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Journal of Intellectual Capital Emerald Article: Intellectual Capital: Definitions, Categorization and Reporting Models Kwee Keong Choong Journal of Intellectual Capital Emerald Article: Intellectual capital: definitions, categorization and reporting models Kwee Keong Choong Article information: To cite this document: Kwee Keong Choong, (2008),"Intellectual capital: definitions, categorization and reporting models", Journal of Intellectual Capital, Vol. 9 Iss: 4 pp. 609 - 638 Permanent link to this document: http://dx.doi.org/10.1108/14691930810913186 Downloaded on: 17-08-2012 References: This document contains references to 93 other documents Citations: This document has been cited by 12 other documents To copy this document: [email protected] This document has been downloaded 2651 times since 2008. * Users who downloaded this Article also downloaded: * Charles Inskip, Andy MacFarlane, Pauline Rafferty, (2010),"Organising music for movies", Aslib Proceedings, Vol. 62 Iss: 4 pp. 489 - 501 http://dx.doi.org/10.1108/00012531011074726 Hui Chen, Miguel Baptista Nunes, Lihong Zhou, Guo Chao Peng, (2011),"Expanding the concept of requirements traceability: The role of electronic records management in gathering evidence of crucial communications and negotiations", Aslib Proceedings, Vol. 63 Iss: 2 pp. 168 - 187 http://dx.doi.org/10.1108/00012531111135646 James DeLisle, Terry Grissom, (2011),"Valuation procedure and cycles: an emphasis on down markets", Journal of Property Investment & Finance, Vol. 29 Iss: 4 pp. 384 - 427 http://dx.doi.org/10.1108/14635781111150312 Access to this document was granted through an Emerald subscription provided by UNIVERSIDADE FEDERAL DE SANTA CATARINA For Authors: If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service. 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The current issue and full text archive of this journal is available at www.emeraldinsight.com/1469-1930.htm Intellectual Intellectual capital: definitions, capital categorization and reporting models Kwee Keong Choong 609 Department of Accounting, School of Business, La Trobe University, Melbourne, Australia Abstract Purpose – The purpose of this paper is to develop a conceptual framework that can be used to formalise a reporting model for intellectual capital (IC). Design/methodology/approach – This paper proposes a reporting model with a formal definition and classifications of IC to analyse and report on the IC generated by a firm. Findings – This paper demonstrates that the field is maturing to one in which it is possible to analyse existing definitions and classifications of IC to construct a formal body of items that can be considered as IC for use in the study and application of IC. Practical implications – The paper presents a formal reporting model which can be used generally in the analysis of the IC generated from the production process of a firm. Originality/value – This study examines the characteristics of items that can be considered as IC in order to provide a formal classification system of IC that can be instilled in a reporting system which can be used generally in any organization that involves the use of IC. Keywords Intellectual capital, Intangible assets Paper type Conceptual paper 1. Introduction The field of study into intellectual capital (IC), also known as intangible assets (IAs), or other names (to be discussed in the next section) has been ongoing since the early 1990s (Marr and Chatzkel, 2004, see Table I, p. 20)[1]. However, the wide array of studies across disciplines has created a magnitude of definitions and emphasis, and a wide range of resources, properties and attributes that can be considered as IC or intangibles. The literature is also proliferated with different terms to describe either the same or different information used in relating to IC (intangibles). Kaufmann and Schneider (2004) provide a good account of the variety of terms and definitions for each term in the literature. What we need is a system to streamline the various definitions and terms into manageable categories (classes)[2]. Categorization enables us to put in order the systematic organization of a magnitude of possibilities into a set of class (group) consisting of a coherent number of items. According to Rudner (1966), the value of classification is associated with its ability to function as a heuristic device, which is useful for the interpretation of substance. Researchers have developed various models to facilitate the measuring of each category of intangibles (human, customer, and structural capitals) and enable the intangibles Journal of Intellectual Capital Vol. 9 No. 4, 2008 reported to be compared with other firms. However, up until now, there has been no pp. 609-638 widespread acceptance of these models partly because these models are too qualitative, q Emerald Group Publishing Limited 1469-1930 broad or general, and the objectives remain ambiguous (Kaufmann and Schneider, 2004). DOI 10.1108/14691930810913186 definitions of IC (IAs) Use of terms and Table I. 610 9,4 JIC Authors Term/concept Definition Itami (1991) Invisible assets “Intangible assets are invisible assets that include a wide range of activities such as technology, consumer trust, brand image, corporate culture, and management skills” Hall (1992, p. 136) Intangible asset “Intangible assets are value drivers that transform productive resources into value-added assets” Smith (1994) Intellectual property “Intangible assets are all the elements of a business enterprise that exist in addition to working capital and tangible assets. They are the elements, after working capital and tangible assets, that make the business work and are often the primary contributors to the earning power of the enterprise. Their existence is dependent on the presence, or expectation, of earnings” Brooking (1997, p. 13) Intellectual capital IC as “market assets, human-centered assets, intellectual property assets, and infrastructure assets” Edvinsson and Malone (1997, p. 22) Intellectual capital and “Intangible assets are those that have no physical existence but are still of intangible assets value to the company” Sveiby (1997, p. 10) þ Immaterial values IC has three dimensions (employee competence, internal structure and external structure) Nahapiet and Ghoshal (1998, p. 245) Intellectual capital IAs as “knowledge and knowing capability of a social collectivity, such as an organization, intellectual community or professional practice” Stewart (1998, p. XI) þ Intellectual capital IC is intellectual material – knowledge, information, intellectual property, experience – that can be put to use to create wealth – collective brainpower Granstrand (1999) Intellectual property “IP is property directly related to the creativity, knowledge and the identity of an individual” Brennan and Connell (2000, p. 1) þ Intellectual capital “Knowledge-based equity of a company” Harrison and Sullivan (2000, p. 34) þ Intellectual capital “Knowledge that can be converted into profit” Sullivan (2000, p. 228) þ Intellectual capital “IC is knowledge that can be converted into profit” Heisig et al. (2001, p. 60) þ Intellectual capital “IC is valuable, yet invisible” Lev (2001, p. 5) þ Intangibles “An intangible asset is a claim to future benefit that does not have a physical or financial (a stock or a bond) embodiment” “Assets exclude financial assets” IA cannot stand alone Gu and Lev (2001, p. 14) þ Intangibles Intangibles are defined by their value drivers (RD, advertising, IT, capital expenditures, and human resources practices)a (continued) Authors Term/concept Definition FASB NN (2001, p. 6) þ Intangible assets “Intangible assets are non current, nonfinancial claims to future benefits that lacks a physical or financial term” Petty and Guthrie (2000, p. 158) þ Intellectual capital IC are indicative of the economic value of two categories (organization and human capital) of IA of a companya Pablos (2003, p. 63) þ Intellectual capital “A broad definition of intellectual capital states that it is the difference between the company’s market value and its book value. Knowledge based resources that contribute to the sustained competitive advantage of the firm from intellectual capital” Rastogi (2003, p. 230) þ Intellectual capital “IC may properly be viewed as the holistic or meta-level capability of an enterprise to co-ordinate, orchestrate, and deploy its knowledge resources towards creating value in pursuit of its future vision” Mouritsen et al. (2004, p. 48) Intellectual capital IC mobilises ‘things’ such as employees, customers, IT, managerial work and knowledge. IC cannot stand by itself as it is merely provides a mechanism that allows the various assets to be bonded together in the productive process of the firm IASB (2004b, p. 2) Intangible assets An identifiable IA as a “non-monetary asset without physical substance held for use in
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