Intellectual Capital Management in Finnish SMEs

Sari Salojärvi ABSTRACT Swedish School of Economics and Business Administration Helsinki Finland ABSTRACT OF THE RESEARCH PLAN Topic: Intellectual Capital Management in Finnish SME:s Introduction Our society is developing more and more towards an information society. As a result of this development both the external activities and internal tasks are more and more abstract. This kind of development requires continuous development and growth of immaterial resources. Because change has become a permanent state in our society the organizations and their members have to adopt and learn new things all the time. The new competition strategies are increasingly based on learning and intellectual capital. Today know-how also becomes outdated so rapidly that learning new has become every day reality in organizations. Learning is not anymore one time action but a continuous process, which requires conscious knowledge management and thus, creating a permanent but at the same time renewable intellectual capital. On the other hand, such organizations that base their whole business on know-how and service are increasing in number and importance all the time. Therefore, there have been several attempts to create methods to compare such immaterial enterprises with the traditional production enterprises. The concrete capital stated in the traditional balance sheets of such enterprises is more than often very limited, and therefore it doesn?t tell the real value of these enterprises. Therefore, such concepts as intellectual capital, knowledge capital or human capital have been created. Among others, human resources balances and statements have been some attempts to measure immaterial capital of different organizations and enterprises. Different researches and studies of intellectual capital and knowledge management have become quite common in the recent years. There have been many aspects on this topic, but a common theory combining several aspects is still lacking. The target of this research is to establish a synthesis of several approaches on the topic and thus to create a versatile model to describe and to evaluate the immaterial capital in enterprises. Objective of the study The main objective of this research is to combine different approaches to create one extensive model on intellectual capital in order to evaluate the real value of the enterprise or to gain useful information on the current state in the enterprise and how to develop the intellectual capital further. The research will start from a survey to find out the current situation and needs of intellectual capital in Finnish SMEs. After getting the basic information from the field, the target is to construct a process tool that the enterprises could use both in their internal development and to express their immaterial value to their stakeholders and customers. The aim is to test the model in several case enterprises and to further develop it if needed, and finally, to create a process model which can be used as a self-estimation tool in the enterprises. Theoretical background The theories to be used in this research cover several approaches and previous researches and studies on the topic. First I will study the concept of immaterial capital and intellectual capital. The strategic management theory will provide a wider theoretical framework for this study. There are also closely linked fields of study like organizational learning, knowledge management and networking which also will be reflected in the theoretical background of this research. Method The empirical part of the will start from a questionnaire survey with approximately 100 Finnish enterprises that are chosen randomly. The second step is to interview those enterprises that told in the survey of their systematic use of intellectual capital management. Finally, the aim is to create a model of intellectual capital based on theories and previous studies and on the collected survey material, and to test and re-define it in the case SMEs. As a result of the case studies, a process model to evaluate intellectual capital will be documented. The research method is mainly qualitative, but some quantitative measures and comparisons will support the research as well, especially in the analysis of the survey data. Time schedule The survey parts of the study and the two first case studies have been carried out in autumn 2002. The third case study will take place in early 2003. The year 2003 will be devoted to analyze all data and to write the research report. The project is expected to be completed in the first half of 2004.