Intellectual Capital Measurement and Reporting Models

Intellectual Capital Measurement and Reporting Models

Jamal A. Nazari (Simon Fraser University, Canada)
DOI: 10.4018/978-1-4666-6457-9.ch008
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This chapter extends the earlier study of Bontis (2001) by critically reviewing the existing methods to measure and report intellectual capital. Bontis's (2001) study contributed significantly to the intellectual capital measurement and reporting literature. However, despite the growth in the field of IC and development and introduction of several new approaches to measure and report intellectual capital, no recent study has synthesized the IC measurement and reporting models. The objective of this chapter is to fill this gap in the literature by providing a critical review of 28 IC measurement models. To achieve this objective, the author partially adopts Sveiby's (2007) suggested classification scheme for categorizing the existing measurement models. The classification will enable the reader to uncover the common attributes of each model and to contrast the dissimilarities.
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Intellectual Capital Measurement Models

The existing measurement methods for intellectual capital can be classified into four main categories. These categories are an extension to the classifications suggested by Luthy (1998). Consistent with some of the earlier studies, Sveiby (2007) provided a schematic summary of the existing methods and organized them into four main categories. The first two categories, Return on Assets and Market Capitalization Methods, are intellectual capital measurement methods that measure intellectual capital at the aggregate organizational level; and hereafter are called market models since the data for calculating the value can be obtained from the market and from annual reports. With the exception of VAIC and FiMIAM IC measurement methods that overlap with the management models, the IC is usually measured in an aggregate level and it is not usually broken down into common classifications. The next two categories, Direct IC and Scorecard methods, represent intellectual capital methods at the component level; and are hereafter called management models. The input data for these methods are usually obtained from within organizations. Most methods falling under Direct IC category assign dollar value to IC components, while methods classified under Scorecard do not. Figure 1 graphically summarizes IC measurement models. Methods falling under each of these four categories are discussed in the following sections.

Figure 1.

Methods for measuring intangible assets/ intellectual capital


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