The management, measurement and the reporting of intellectual capital

TLDR

The rise of the new economy, driven by information and knowledge, has elevated intellectual capital as a key determinant of enterprise value and national economic performance, prompting early adoption of non‑financial metrics in Swedish companies. The study aims to develop metrics for recording and reporting the value of knowledge within organizations. The adoption of non‑financial metrics marks a significant departure from traditional accounting orthodoxy.

Abstract

The rise of the “new economy”, one principally driven by information and knowledge, international competitiveness and changing patterns of interpersonal activities is attributed to the increased prominence of intellectual capital (IC) as a management and research topic. There is indeed much to support the assertion that IC in the new century will be instrumental in the determination of enterprise value and national economic performance. Stemming from this awareness of the value of know‐how is a drive to establish new metrics that can be used to record and report the value attributable to knowledge within an organisation. The task has been given impetus by the fact that early work appearing in the accounting financial reports of Swedish companies involves the application of non‐financial metrics and focuses on intangible assets. This represents a significant departure from traditional financial and management accounting orthodoxy.