Intellectual Capital Strategy - Integrating Strategic Management and Intellectual Capital Ontology

Abstract

Although Intellectual Capital (IC) is widely recognized as the critical source of true and sustainable competitive advantage, it is not taken into account sufficiently in Strategic Management. The existing literature on Intellectual Capital focuses on taking strategy as a guideline when managing Intellectual Capital. In the Strategic Management literature, intangibles are embedded in different significant roles in Strategic Management. Thus, the proposition is that Intellectual Capital Ontology should be integrated into Strategic Management.

The main objective of the research is to create a model by means of which Intellectual Capital can be managed and integrated into Strategic Management better than before. Constructive research methodology is the main approach to the subject. It consists of conceptual analysis, constructing a heuristic model of IC based on existing literature, and testing the model in practice by applying the case method. The test cases include three phases. At the beginning of each test case, Intellectual Capital Ontology is introduced and explained to the case attendees. In the first phase, the model is tested in order to create a strategy. Thus the Intellectual Capital Ontology can be interwoven into the decision makers’ strategic thinking and the strategy created. In the second phase, the model is tested based on the new strategy in order to create strategic plans. In the third phase, the effects and utilities of the model and Intellectual Capital Ontology are considered. The model was tested empirically in four case companies.

The results comprise the new IC model itself and the framework of Intellectual Capital Ontology integrated into Strategic Management. By utilizing the Intellectual Capital Ontology and the new created model, companies can better identify, assess and manage IC, and furthermore create more insightful comprehensive strategies and strategic plans to develop competitive advantage. Because of the increased emphasis on intangible value drivers in the business world, the discipline of Intellectual Capital Ontology is also required in Strategic Management. A computer-aided decision support software model for strategic management purposes can be created out of the Intellectual Capital Ontology. The software application could be used e.g. to assess the relation between strategic development and IC investments quantitatively and qualitatively. Intellectual Capital Ontology clearly supports strategy making and Strategic Management in companies.