic in accordance with its temporal nature. The “time” relationship, which inevitably also implies evolution (Meritum, 2002), is also identified in the MERITUM project, which emphasizes the existence of two points of view on CI: the static one, with reference to the embedded material part, possibly measurable and the dynamic one, difficult to quantify, both expressing CI in relation to time. Thus, a multidimensional (multifaceted, complex, manifold) measurement of IC becomes much more edifying because it allows the transfer from a limited perspective, insufficiently relevant, to a much more complex perspective, capturing closer to reality the caliber or complex measure of the whole body of knowledge that CI it encompasses them. The multidimensional approach of our research7 has its origins in the finding that “controversies regarding the recognition and measurement of intellectual capital have led, on the one hand, to the development of possible solutions and systems for calculating and disclosing performance generated or stimulated by different components of IC , on the other hand, they were also the main premises that favored the use of intangible assets in general and intellectual property in particular in the transfer of results and the reduction of the taxable base by transferring income to tax havens or jurisdictions that do not tax these categories of assets. Against these aggressive methods of fiscal planning, the countries reacted unitarily and coordinated through the BEPS plan (Base Erosion and Profit Shifting Project)”. Through our study, we analyzed whether the measures and solutions proposed by BEPS Action 5 end the disputes regarding the recognition and evaluation of IC under the conditions of the ““OECD / G20 Inclusive Cooperation Framework” with over 130 members and 14 observers in December 2019, of which over 70% of countries and jurisdictions are non-OECD and non-G20, belonging to all geographical regions, accounting for over 95% of global gross domestic product. They work together on an equal footing, both for the implementation of the BEPS measures agreed in 2015 and for the design of new international tax rules”. One of the conclusions of our study notes that “… although the modified NEXUS method used expenditures as representation for research evaluation and more, it extended this principle of involvement to revenues after the creation and operation of intellectual property, it did not provide a reasonable solution for CI evaluation. . …. Moreover, the eligible costs used in the NEXUS approach were not quantified on the structural elements of intellectual property or intellectual capital, as such allowed the partial verification of hypothesis H3, but without ending the disputes” (Popescu, C.R.G., 2020).
7 Sustainability Assessment: „Does the OECD/G20 Inclusive Framework for BEPS (Base Erosion and Profit Shifting Project) Put an End to Disputes Over The Recognition and Measurement of Intellectual Capital?” - Popescu, C.R.G. Sustainability Assessment: Does the OECD/G20 Inclusive Framework for BEPS (Base Erosion and Profit Shifting Project) Put an End to Disputes Over The Recognition and Measurement of Intellectual Capital? Sustainability 2020, 12, 10004. https://doi.org/10.3390/su122310004. 11
The role of the human factor is absolutely obvious, first of all through the capacity conferred by its knowledge put into action, which enters the internal circuit of use of the organization, although, most of the time, recognizing their value is an approach avoided by responsibility, which would only prefer to benefit from results, not to recognize them. One solution proposed by the authors is to measure the IC in the dynamics of the knowledge included in the IC, while trying to visualize the effects, a necessary step in facilitating a process of further improvement, with the dual condition of serving both the interests of managers and those who generates wealth. It is preferable that the indicators chosen in the accounting tests correspond to the “needs of the people involved in the process”. A plus could be brought if a process of visualizing the perspectives with which CI can contribute in the future, “measuring its potential”, is tried, in order to identify in time the necessary transformations and improvements. The value of knowledge becomes much more relevant in an organization that not only supports it but is constantly concerned with ensuring the necessary context for its dissemination. Thus, complementary knowledge can be used much more correctly, even through a mutual dependence, thus guaranteeing them a higher level of representation and capitalization. “Although people talk about knowledge as the main bearer of power in this age, that power actually refers to its manifestation in business and this is intellectual capital. In the new economy, the concept of intellectual capital is used as a synonym for those employees who have the ability to transform and incorporate knowledge into products and services that create value” (Pulic, A., 2008; p. 5). Even if the problem of how knowledge is affected by the passage of time has not been raised, it seems that “temporal nature” influences their value, the dynamics of the evolution of knowledge over time being a factor difficult to neglect, as the authors argue. Each moment is considered to be an additional step in the development of any organization because market demand and the entire social and environmental context require, through quantitative and qualitative accumulations, continuous adaptation and refreshment, often with those essential leaps, or radical transformations, leading to processes, products or services that did not exist until then. The increased demands of market competition force the entity to continuously transform and reconfigure its profile, in close correspondence with the imminent developments brought by the passage of time, the process being appreciated as an important “objective” in a more complete understanding of organizations that are “designed using time parameters” (Ancona et al., 2001a), (Ancona, Okhuysen și Perlow. 2001b). “Time and synchronization” can be decisive, according to the authors the “lens” of time being found practically “at the base of the theory of the organization”, being recognized the need for repositioning: “background in the foreground” organizational, contributing more obviously to the dynamics of the events unfolding within it and, obviously, at that of the IC. The new stage in the CI study also surprises us with an urge to return to the analysis and even to reconsider the way of analyzing the concept of knowledge as a starting point to correct, better understand and reevaluate how they were perceived and managed. “knowledge- based resources in value creation” (Mouritsen, Larsen and Bukh, 2001; Guthrie, Ricceri and Dumay, 2012), thus changing the preconceptions underlying the use of knowledge, whose main purpose must in fact be oriented towards social aspects and collective, for which there are well-defined norms and conventions at the organizational level, but which have most often been ignored (Nonaka, 1994; Blackler, 1995; Spender, 1998; Brown and Duguid, 2001). Referring to knowledge, Blackler (1995) has a point of view that is worth mentioning for the alarm signal he raises regarding the way in which knowledge is understood because it is: “analyzed as an active mediated process” but which is based on practical rather than theoretical considerations, emphasizing in this regard the need to treat knowledge-generating systems more carefully, while emphasizing the effects, and emphasizing the need to approach knowledge-generating systems with greater attention the effects of “changes taking place in these systems” but also on “processes by which new knowledge can be generated”. 12
On the other hand, Brown and Duguid (2001) emphasize the implications of the practice, which they consider to be the one that “creates epistemic differences between communities within a firm, and the company's advantage over the market lies in the dynamic coordination of knowledge produced by these communities, despite these differences”. Based on these considerations, arguing that it is much more important to extend the “analysis of systemic innovation” so as to “encompass all firms in a knowledge economy, not just classical innovators”, I see a need to “transform the coordination of conventional ideas and of the compromise between exploration and exploitation”. Moreover, the authors also draw attention to a “contrasting and even contradictory view of knowledge”, which they capture in studies of the literature on knowledge, sometimes described as “contagious” and sometimes “with gaps”. They debate the issue because, most of the time, “such discussions focus on the movement of knowledge within the boundaries of the company”, neglecting the “external flow and / or unwanted flow of knowledge”, which usually leads to “loss of knowledge” that becomes thus accessible to competition, affecting the business of the initiator. Obviously, there are “knowledge and communities”, but they must be looked at in close connection and from a “theoretical” point of view to understand the existential problems they face in reality. Only then can the measures that can be taken be effective. A benefit that can be capitalized from the perspective of timely reporting of the evolution of IC is also brought by the possibility to assess only a sequence of circumstances in which certain events took place, analyzing in addition both the duration and the gap between the moment of identifying the problem and the one of solving it, between the initial and the later stage. The answer to this study to which I devoted myself with all my attention, is not edifying, however, the result highlighting the fact that, in reality, the problem is only partially solved. However, this concern has made it easier for us to identify the nature of expenditures which, under the NEXUS method, are recognized as valid expenditures, which, from a fiscal point of view, allows the creation of facilities for countries that actually carry out research, a finding that proves to be, after all, the most beneficial result of the study undertaken. In these circumstances, I had to expand my investigations. Through the analyzes and studies that I conducted, on the specialized indicators for intellectual capital and its performance, I found that the 2020 Europe Agenda (approved in June 2010) was very generous and very dedicated to results that are very, very special to the research activity. The horizon of the chosen thesis topic became from this point of view much more comprehensive, much more complex and far-reaching, which led the orientation of their concerns towards several types of approaches of the specific elements of the 2020 Europe Agenda, concluding that an analysis of the European Union is the most beneficial from this point of view. In fact, it should be noted that the results of the thesis included in the ideas in this Abstract were disseminated in Chapter 6 “Measuring Progress towards Sustainable Development Goals: Creativity, Intellectual Capital and Innovation” (110621-024149), from the book: “Handbook of Research on Novel Practices and Current Successes in Achieving the Sustainable Development Goals”, published at IGI Global (Popescu C.R.G., 2021). Based on my experience with the NEXUS method on the BEPS plan, where I identified the nature of the expenditures that are needed in tax research and development at the international level, analyzing the impact of intellectual capital components on performance in the European Union, I have obtained some extraordinarily relevant results from this point of view. For example, what can be more edifying than the fact that, for example, employees without education or only with primary education not only do not contribute to the growth of Gross Domestic Product (GDP), but even diminish it, the negative impact on Gross Domestic Product being obvious?
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Another example in this sense is represented by the fact that employees with secondary education, with high school education do not contribute to the growth of the Gross Domestic Product. The situation is obviously changing in the case of employees with higher education or those involved in research that, appropriately, make a real contribution to the growth of Gross Domestic Product. Taking into account both the purpose and objectives of the current research entitled “Empirical Research on the Impact of the Main Components of Intellectual Capital on the Economic Performances at the European Union level”, it should be noted that the selected population (the research population) refers to the synthesis reports published in the level of the European Union based on the reports of the 28 Member States (EU-28), in accordance with the requirements of the Eurostat database. The relevant data for this study were obtained from the Eurostat database, being subsequently subjected to the analysis of the main components of intellectual capital in correspondence with GDP, as an indicator of synthetic performance in the European Union for the period 2007-2019. At the same time, this information was collected, processed and statistically analyzed to form the basis for the tests contained in our research study. For compliance, we would like to point out that the 28 Member States (EU-28) whose data were found synthetically in the Eurostat database8 used in our analysis for the period 2007-2019, are: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom of the United Kingdom (UK) which has opted out of the EU since: 31.01.2020 (https://europa.eu/european-union/about-eu/countries_en#tab-0-1). We preferred this interval, even if Croatia joined only in 2013, in order to have a much more conclusive result of the analysis we conducted. Regardless of the objectives analyzed, I took into account exclusively the existing data in the summaries of Eurostat databases, noting that there were situations where there were no complete data for certain countries, so that they exist only for certain reporting years and only under these conditions do statistics allow us to take them into account. As are the existing notations for each table generated by Eurostat, some data that may be subject to synthesis analysis may be unavailable (:), for others there may be breaks between time series, others are not published for reasons of confidentiality (c), others are estimated (e) or temporary (p), etc. In our case, we were faced with the situation where for certain time intervals, certain syntheses could only be obtained for certain time intervals. For the results of our report, we made a summary of the exceptions in which the data were not available for the entire range of years we proposed, respectively: 2007-2019. The conclusions for the analysis part and results regarding the determination of the impact of the components of intellectual capital on the synthetic performance, are systematized in the following:
O1. Analysis of the relationship between the dimensions that characterize the components of human capital and the gross domestic product at European Union level
Conclusions resulting from: The analysis of the relationship between the dimensions that characterize the components of human capital and GDP in the European Union Based on the analyzes performed and presented previously on the 9 (nine) factors, which include or enhance human capital and can contribute to increasing the synthetic
8 The Member Countries of the EU (2021). https://europa.eu/european-union/about-eu/countries_en#tab-0-1. 14 performance that were, moreover, the subject of our study we can draw the following main conclusions: - human capital has a very important role to play in increasing synthetic performance; - researchers in the business sector have the strongest influence on increasing synthetic performance; - high school and post-high school education in the age of the knowledge-based economy are no longer sufficient, and employees with primary or uneducated education negatively affect synthetic performance.
O2. Analysis of the relationship of determination between the dimensions that characterize the components of structural capital and GDP in the European Union
Conclusions resulting from: The analysis of the relationship between the dimensions that characterize the components of structural capital and GDP in the European Union Based on the analyzes performed and presented previously on the 5 (five) factors, which incorporate or enhance structural capital and can contribute to increasing the synthetic performance that were, moreover, the subject of our study we can draw the following main conclusions: - structural capital has an important role to play in increasing synthetic performance; - the strongest influence on increasing the synthetic performance has the research- development expenses; - It is confirmed that government budgetary allocations for research and development in the Transport, Telecommunications and other Infrastructure sectors, with the characteristics of the technology of the period under review, no longer have a significant impact on synthetic performance. The transition to G5 technology and infrastructure is required.
O3. Analysis of the relationship between the dimensions that characterize the components of relational capital and GDP in the European Union
Conclusions resulting from: The analysis of the relationship of determination between the dimensions that characterize the components of relational capital and GDP at the level of the European Union Based on the analyzes performed and presented previously on the 4 (four) factors, which include or enhance relational capital and can contribute to increasing synthetic performance, which were, moreover, the subject of our study we can draw the following main conclusions: - relational capital has a key role to play in the modern economy, which increasingly requires an approach to sustainable development and supports the growth of synthetic performance under the conditions imposed by environmental protection and sustainable development; - although Eurostat database reports are relatively recent, they have been able to show a very strong influence on increasing the synthetic performance of the Number of enterprises and their employees, who use software solutions to analyze customer and market information; - the restrictive nature of reporting on the Number of enterprises and their employees whose business processes are automatically linked to those of their suppliers and / or customers, which do not include enterprises with less than 10 (ten) employees and no information on the traditional form of integration of economic processes, based on
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contracts and agreements between the parties, did not allow the identification of correlations.
O4. The analysis of the relationship of determination between the dimensions that characterize the components of relational capital and GDP at the level of the European Union
Conclusions resulting from: The analysis of the relationship of determination between the dimensions that characterize the components of relational capital and GDP at the level of the European Union Based on the analyzes performed and presented previously on the 10 (ten) factors, which incorporate or increase the innovative capital and can contribute to the increase of the synthetic performance that were, moreover, the object of our study, we can draw the main conclusions: - Innovative capital has an essential role in the knowledge and research-based economy that requires the achievement, protection and capitalization of research-development and innovation results; - Reports based on Eurostat could have a very strong influence on increasing the overall performance of the number of employees working in the production of intensive services and business knowledge, both those recorded annually and related to their cumulative effect; - A strong interdependence has been established for the cumulative effect not only of patents in general but also of high-tech patents; - With a moderate impact was identified the effect on the models and designs registered not only annually, but also at their cumulative level for the analyzed period; - Due to the specificity of obtaining, registering and capitalizing on patents, filed annually and the concrete way of transmitting their value over time, no linear dependence between them and the overall performance has been identified. The results obtained are edifying and useful and will help to identify the essential factors that shape the calculation of the impact of intellectual capital for its most dynamic component of the current period of innovative capital. For the microeconomics part, I conducted a “Study on intellectual capital and performance indicators at the microeconomic level” with the aim of analyzing the link between intellectual capital and economic performance at S.N. Nuclearelectrica S.A. from the energy industry listed on the Bucharest Stock Exchange (BVB). The analysis was performed during the years 2013-2020, based on available indicators or calculated based on data published on the BVB website or on the company’s website. The Economic Performance was measured by: the Rate of Return on Assets (ROA), determined as the ratio between profit and total assets; Return on Equity (ROE), determined as the ratio between net profit and total equity; Debt to Equity (DEB), determined as the ratio of total debt to equity. The Intellectual Capital was assessed on the basis of the indicators: “Market to-book ratio” (acronym: MTB) determined as the difference between market value and book value and “Market value added” (acronym: MVA) determined as the difference between market value and equity. It should be emphasized that all results presented in tables and figures belong to the author. I presented the evolution over time of the variables MTB (expressed in tens of billions of lei), ROA, ROE and DE. By applying the multiple linear regression on the MTB dependent variable, based on the results provided by SPSS, it results that there is a certain strong linear dependence but only between MTB and ROA, the other independent variables being eliminated from the regression model. Another important finding is that
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including the constant of the linear model is significant, the probability at which it was determined being less than 5%. By applying multiple linear regression on the MVA dependent variable, based on the results provided by SPSS, it results that no linear dependence was identified between the MVA and the independent variables ROA, ROE and DE. In conclusion, our study confirms other results from the literature, which record that, despite the multitude of models proposed for determining IC, they do not have a certain degree of generality, being in fact very dependent on the specifics of the business and field of activity.
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Summary Presentation of the Chapters of the Doctoral Thesis
The Doctoral Thesis entitled “Intellectual Capital Assessment and its Influence on Economic Performances”, PhD. Supervisor: Professor PhD. Habil. Marian Ilie I. Siminică, from the Doctoral School of Economic Sciences, the Domain: “Accounting”, the Faculty of Economics and Business Administration, University of Craiova is structured on four chapters, as follows: . The first chapter called “General and Specific Aspects Regarding Performance and Organizations’ Performance Management” has in its composition seven subchapters, which deal, in turn, aspects such as: performance – an overview; performance in the literature; business performance and management; management and performance measurement; the evolution of the value-based management concept; the influence of management decisions in increasing the wealth of shareholders; and the interdependence between organizational management and intellectual capital. . The second chapter called “Intellectual Capital and its Role in the Modern Economy” has in its composition five subchapters, which deal, in turn, with aspects such as: intangible assets in terms of accounting approaches; the importance of intellectual capital; the characteristics and structure of intellectual capital; from intellectual property to intellectual capital; and intellectual capital in terms of the stages taken. . The third chapter entitled “Methods for Measuring Intellectual Capital and Performance at the Micro and Macro Economic Level” has nine subchapters, which address, in turn, issues such as: direct, financial, capital estimation methods intellectual – with identification and evaluation on organizational components; stock market capitalization methods - with identification and organizational evaluation of intellectual capital; financial management methods and tools based on return on assets – with the identification and evaluation of intellectual capital at the organizational level; Scorecard estimation methods, non-financial – with identification and evaluation on organizational components of intellectual capital; accounting regulations in establishing and using performance indicators; rules in establishing and using performance indicators; financial analysis and diagnosis of performance based on intermediate management balances; performance indicators; and a study on intellectual capital and microeconomic performance indicators. . The fourth chapter entitled “Empirical Research on the Impact of the Main Components of Intellectual Capital on the Economic Performances at the European Union level” has three subchapters, which address, in turn, issues such as: research on the impact of the main components of intellectual capital on synthetic performance in the European Union; analyzes and results on determining the impact of intellectual capital components on synthetic performance; and partial conclusions that take into account empirical research on the impact of the main components of intellectual capital on economic performance in the European Union. The doctoral thesis entitled “Intellectual Capital Assessment and its Influence on Economic Performances” also includes the section entitled “Final Conclusions, Personal Contributions and Research Perspectives” which consists of three subchapters, which deal in turn with issues such as: final conclusions; contributions and published articles; and prospects for further research. At the same time, it should be mentioned that the present study also includes the following representative elements, such as the index of tables, the index of graphic representations and the bibliography sketched on a structure of the type: books (classic book or e-book); articles published in a classic journal or online; doctoral theses; international legal regulations; national legal regulations; websites; and statistical reports.
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The research topic entitled „Intellectual Capital Assessment and its Influence on Economic Performances” addressed in this doctoral thesis is extremely important for general research in economics and business administration and for specific research in accounting, which is why they were established a series of representative specific objectives (SO), as follows: . SO 1 – presentation and analysis of general and specific aspects of performance and performance management of organizations, with emphasis on the following defining elements: building an overview of performance, as it appears outlined in the literature; depicting the relationship between performance and business management based mainly on the interdependence between financial analysis, financial decisions and management control, a process that is, in fact, a repetitive cycle; painting key aspects of management and performance measurement, with a focus on the field of management in general and finance in particular; exposing the evolution of the value- based management concept; rendering the influence of management decisions in increasing the wealth of shareholders and the interdependence between organizational management and intellectual capital. . SO 2 – presentation and analysis of general and specific aspects regarding intellectual capital and its role in the modern economy, with emphasis on the following defining elements: intangible assets in terms of accounting approaches; the importance of intellectual capital; the characteristics and structure of intellectual capital; the transition from intellectual property to intellectual capital; and intellectual capital in terms of the stages taken. . SO 3 – presentation and analysis of general and specific aspects regarding the methods of measuring intellectual capital and performance at micro and macroeconomic level, with emphasis on the following defining elements: direct, financial methods, estimation of intellectual capital, with identification and evaluation on organizational components; stock market capitalization methods, with identification and organizational evaluation of intellectual capital; financial management methods and tools based on return on assets, with identification and evaluation of intellectual capital at organizational level; Scorecard estimation methods, non-financial, with identification and evaluation on organizational components of intellectual capital; accounting regulations in establishing and using performance indicators; rules in establishing and using performance indicators; financial analysis and diagnosis of performance based on intermediate management balances; performance indicators; and a study on intellectual capital and microeconomic performance indicators. . SO 4 – presentation and analysis of general and specific aspects on the impact of the main components of intellectual capital on economic performance in the European Union, using empirical research, focusing on the following defining elements: conducting research on the impact of major components of intellectual capital on synthetic performance at European Union level; presentation of analyzes and results on determining the impact of intellectual capital components on synthetic performance; and the presentation of partial conclusions regarding empirical research on the impact of the main components of intellectual capital on economic performance in the European Union. From the point of view of the research axes, the doctoral thesis entitled “Intellectual Capital Assessment and its Influence on Economic Performances” contains both theoretical and methodological aspects aimed at evaluating intellectual capital and its influence on economic performance, as well as practical (applied) aspects. This paper was intended to address issues specific to the assessment of intellectual capital and its effects on economic performance from both a microeconomic and a macroeconomic perspective.
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Regarding the applicative (practical) part of the doctoral thesis, this can be found both in the third chapter entitled “Methods for Measuring Intellectual Capital and Performance at the Micro and Macro Economic Level”, where a study was conducted on intellectual capital and performance indicators at the microeconomic level (see subchapter 3.9 entitled “Study on intellectual capital and performance indicators at the microeconomic level”), as well as in the fourth chapter entitled “Empirical Research on the Impact of the Main Components of Intellectual Capital on the Economic Performances at the European Union level”. In this context, it should be noted that the fourth chapter has the role of putting into practice and exemplifying the essential theoretical aspects described in the first chapters of this doctoral thesis. At the same time, it should be emphasized that the fourth chapter comes with a new approach and the author’s own vision regarding the evaluation of intellectual capital and its influence on economic performance. It should also be highlighted that the central element and the major goal of the fourth chapter is to conduct original and unique research on the impact of the main components of intellectual capital on overall performance in the European Union. From the point of view of the research methodology, the doctoral thesis entitled “Intellectual Capital Assessment and its Influence on Economic Performances” emphasizes both the scientific analysis of the issue studied, aiming at the correct positioning in the field of knowledge not only of the general field of research, but also of specific research sub-domains, including nuances of specific application aspects for the evaluation of intellectual capital and its influence on economic performance. In the following lines, the purpose of the four chapters of the doctoral thesis entitled “Intellectual Capital Assessment and its Influence on Economic Performances” was analyzed, as follows: (1.) The purpose of the first chapter suggestively entitled “General and Specific Aspects Regarding Performance and Organizations’ Performance Management” is to highlight the general and specific aspects regarding performance and organizations’ performance management. Thus, this chapter focuses on the following key elements: performance analysis, in order to achieve an overview of it; outlining the specific aspects of performance, in order to describe the concept in the literature; business performance and management; management and performance measurement; the evolution of the value-based management concept; the influence of management decisions in increasing the wealth of shareholders; and the interdependence between organizational management and intellectual capital. (2.) The purpose of the second chapter entitled “Intellectual Capital and its Role in the Modern Economy” is to make a synthesis of both IC and its role in the modern economy. Thus, our approach emphasizes the following essential elements regarding: intangible assets in terms of accounting approaches; the scientific importance of intellectual capital; the characteristics and structure of intellectual capital; achieving a parallel between intellectual property and intellectual capital, synthesizing in the last part both the scientific research and the practical results that marked the most significant stages taken so far by IC. The various stages of the research undertaken over the years on IC are reviewed, starting with the initial stage which was found to focus on: establishing “what is intellectual capital”; continuing with the second stage marked by the elaboration of guidelines, standards, the establishment of indicators with potential in the measurement, management and reporting of intellectual capital. The third stage is delimited by the first two, trying to take stock of the results of the first stages of approaching the IC in the period 1990-2012, paving the way for the fourth stage in which it is found that the need for integrated reporting, concluding the research path so far with the convincing finding of the fifth stage, according to which: “the development of research of intellectual capital without limits” continues to represent “a worthwhile endeavor”. (3.) The purpose of the third chapter entitled “Methods for Measuring Intellectual Capital and Performance at the Micro and Macro Economic Level” is to present the methods 20 for measuring IC and performance at both the microeconomic and macroeconomic levels. In the first part there were presented some of the countless methods of classification, organization and measurement of IC according to the systematization proposed by Sveiby, namely the presentation of: financial methods for estimating IC – with their identification and evaluation either on organizational components or at organizational level or financial methods market capitalization or management based on the return on assets at the organizational level; or non-financial methods such as Scorecard estimation methods, non-financial, but only on organizational components. The second part deals with performance indicators, presenting some of the specific accounting regulations, the main rules in their identification and use, continuing with a financial analysis and diagnosis of performance based on GIS, concluding with a study on IC and microeconomic performance indicators. The conclusion of our study, confirmed by the numerous results from the literature, despite the multitude of models proposed for determining IC, may disappoint, failing to clarify how and to what extent IC influences business results, an explanation may be the impossibility of identifying solutions with a degree of generality, proving rather a great dependence on the specifics of the business and the field of activity. (4.) The purpose of the fourth chapter entitled “Empirical Research on the Impact of the Main Components of Intellectual Capital on the Economic Performances at the European Union level” is to conduct an empirical research on the impact of key components of the intellectual capital on the economic performance in the European Union. Thus, this chapter focuses on the following key elements: research on the impact of the main components of IC on synthetic performance at EU level; analyzes and results on the determination of the impact of IC components on synthetic performance; and partial conclusions from empirical research on their impact on EU economic performance. Finally, applying the multiple linear regression on the dependent variable GDP at EU level and the IC components, based on the results provided by SPSS, it is clear the existence of dependence between: five of the independent variables of human capital, the rest being excluded from the model according to tables no. 4.27 and 4.28; three of the independent variables of the structural capital, the rest being excluded from the model according to tables no. 4.43 and 4.44; one of the independent variables of the relational capital, the rest being excluded from the model according to tables no. 4.54 and 4.55; two of the independent variables of the innovative capital, the rest being excluded from the model according to tables no. 4.83 and 4.84. Although IC has only three components recognized, innovative capital, through its decisive role, enhances through continuous and efficient interrelationship each of the respective components, influencing them but also being found both in each and in the whole IC.
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Conclusions, Own Contributions, Limits and Perspectives of the Research
With reference to the final conclusions, personal contributions and research perspectives, the following can be mentioned:
The exhaustive analysis and presentation not only of the performance but also of the intellectual capital from the beginning of the scientific preoccupations until now has allowed the highlighting and nuance in time of their complex meanings, offering a high degree of generality and utility, difficult to define or accept at a unanimous level, indispensable, however, especially when we want to highlight remarkable or outstanding results obtained in various fields of activity. Sometimes identified in the economic field with productivity or similar sizes as Paul Krugman (1994) argues in his book “The Future of Productivity”: “… Productivity is not everything, but in the long run it is almost everything9. Productivity refers to working smarter than working harder. It reflects the ability to produce more through the efficient combination of resources, the development of new ideas, technological innovation and new business models.” Much more nuanced in meaning, scope and depth of reflection, the “3P Model” is the clearest graphic symbolization of the relationship between performance, productivity and profitability, an aspect well highlighted by Tangen in the article “Demystifying productivity and performance” published in 2005 (p. 43), through a suggestive representation. Performance, as suggested in Figure 1 (Tangen, 2005) - “The 3 P Model” (Productivity, Profitability and Performance), encompasses the specific elements of efficiency and effectiveness of results in relation to inputs, specific elements of productivity and profitability and, somewhat in plus globally and synthetically, represented by financial quantities but often also non-financial, difficult to identify and quantify. Although the first “documented” forms of recognition of intellectual property date according to historical sources “between 600 BC and 500 BC” identified in the ancient city of ancient Greece, Sybaris, founded in 720 BC famous for its richness and opulence, also noted for the discovery of the first regulations similar to those of today’s patents, issued in order to “protect the culinary creations of chefs or bakers for a period of 1 year” 10, intellectual capital has captured the energies and the imagination of researchers in the early 1990s, the reference being the year 1991, when Leif Edvinsson was appointed director to Skandia of the first department of Intellectual Capital, dedicated to the identification, evaluation and financial reporting of CI components so that these “invisible assets” can find an accounting equivalent. The presentation of the IC through the prism of the five stages: establishing “what is IC”; elaboration of guidelines, standards, indices in the measurement, management and reporting of IC; critique of IC approaches; the need for integrated IC reporting and the continued “development of limitless IC research” precisely because it remains “a worthwhile endeavor”, allowed us to highlight the scale of the efforts and the multitude and diversity of concerns dedicated to this field, which turned out to be “a hard nut” but as important as it is sensitive and, for the time being, impossible to calculate. Presented in a variety of definitions, summarized in the table “Selection of Intellectual Capital Definitions”, which includes 50 (fifty) definitions of over 80 (eighty) researchers, IC also reflects the complexity of the issue it entails, the difficulties identified in
9 In the original version, in English: „ … Productivity isn't everything, but in the long run it is almost everything. …” (p. 11). 10 https://en.wikipedia.org/wiki/Sybaris#Ancient_Patent_Law 22
structuring its components, in their measurement, arousing a special interest including on the generated effects. Although intellectual capital is considered the fourth pillar of the Sustainable Competitiveness Pyramid, which is the basis for calculating the “Global Sustainable Competitiveness Index” (acronym: GSCI) which aims to measure competitiveness countries in an integrated way, with reference to the definition, its reflection in the financial statements and the identification of its contribution to increasing performance, a common view could not be reached. Our concern was focused on identifying a valid explanation concerning the difference between the company’s accounting and market value, but also to reveal those values, hidden as if with express care, although the undisputed contribution to achieving the company’s business objectives as well implicit but more than obvious contribution to the permanent creation of new added value, systematizing over 35 (thirty-five) methods of classification, organization and measurement of intellectual capital, in the four quadrants corresponding to Sveiby’s classification, obtained, on the one hand, according to financial methods used, on the other hand, depending on the non-financial methods, which in turn are correlated with the types of calculation methods systematized either by their components or viewed in a unitary way, but at organizational level. Sveiby’s (2004) statement on the perception of performance measurability in relation to IC is remarkable, about which the reservations of creators and beneficiaries sometimes seem extremely justified in disclosing reality: “Performance measurement has its own discourse independent of the IC discourse. The performance measurement experts are usually found in the accounting department. And they measure the performance of others – not their own.”. However, the problem of IC quantification proves to be extremely delicate precisely because of the difference between who makes the evaluations, who measures them and for what purpose, nuanced by the fact that: “Trouble is that most people don’t like being measured upon. I don’t! Do you? So my response is probably to stop sharing ideas and knowledge, because it will increase the chance that my competitors gain the bonus instead of me.” (Sveiby, K.E., 2004). So “concealment” also has a reasonable explanation, at least to the point where it could harm humanity. They have been developed and presented in detail and, as far as possible, pragmatically: the main methods: direct, financial, intellectual capital estimation – with identification and evaluation on organizational components; stock market capitalization – with identification and evaluation at organizational level; financial management tools based on return on assets – with identification and evaluation at organizational level; Scorecard estimation, non-financial – with identification and evaluation on organizational components. Performance indicators were analyzed at both levels Micro-economic based on: accounting regulations; the rules in establishing and using performance indicators; financial analysis and diagnosis based on intermediate management balances; of the relevant indicators in the activity of measuring the results of an entity; of the relevant indicators in the activity of analyzing the profitability and performance of an entity, as well as at the level: Macro-economic through relevant indicators in the activity of analyzing results and performance at macroeconomic level. As a result of our research on the definition and determination of intellectual capital and performance at the micro and macroeconomic level, we concluded that: there is a unanimous view of recognizing the contribution of IC to increasing the performance of organizations;
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the models for calculating and presenting the components of intellectual capital are not unanimously recognized as being models specific to different types of entities without a reasonable degree of generality; although at the declarative level it was intended to define simple and easy-to- use models, the proposed models are complex, complicated and include many indicators; many of the proposed indicators cannot be calculated on the basis of publicly available data, implying privileged access to information; we have not identified any study that would present IC’s contribution to increasing the performance of organizations. That is why in our approach we tried, we believe, for the first time in the Romanian literature and not only, to identify the contribution of intellectual capital components, factors that incorporate or enhance the elements of IC to increase gross domestic product in the EU (28 states) for the period 2007-2019 and to determine the intensity of these contributions on the basis of data publicly and transparently made available by the EUROSTAT database.
A summary of our conclusions, extremely relevant especially through the conclusive results obtained by using the multiple linear regression method, is presented below:
A. Conclusions resulting from: The analysis of the relationship of determination between the dimensions that characterize the components of human capital and GDP at EU level. - These results are mostly supported by applying the multiple linear regression to the GDP dependent variable, based on the results provided by SPSS, resulting in a certain multiple linear dependence between GDP and five independent variables the rest of the variables being excluded from the model as shown in tables no. 4.27 and 4.28. We also find that the constant of the linear model is not significant either; the probability at which it was determined is higher than 5%. B. Conclusions resulting from: The analysis of the relationship between the dimensions that characterize the components of structural capital and GDP at EU level. - These results are supported by applying the multiple linear regression to the GDP dependent variable, based on the results provided by SPSS, which leads to a certain multiple linear dependence between GDP and three independent variables, while the rest of the variables are excluded from the model, as shown in tables no. 4.43 and 4.44. We also find that the constant of the linear model is significant, the probability at which it was determined being higher than 5%. C. Conclusions resulting from: The analysis of the relationship of determination between the dimensions that characterize the components of relational capital and GDP at EU level. - These results are partially supported by applying multiple linear regression on the GDP dependent variable, based on the results provided by SPSS, resulting in a certain multiple linear dependence between GDP and an independent variable, the rest of the variables being excluded from the model as shown in tables no. 4.54 and 4.55. We also find that the constant of the linear model is significant, the probability at which it was determined being higher than 5%. D. Conclusions resulting from: Analysis of the relationship between the dimensions that characterize the components of innovative capital and GDP at EU level. - These results are partially supported when applying the multiple linear regression to the GDP dependent variable, based on the results provided by SPSS, which resulted in a certain multiple linear dependence between GDP and two independent variables, the remaining five variables being excluded from the 24
model as are shown in tables no. 4.83 and 4.84. We also find that the constant of the linear model is significant, the probability at which it was determined being higher than 5%. Important note: Our study had to take into account the fact that on the EUROSTAT database site there are also cases in which the data for certain independent variables were not made available by all EU countries nor during the entire period subject to our entire study (2017-2019). Therefore, in such situations, respecting the rules of statistics, we reduced the study interval in the case of strictly innovative capital to the reported period. Even with these restrictions, the results were sufficiently relevant, responding favorably and demonstrating the indisputable correlations between the IC and GDP components at EU level. Along with the main personal contributions, the extensive and deep analysis of the literature, the elegant and inspired synthesis of an up-to-date bibliography, we allow ourselves to note the need to extend the term to global performance and synthesize results at macroeconomic or supranational organizations11 such as this is also the case of the European Union, thus enriching the scope and enhancing the force of reflection of some edifying or outstanding results12. We also extended the analysis of performance in close correlation with performance management by contributing to the identification and presentation of general and specific factors that can support performance growth in its various forms in the complex correlated system of actions, processes, intermediate or final results depending on resources used and their quality. Promoting the social objectives of defending the public interest, the economic, political and social consequences of which must be based on combining economic with moral elements, pragmatic and ethical approaches and integrity. Our studies have determined the impact of the main information or actions revealed in the CSR reports, on the one hand (Popescu, C.R.G.; Banța, V.C., 2019), and, on the other hand: the dependence that exists between the level of compliance and the multitude of factors that can influence the level compliance (Popescu, C.R.G., 2019). In fact, our study was extended by analyzing potential ways to improve the financial and non-financial performance of Romanian organizations, highlighting the role of corporate social responsibility and intellectual capital (Popescu, C.R.G., Popescu, N.Gh., 2019). Also, our contribution has been materialized, but not limited to this, in critically presenting the opinions of researchers, in highlighting the strengths and more sensitive points of the terrors developed by them, in identifying and nuance the specific trends of each stage in order to capitalize on the results to achieve the objectives of our own research. The systematization of CI calculation methods according to multiple criteria and the extension of the performance evaluation at macroeconomic level based on the synthesis indicators can be added to the contribution we have made. The multidimensional analysis of IC, the identification and extension of the concerns of its recognition and measurement at the level of some international edifying bodies was the object of our study (Popescu, C.R.G., 2020) which, through its results, confirms and supports the complexity and contradictions incorporated and involved of intellectual capital. The study of the characteristic on the impact of the main components of IC on the synthetic performance at EU level represented by GDP presented in Chapter 4, represents
11 “Which is invested with powers placed above the government of each state, independent of it”. Source: DEX’09 (2009). 12 See, in this matter, the List of scientific papers / works from 01.10.2018 - 17.06.2021, from the doctoral file. 25
entirely the personal contribution, which also allowed us to identify the main components of intellectual capital that support the increase of synthetic performance at EU level on 28 countries. Thus: a) the main components of human capital are represented by: Total of number of employees with higher education studies; Total researchers; Total researchers in the business enterprise sector; Total researchers in the higher education sector – with a very strong positive influence; Total employees - with a strong positive influence; Total employees with or without primary education – with a strong negative influence; Total researchers in the government sector – with a moderately positive influence. b) the main components of structural capital are represented by: Research and development expenses; Total government budget allocations for research and development; Total allocations for research – development from general university funds and other sources – General progress of knowledge – with a very strong positive influence; Government budget allocations for research – development sectors Industrial production and technology – with a strong positive influence. c) the main components of relational capital are represented by: The Number of companies that use software solutions to analyze customer information; Number of employees in companies that use software solutions to analyze customer information – with a very strong positive influence. d) the main components of innovative capital are represented by: The Annual number of European Union trademark applications); Cumulative number of European Union trademark applications); Total employees working in Knowledge Intensive Services – with a very strong positive influence; The Cumulative number of patent applications filed with the European Patent Office (EPO); Cumulative number of high-tech patent applications filed with the European Patent Office (EPO); Cumulative number of submitted Community designs – with a strong positive influence; The Annual number of Community designs submitted; Total employees working in High and Medium High Technology Production – with a moderately positive influence. After identifying the main factors, components of the IC structure or that enhance its influence, in order to define a model to determine the influence of intellectual capital in increasing the performance of organizations, it is necessary: the analysis of the possibility of reducing their number as far as possible; identifying sources of information that reflect these factors but in accordance with the assessment of their transparency; defining its own model for calculating CI's contribution to increasing the performance of organizations and, finally: experimenting with its use. Monitoring the completion of the publication of studies in progress and identifying new and varied possibilities for capitalizing and publishing the results of this research.
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Selective Bibliography
1. Ancona,- D.G., Goodman, P.S., Lawrence, B.S. & Tushman, M.L., 2001a. Time: A new research lens. Academy of Management Review, Vol. 26, nr. 4, pp. 645-663. 2. Ancona. D.G.. Okhuysen. G. A.. & Perlow. L. A., 2001b. Taking time to integrate temporal research. Academy of Management Review. Vol. 26, pp. 512-529. 3. Biziday.ro . 2021. Cancelarul Marii Britanii: Rishi Sunak: The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax. (Țările din cadrul G7 au ajuns la un acord pentru taxarea unitară a multinaționalelor cu un impozit pe profit de cel puțin 15%.). Available at website
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19. Popescu, C.R.G., 2019. Proiect pentru disciplina: Diagnostic Financiar - Contabil, Titlul proiectului: Diagnosticul Financiar - Contabil al S.C. FORAJ SONDE S.A., Coordonator: Prof. univ. dr. Habil. Marian Ilie I. Siminică, data susținerii proiectului: 01.02.2019, Craiova, România, pagina 53. 20. Popescu, C.R.G.; Popescu, G.N. 2019. An Exploratory Study Based on a Questionnaire Concerning Green and Sustainable Finance, Corporate Social Responsibility, and Performance: Evidence from the Romanian Business Environment. J. Risk Financial Manag. 2019, 12, 162 Available at website: https://doi.org/10.3390/jrfm12040162 . 21. Popescu, C.R.G., 2020. Sustainability Assessment: Does the OECD/G20 Inclusive Framework for BEPS (Base Erosion and Profit Shifting Project) Put an End to Disputes Over The Recognition and Measurement of Intellectual Capital? Sustainability 2020, 12, 10004. Available at website: .https://doi.org/10.3390/su122310004 . 22. Popescu, C.R.G., 2020. Does the OECD/G20 Inclusive Framework for BEPS (Base Erosion and Profit Shifting Project) Put an End to Disputes Over The Recognition and Measurement of Intellectual Capital?, Sustainability Assessment, 12, 10004. Available at website
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