Intellectual Capital and Productivity: Identification and the Measurement of the Relationship at Company-level

A company’s intellectual capital consists of a set of various non-physical sources of value, such as employee competencies, stakeholder relationships and patents. This paper examines the relationship between intellectual capital and productivity at company-level. It is based on a conceptual study aiming to understand the relationship as well as two statistical studies aiming to describe it empirically. The empirical examination is based on information gathered from the financial statements of Finnish companies between 2001 and 2003. Altogether around 20.000 companies are included in the analysis, in which the results of intellectual capital measures and productivity measures are examined. The conceptual study suggests that the company-level relationship between IC and productivity is a complex and case-specific phenomenon. The biggest problems in studying the relationship are related to IC measurement. Valid and comparable IC measures are missing, and due to the case-specific nature of IC, measures that would be generic and still relevant in different companies may be very difficult to create. Although it seems most probable that there is a strong relationship between IC and productivity it is difficult to ascertain the relationship empirically. Also in this paper, the empirical relationship was not clearly shown. However, instead of discussing about the generic relationship between IC and productivity it might be more useful to focus on various interrelated relationships between different IC-factors and productivity.

Date: 2007
Pages: 20
Price: 10 €
Language: English
Discussion Papers no. 1108