Intellectual Capital Management - Understanding Why Finnish Companies Do Not Apply Intellectual Capital Management Models

Abstract

In recent years intellectual capital research has introduced a number of models to support and guide managers towards the management of their company s intellectual capital. However, there is a lack of practical applications of the proposed models. The objective of this research is to understand why companies do not apply models that are commonly known in the intellectual capital literature. The focus is on Finnish companies. The general research objective is divided into four research questions taking different perspectives on the same phenomenon: the importance of intellectual capital and its management, the applicability of intellectual capital management models, the suitability of typical general management approaches for intellectual capital management and factors affecting the application of intellectual capital management models. The research questions are studied through eight scientific publications and adopting diverse research methods. The empirical material includes interviews, a large amount of quantitative data from the financial statements of companies and case studies in which action research was used. The results suggest that intellectual capital is important in Finnish companies (in terms of its monetary value and its impact on productivity) and managers wish to have tools to support intellectual capital management, particularly internal management purposes. The research shows that four common intellectual capital management models, the Calculated Intangible Value, the Value Added Intellectual Coefficient, the Meritum Guidelines and the Danish Guidelines, are applicable in practice. However, intellectual capital management can also be applied by integrating it into business process management or balanced performance measurement. The decision whether to use an intellectual capital management model is affected by numerous factors, e.g. managerial need, existing management systems and resources available. The main contributions of the research are the practical applications of the rarely used intellectual capital management models and descriptions of how to apply intellectual capital management in a company without any intellectual capital management model. Empirical evidence on the relevance of intellectual capital to Finnish companies and its linkage with productivity and profitability are also valuable contributions. A further contribution of the research is the identification of the factors affecting the application of intellectual capital management models. Moreover, the research sheds light on the relevance of developing a separate field of intellectual capital research.