Information Structure And Intellectual Capital

Information Structure and Intellectual Capital
(word count 4,151)

Submitted to the
5th World Congress on Intellectual Capital
Hamilton, Ontario
January, 2002

Submitted by

Brian Nienhaus
Department of Business Administration
The Martha and Spencer Love School of Business
Elon University
Elon, NC 27244
Telephone: 336-278-5936
Fax: 336-278-5952
Email: bnienhaus@elon.edu

AndDouglas Redington
Assistant Professor of Economics
Department of Economics
The Martha and Spencer Love School of Business
Elon University
Elon, NC 27244
Telephone: 336-278-6000
Fax: 336-278-5952
Email: redingto@elon.edu

October 1, 2001

Biographical Notes

Brian Nienhaus is an assistant professor of business administration, teaching primarily business communication. His principalresearch interest is in the global distribution of human capital resources.

Douglas Redington is an assistant professor of economics. His teaching and research interests are in environmental economics.

Information Structure and Intellectual Capital

Abstract

In our information age, intellectual capital scholars have focused primarily on the level of the firm, and have tried toconceptualize intellectual capital as a firm’s human, structural and relational capital. This paper suggests that factors above the level of the firm, and therefore external to the firm, may be crucial in understanding the human capital resources available to the firm even before it implements its intellectual capital asset management processes. Key to understanding relevant features of the externalenvironment are the ways nation-states have allowed symbolic exchange to articulate to the money economy. We develop three ways as well as expected cognitive outcomes, all of which, we argue, are crucial to human capital formation and destruction across the globe.

Information Structure and Intellectual Capital

Introduction

Thanks to the work of some academic pioneers, intellectual capitalhas been defined, elegantly and compellingly, as the difference between a firm’s market value and its asset replacement costs (Edvinsson & Malone, 1997). The gap between tangible asset valuations and what some firms actually sell for has been substantial in the late 1990s. If we consider that this gap had grown contemporaneously with the notion that we had entered into an information age (Beniger,1990), then we can understand the sense of urgency with which intellectual capital scholars have tried to help corporate managers plan and care for their knowledge resources (McNamara, 1999).
Initial conceptualizations of intellectual capital have focused our attention on intangible assets, and hence have chosen the firm as the appropriate level of analysis. Those intangible assets havebeen parsed into component categories: human, structural and relational capital. Human capital is the sheer intelligence of a firm’s employees (Bontis, 1998). Structural capital points to the firm’s organizational capabilities to meet market requirements, actualizing the intelligence of its employees (Joia, 2000). Relational capital reminds us that firms that gain end user satisfaction and loyaltyare highly valued in the marketplace (Joia, 2000). At first glance, the component categories strike us as compelling. Yet at the beginning of bubble in valuations of technology firms, when the gap between tangible assets and firms’ market value were at their greatest, Rutledge vehemently challenged the intellectual capital movement as wrong-headed (1997). Now, post-tech bubble burst, we canspeculate that his critical efforts against the intellectual capital movement may have garnered even more currency.
Even without pressure from critics, intellectual capital scholars should see merit in reassessment of initial conceptual work. Initial responses to practitioner demands came quickly; substantial devaluations of goodwill and other intangible assets will surely follow in the months...