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Intellectual Capital for Communities



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Author: Ahmed Bounfour and Leif Edvinsson

Publisher: Routledge

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Publish Date: January 21, 2005

ISBN-10: 750677732

Pages: 368

File Type: PDF

Language: English

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Book Preface

Intangible (intellectual capital or IC) resources are now largely recognized by scholars and practitioners as the most important source of an organization’s competitive advantage. At the corporate level, intangible investments (research and development or R&D, innovation, knowledge creation and fertilization, marketing and advertising expenditures) are now unanimously considered the most important sources of performance. Over the last 8 years, several models and approaches have been proposed and designed for the managing and reporting of intangibles. At the managerial level, these models are mainly oriented towards measuring inputs (investment in R&D, software, knowledge creation, human capital development, and so on), including the accounting level. Others tend to specifically focus on how to harmonize accounting rules, especially at the international level (e.g., via the convergence of the International Accounting Standards Board [IASB] and Financial Accounting Standards Board [FASB] rules).

However, despite these developments, we are still in need of an integrated approach to ‘‘problematizing’’ intangibles before reporting on them. This might be done by referencing the concept of the knowledge economy (KE) and revisiting its underlying assumptions. Indeed, if knowledge in its tacit, explicit, and hybrid forms is considered the main source for performance for organizations (regardless of if they are companies, public institutions, or associations), we need to explore new ways of viewing the world and, therefore, challenge the existing models. When examining this issue from an analytical point of view and with a long-term perspective, one of the main arguments to support this is the shift from a physical to a service (potentially intellectual/intangible) mode of producing and delivering ‘‘outputs’’ and values. These outputs might be of different natures: products, services, messages, and signals. They are not necessarily final outputs; they may be intermediate outputs or even outputs with an input status within the delivery process (typically a generated patent within a company designed towards use in the production process). The KE is basically characterized by the nonlinear nature of generating outputs, the ‘‘combinatory nature’’ of the resources used, and the deep uncertainty regarding their value. The last two characteristics are important to consider when the question of assessing the value of activities and companies from a financial point of view surfaces. How can we assign a value, in terms of Euros, dollars, or whatever, to activities for which the dynamics and paths can be deeply challenged from one day to another? When considering this question, we can imagine the anxiety of financial analysts when it comes to calculating future cash flows for listed companies and their business lines.

One of the strong implicit hypotheses of the KE lies in the assumption that we are shifting from large hierarchical organizations to very horizontal, networking ones. This is an assumption that has a strong impact on the way we view and assess activities and market structures, including market competition. From the socioeconomic perspective, the concept of the KE also deals with the concept of ‘‘embededness’’ (as it has been developed around the work of Granovetter). Knowledge is not created, fertilized, and disseminated in a vacuum of social links, but fundamentally in contexts with specific and adapted social capital. It must be linked to the emergence of new organizational forms.


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