The Choice of Intellectual Capital Statements in Systems Integration in a Leading High-Tech Company

Today, many organizations recognize the importance of intellectual capital models as a principal driver of firm performance and as a core differentiator. An increasing number of firms begin reporting more about the intangible aspects of their business even without the force of regulations. Human capital is the core of the IC model. In the knowledge-based economy, this is becoming the most important intangible asset for most organizations. Key value drivers for human capital are employee knowledge, skills, abilities, innovativeness and experience. The key is to capture that knowledge within the company's structures, transferring it from individuals, to groups, to the entire organization and such that it becomes part of the organization's "structural" capital and enhances the ability to build relationships with customers and all stakeholders. The purpose of this paper is to present the results of an empirical study into the critical success factors for implementing the development of intellectual capital statements in relation to knowledge-management activity. In fact, the IC statement is a new form of reporting the aim of which should be to capture the firm's KM activities (Mouritsen, 1998; Mouritsen, Larsen and Bukh 2001) in order to improve managerial decision process and the evaluation of the firm by financial analysts and external stakeholders. The research is qualitative and focused on a case study. In general terms, the case method (Yin, 1994) has the dual aim of detailing the principal characteristics of the phenomena and understanding the dynamics of a given process. The company analyzed designs and develops Large Systems for Homeland Protection - systems and radar for air defence, battlefield management, naval warfare, air traffic control, coastal and maritime surveillance. The company with about 4,200 employees has fifty years of experience in systems integration and a customer base in no less than 150 countries. The firm is a leader in research and development thanks to annual investments amounting to 20% of the production value. One of the company's top management new challenge is to define a method to visualize, measure and manage the firm's intellectual capital. Thus our research question is how to draw up a "useful" instead of a "fashionable" corporate IC statement. As a first step we suggest it is important to ask "why", "what", "how" and "when" to implement it. Consequently our empirical study aims at answering these questions.