The Past, Present, and Future For Intellectual Capital Research : An overview

Purpose The purpose of this paper is to explore the extent to which the practice of integrated reporting (IR) in organisations can be a vehicle for furthering and sustaining the practice of accounting for intellectual capital (IC). It introduces the eight papers forming this Journal’s special issue on “Extending Intellectual Capital through Integrated Reporting” that demonstrate how organisations are developing practices at the nexus of IC and IR. Design/methodology/approach The paper takes the form of a review of the eight papers, and it connects the outcomes from these papers into some future research directions based on an interpretive approach and the authors’ expertise on IC and IR. Findings The papers published in this special issue provide a useful foundation for extending the research project on IR-led IC accounting. However, there is a lack of research in this special issue that goes much beyond third-stage IC research, which is directed at strengthening IC practices inside organisational boundaries. Research limitations/implications This commentary highlights that IR provides many opportunities to reinvigorate the field of IC accounting. Insights provided in this commentary may be relevant to understand and evaluate future iterations of IC accounting. Practical implications While it is essential to understand how IR works in practice moving beyond organisational boundaries it is even more critical if companies are to survive and thrive in an increasingly turbulent business operating environment. Thus, this commentary offers arguments as to how IC and IR research can extend into fourth and fifth stage research paradigms. Originality/value This commentary places the eight papers published in the Journal’s special issue on “Extending Intellectual Capital through Integrated Reporting” within the context of IC accounting to explain the trajectory of research that connects IC and IR and reveals gaps in this field of research.

Purpose – Intellectual capital (IC) is fundamental to understanding how firms create value; however, current IC disclosure (ICD) has been described as inadequate due to the lack of an established IC framework and companies’ actual commitment to report IC information. The International Integrated Reporting Council aims to foster ICD by means of integrated reporting (IR); such a report should display how IC and other forms of capital (e.g. financial) contribute to value creation over time. Drawing on impression management (IM) studies, the purpose of this paper is to assess the quality of ICD offered in IR. Design/methodology/approach – A manual content analysis of all the reports available in the International Integrated Reporting Council web site is run considering both the content of ICD and specific linguistic attributes (evidence, time orientation and tone). In addition, the study tests the relationship between the positive ICD tone and specific characteristics that may incentive managers to manipulate their disclosure to determine whether firms use ICD to manage public perceptions of corporate behaviour. Findings – The results of the content analysis show that majority of ICD is focused on relational capital, with limited quantitative and forward-looking information. Additionally, compared to non-ICD, ICD is significantly more optimistic. Furthermore, the positive tone of ICD is significantly associated with declining performance, bigger size and higher level of intangibles supporting the use of ICD as an IM strategy. Originality/value – The research contributes to the literature offering evidence of the quality of the ICD offered in the IR and demonstrating that ICD offered in the IR is used by managers opportunistically to advance their image.

Purpose – The purpose of this paper is to present a structured literature review of the public sector intellectual capital (IC) literature. It is, in part, motivated by a recent review of the IC literature by Guthrie et al. (2012, p. 74), who found that the public sector is one of the least addressed areas of IC research. Design/methodology/approach – This paper presents a structured literature review of public sector IC articles that is as up to date as possible. The authors use and update the dataset from Guthrie et al. (2012) to include another five plus years of data, including seven articles appearing in this special issue. Findings – The public sector IC has a primary research focus on central government and central government agencies, education (especially universities), Europe (especially Italy and Spain) and empirical research using case studies mainly investigating management control and strategy. It appears public sector IC researchers are firmly entrenched in performative third-stage research, investigating “how” IC works in organisations rather than offering normative solutions. Research limitations/implications – Three areas offered as a way of forwarding public sector IC research. First, there is a need to expand public sector IC research from beyond the confines of education (university) research. There is also an opportunity for a study to synthesise the findings. Second, there is also a need for more longitudinal research in public sector IC because IC is not an event, but a journey. Third, there is an opportunity for researchers to undertake empirical research with organisations to develop and test IC frameworks and models in specific public sector contexts. Practical implications – The authors call for researchers to consider helping public sector practitioners implement IC frameworks and models through interventionist research. In keeping with the performative third-stage IC research agenda, interventionist research makes it possible for academic researchers to act as a catalyst for implementing IC frameworks and models in practice. Originality/value – This paper is a must read for IC researchers wanting to embark on public sector research. The paper outlines how public sector IC research has developed, offers critique and outlines future opportunities for research that has potential impact, rather than concentrating on already well-researched contexts.

In 2013, the International Integrated Reporting Council (IIRC) issued the Integrated Reporting (IR) Framework to improve corporate reporting. The purpose of IR is to integrate financial and non-financial information to explain how the organisation creates value and improves firm performance over time. Since the introduction of IR, a company weighs the benefits over the costs of changing to IR. Recent trends in IR have heightened the need to examine the actual contents of IR. The objective of this study was to find the relationship between preparing a high-quality IR and corporate reputation. Corporate reputation is one of the main objectives for the preparation of IR, and preparing a high-quality IR can positively impact corporate reputation. Data was collected from a sample of 120 companies from the IIRC websites for three years (360 firm-year observations) to examine the quality of following the 2013 Framework. An index was developed, and the corporate reputation score was collected from the RepTrak websites. The finding showed that companies preparing high-quality IR reports had a significant positive relationship with corporate reputation. Preparing a high-quality IR sends a signal to users of annual reports as a connotation of the company (good product or services, ethical management reporting), which will help build trust towards the company and improve its reputation. This study contributes by providing empirical evidence for a company, which is uncertain about the benefits of IR. The IR disclosure score can be used as a reference by IIRC and policymakers to prepare the IR. Keywords: integrated reporting, disclosure quality, corporate reputation

Integrated reporting (IR) is a new communication tool that is gaining increasing attention among scholars, practitioners, and standard setters in both the private and public sectors. Therefore, it is important to discuss the suitability of the framework proposed by the International Integrated Reporting Council (IIRC). This paper offers some reflections based on case studies of public entities that differ in terms of legal structures, locations, and business models to demonstrate—despite legal and cultural requirements—that some common features exist. The primary aim is to discuss whether IR represents a new challenge for public sector organisations, specifically regarding their stakeholder engagement and their pursuit of greater accountability. In doing so, the selected case studies are examined through a theoretical framework based on the growing IR literature and specific objectives recognised by the <IR> Framework. The results that emerge from this study can be beneficial for both scholars and practitioners, enabling the identification of new paths towards improving reporting in public entities to achieve high stakeholder engagement and overcome the possible limitations of the IR model that has been proposed thus far. Key words: Integrated reporting, integrated reporting framework, stakeholder engagement, public sector entities, accountability, state-owned enterprises.

Integrated Reporting and Sustainable Corporate Governance from European Perspective

Purpose– The purpose of this paper is to provide a holistic picture of how and to what extent Cohen and Levinthal’s (1990) seminal article on absorptive capacity was used in knowledge management (KM) and intellectual capital (IC) research from 1990 to 2013.Design/methodology/approach– In this paper, 186 articles extracted from eight KM and IC journals were reviewed by conducting both content and text analyses. To facilitate research comparison, content analysis followed the method used by Robertset al.(2012) and thus was based on categories, conceptualizations, levels of analysis and, additionally, temporal evolution of absorptive capacity from 1990 to 2013 was looked at. Text analysis was performed to identify major research themes developing the absorptive capacity construct.Findings– Finding showed that absorptive capacity was largely underdeveloped in the KM and IC fields. KM, knowledge transfer and innovation were the top three research areas investigating absorptive capacity in the KM and IC fields.Research limitations/implications– This study had limitations related to time frame, covering a period from April 1990 to November 2013, and accessibility of articles due to specific restrictions in journal subscriptions.Originality/value– This paper is a first attempt to review absorptive capacity in KM and IC research. It represented a primary reference for those interested to research absorptive capacity in the KM and IC fields.

Purpose– The intellectual capital (IC) literature argues that introducing the IC concept into a company focusing on measuring can be detrimental and lead to IC “accountingisation”. Using Chaminade and Roberts’ (2003, p. 747) concept of IC accounting “lock-in”, the paper asks “is it possible for an organisation initially to implement and “lock-in” IC accounting practices and subsequently “un-lock” IC through a more strategic managerial approach?” The authors also investigate if and how, after IC has been “un-locked”, can a new IC “locking-in” process occur? The paper aims to discuss these issues.Design/methodology/approach– The authors present an interpretive case study of implementing a system for measuring and reporting IC in an Italian public sector utility company. The analysis uses Actor-Network Theory (ANT) to analyse data and discuss findings which is an appropriate theory for case studies using an interpretive approach.Findings– The findings are contrary to Chaminade and Roberts (2003, p. 733) because the authors challenge the notion “that a dominant accounting perspective can lead to an excessive focus on measurement issues and little attention to management processes”. The evidence from the case study shows how at times a dominant focus on accounting for IC is necessary, especially to allow newcomers to take stock, and make sense, of IC. The analogy is much like comparing accounting vs managing IC to the concept of the chicken and the egg: what comes first?Research limitations/implications– Because the study looks at IC over time, it allows the authors to develop different insights into IC “because IC is not an event, but a journey” (Dumayet al., 2015). Thus, the critique of Chaminade and Roberts (2003) and other IC research based on a short time period is that it does not allow researchers to fully follow the IC’s impact on an organisation. Additionally, the authors also highlight the role academic researchers can play in understanding how IC works inside organisations, especially when the authors examine how deeply (or not) a researcher intervenes in implementing solutions (see Dumay, 2010).Practical implications– The research exemplifies how IC can make a difference for public sector organisations because there is a need for studies such as the authors which exemplify how to introduce the IC concept into public sector organisations and at what point should the IC concept “enter” the organisation (see also Secundoet al., 2015). Doing so re-emphasises that IC is not an ostensive concept. Rather, “IC is part of a configuration of knowledge management and actively mobilised to condition effects” (Mouritsen, 2006) and to make a difference (Tull and Dumay, 2007).Originality/value– This paper is a must read for academics and practitioners seeking to understand how to introduce the IC concept into an organisation.

This study reviews the diffusion of integrated reporting (IR) research. The systematic literature review method is used to review the effects of IR at the organisational level, determinants of IR adoption and integrated report quality (IRQ), assurance on IR, economic consequences of IR/IRQ, and research design issues to set agendas for future research. The review covers 119 peer‐reviewed IR articles published in 36 journals between 2012 and 2021. It finds that the IR literature is dominated by organisational‐level studies, but there is limited research on the economic consequences of IR/IRQ, and the findings are inconclusive to date. Further, the factors that determine IR adoption/IRQ are not conclusive, and there is scarce research on IR assurance. This review contributes to the emerging IR literature and provides valuable insights to the International Integrated Reporting Council (IIRC) in establishing the IR framework as a global reporting norm in practice.

The aim of this chapter is to provide a discussion of the business case of Enel, which is an International Integrated Reporting Council (IIRC) pilot program company currently evolving its corporate disclosure towards Integrated Reporting (IR). The relevance of pilot company business cases has been recognized by the IIRC, which defined their experience as “invaluable”. On the one hand, Enel did modify its corporate reporting system coherently with the IIRC guiding principles by including considerable non-financial information in its annual report, reducing the length of its sustainability report and improving its materiality determination process and business model analysis. On the other hand, it will be interesting to see how the company applies other aspects of the IIRC framework, such as the six-capital structure and the way in which reporting boundaries are defined. The analysis done in this chapter may be of interest to companies, standard setters and scholars wishing to enhance their knowledge on how companies are currently evolving their corporate disclosure systems towards IR.

PurposeThe paper discusses the role of measurement and classification in intellectual capital research. Its purpose is to develop an alternative role for measure. The aim is to explore how measurement may be important even if it does not pretend to accurately represent and underlying reality.Design/methodology/approachThe paper is an essay on the difficulties of measuring intellectual capital. It is a conceptual, analytical paper which proposes a new approach to analyzing the roles and effects of measurement in the area of intellectual capital.FindingsThe analysis suggests that measurement of intellectual capital is difficult because it is not possible to copy its properties in a number; yet it is necessary because it allows intervention to happen since it develops a wholly new set of dimensions to manage. This dual conclusion both problematic because the search for a definitive measure of the size, value and effects of intellectual capital is impossible, yet it is also comforting because measurement helps develop the actions that can be made in the name of intellectual capital.Research limitations/implicationsThe central implication is that research should be explicit about the status of measurement in intellectual capital research since measurement does not primarily represent an underlying reality to be reported by intellectual capital. This directs attention to different purposes of measurement.Originality/valueThis paper explores alternative roles for measurement and suggests that it is necessary to study how measurement is input to management decision making more than a representation of an underlying reality.

PurposeThis paper aims to discuss the most critical aspects relative to the “usability” of the International Integrated Reporting Council (IIRC) Framework faced by small and medium-sized enterprises (SMEs) in releasing the integrated report and adapting the Integrated Reporting (IR) principles (i.e. materiality, integrated thinking and connectivity) to their needs and features. Only recently the relevance of IR for SMEs has been internationally acknowledged.Design/methodology/approachThe study is based on both a deductive and inductive approach. The first one is founded on a literature and technical review aimed at tracing the theoretical background and the framework on integrating reporting in SMEs. The second one is empirically constructed and follows the action research approach because it involves the analysis of a single case-study relative to a company – Costa Edutainment Spa that released its pioneering integrated report in 2014 – belonging to the Italian Network on Business Reporting, a working group which has been involved in the pivotal drafting process of a Guidance for IR in SMEs.FindingsResults emphasise the main criticalities faced by an SME in the IR process, namely, the need for the following: clearly defining the relationship between sustainability and integrated reporting; adapting the main IR concepts (such us materiality, integrated thinking and connectivity) and fully understanding the benefits deriving from the implementation of IR. Moreover, results shed light on the usefulness of a simplified and operative guidance for releasing the integrated report within SMEs the effectiveness deriving from the direct involvement in the NIBR working group and the provision of practical examples and suggestions.Research limitations/implicationsThe main limitations are due to the fact that the empirical analysis is related to a single case study, and it is explorative in nature. Consequently, results are not generalisable. However, the work contributes to nourish the debate on the benefits and critical issues relative to the diffusion of IR among SMEs in a research field which has not been adequately investigated and to develop reflections on the benefits of the diffusion of the IR among SMEs, pointing out the opportunity to follow an evolutionary path which drives the evolution of the entrepreneurial and organisational culture towards monitoring, assessing and reporting the company’s value process creation.Practical implicationsThe work contributes to triggering the debate on the diffusion of IR among SMEs which represents a research field that remains still under investigated. It points out a fundamental gap on how to implement IR in SMEs and operationalise the IIRC concepts and principles. It develops reflections on the critical issues and benefits of the diffusion of the IR among SMEs. Drawing from a pioneering experience, the work contributes to supporting entrepreneurs by emphasising the possible benefits deriving from the implementation of the IR process. It suggests an evolutionary path through different steps (starting from the business model definition) which are necessary to drive the entrepreneurial and organisational culture towards monitoring, assessing and reporting the SMEs’ value process creation.Originality/valueThe work contributes to devoting the attention of both scholars and practitioners to an underestimated research field – the “feasibility of IR in the SMEs context – which has not been yet adequately investigated. Moreover, being empirically based, it helps in supporting the diffusion of the IR framework among SMEs, practitioners and consultants by providing insights aimed to improve the IR Guidance for SMEs and sensitise entrepreneurs by emphasising that a possible step-by-step “IR journey” is possible.

This chapter explores how companies can elaborate a report that is capable of satisfying stakeholders’ “hunger” for information by integrating financial, environmental, social, and economic information together. The Integrated Report (IR) proposed by the International Integrated Reporting Council is based on more than just a method of reporting or a fashion fad. It presents a new way of looking at business operations that is no longer solely aimed at maximizing profits, which is a real, cultural change. The IR aims to communicate the financial and non-financial information that characterizes the sustainable value creation of an organization in a connected, clear and concise way. This chapter aims to demonstrate how the IR concept is stimulating the academic, institutional, and corporate world ten years after the birth of the IIRC. The research design provides information gathered from a time-series investigation over an eight-year period (2011–2018) straddling the <IR> Framework and the Directive 2014/95/EU to verify how IR as a corporate tool has spread through the countries of the EU. The investigation has taken into consideration all IR released from the companies present in the IIRC Examples database during the period considered. Samples are limited to only companies with legal head offices in the countries of the European Union.

Background: Given the persistent challenges to the higher education business model, private higher education institutions (PHEIs) are exploring myriad ways to increase enrolment and income, while aggressively managing spending. Many PHEIs are facing financial distress and struggling because of decreasing budgets and declining revenue. Thus, carving unique strategies that direct the institution to focus on its core competencies, making additional budget cuts without compromising quality, developing new revenue streams, embracing new technology, and offering affordable programs, will ultimately lead to financial success. Frugal innovation (FI) can shed light on these challenges.Methods: This paper presents a systematic literature review to investigate and analyse prior research that focused on FI within the sphere of intellectual capital (IC) and information technology capabilities (ITC) research, and their relationships in PHEIs. Transfield’s five phases were employed to extract journal articles published over a thirty-year period (1990 to 2020) from major online databases using keyword searches. Although an initial search generated 76,025 papers, the search for IC and FI yielded 41 papers, and finally only two papers were selected as they clearly related IC with FI.Results: There was a research gap in the literature published from 1990 to 2020 regarding IC applications to achieve FI. This work revealed that IC and ITC research for FI in PHEI remain insufficiently explored. Conclusions: Further research is required on the evaluation model of IC, ITC and FI, methodologies, empirical analysis, and the development of measurement metrics. A limitation to this study is the number of keywords selected.

Intellectual capital has gained increasing attention, and its importance has been acknowledged widely including in Indonesia. Despite the importance of intellectual capital, several researchers emphasise the limitation of such studies in non-developed countries. Furthermore, the majority of prior studies on intellectual capital disclosures employ content analysis despite its weaknesses. Therefore, this research constructed an Indonesian intellectual capital disclosure framework, a framework based on data of Indonesia that may overcome content analysis weaknesses. Furthermore, this research also offers a new joint theoretical framework, intellectual capital theoretical framework, which may be useful for future intellectual capital disclosure research. This research contributes to limited intellectual capital disclosure research in Indonesia and provides valuable insights into the practice in Indonesia. This research also contributes to the development and introduction of intellectual capital theoretical framework and Indonesian intellectual capital disclosure framework.