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Literature Review of Intellectual Capital

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Intellectual capital was measured by many, coined by some, agreed by few and valued formally and practically by no one. Intellect management is sought to depend on value creation in the contemporary era of business knowledge. Intellectual capital as it is coined as intangible assets including customer information, technology, reputation, brand name and corporate culture.

Human factors as displays a core role in an organization the concept of intellectual capital is gaining rapid recognition where efforts are driven toward creating knowledge based model. Continuous raging and changing environment of business limits firms to look for different answers to the complications they face and to utilize all available resources more efficiently.

According to Bollen (2005) for corporate value creation and nourishing competitive advantage IC is a key player. Contemporary accounting standards are not requiring the IC recognition in firm’s financial statements and few of them disclose such items of IC in annual reports.

According to Brüggen, Vergauwen, & Dao (2009), presence of asymmetry is increasing among users and companies due to the absence of IC disclosures in financial statements. Standardizing is complex in terms of “soft” intangibles. Companies are in necessity to “Know what they know” and in which way they can utilize their knowledge so as to achieve sustainable advantage in the competition. Various studies have been in place to know what are the potential candidates to be listed as the item of intellectual capital disclosure and which ones drove the performance of organizations.

Youndt & Snell (2004) carried out a study titled- “Human resource configurations, intellectual capital, and organizational performance”, which was aimed at introducing the intellectual capital to be a refereeing factor among configurations of HR and performance of the organizations. According to the study HR systems were found to be basics in construction of intellectual capital. In many literatures this study was referred and cited for conducting study in different country settings.

In another study of Crook, Todd, Combs, Woehr, & Ketchen (2011) which was studied to find a relationship in between firm performance and human capital presented a meta-analysis of the past literatures. From the study surprisingly human capital was found to be related to firm performance strongly. Authors have also provided interesting insight that the strength is present when human capital is not available for trading freely and researchers use such performance measures which are not easily subject to misappropriation.

Díaz-Fernández, González-Rodríguez, & Simonetti (2015) have found a positive relationship among diversity of top management and firms which have complex financing dynamics. In the study top managements intellect was given primacy and focus for closer look.

Chan et al. (2009) stated that in Hong Kong listed companies and investors prefer tangibles which is a factor to consider for future research. Author also presented that from the study it was identified that corporate markets resides more on physical than intangible assets.

Nurunnabi, Hossain, & Hossain (2011) conducted a study in Bangladesh and found that growth of stock market in the period of recession was excluding disclosures of IC. Authors also found that size and industry to be key attributes for IC disclosure explanation in Bangladesh. Various interesting perspectives have been discovered from the study including references to limitations. Among all the limitations first one was measurement issues. Under this study weighted disclosure index which was a range between 1 to 3 was used that requires extensive level of judgment. Second limitation was that the year range was 2008 to 2009 which is expected to be more in future researches considering larger sample size. In addition, future researches are expected to consider mixed methods for gaining expanded insights into the IC disclosure practices.

According to Hsu & Sabherwal (2011), intellectual capital offers a representation of organizational knowledge which significantly influences innovation. From the study of the authors it was observed that capability utilization and enhancement of knowledge leads to development of innovation. Previous studies of ICD have followed content analysis for coding the information’s found in the annual reports. Intellectual capital framework has an origin that can be traced back to various professional assertions on intellectual capital. From the rational of potentials of IC disclosure leading to improved efficiency have led to different research undertakings. Past researchers have categorized ICD into three different categories. The studies also classified ICD into three categories viz., internal capital, external capital and human capital according to the framework developed by Sveiby (1997). Reporting intellectual capital under several categories has been energized with a view to extract a clear index for ICD.

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Literature review of Intellectual capital. (2019, March 27). GradesFixer. Retrieved December 5, 2022, from https://gradesfixer.com/free-essay-examples/literature-review-of-intellectual-capital/
“Literature review of Intellectual capital.” GradesFixer, 27 Mar. 2019, gradesfixer.com/free-essay-examples/literature-review-of-intellectual-capital/
Literature review of Intellectual capital. [online]. Available at: <https://gradesfixer.com/free-essay-examples/literature-review-of-intellectual-capital/> [Accessed 5 Dec. 2022].
Literature review of Intellectual capital [Internet]. GradesFixer. 2019 Mar 27 [cited 2022 Dec 5]. Available from: https://gradesfixer.com/free-essay-examples/literature-review-of-intellectual-capital/
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