The Communication of Intellectual Capital and its Relationship With Organizational Performance

Competition and economic downturns in the past decade have highlighted the importance of the communication of intellectual capital (IC) in supporting organizational resilience. While IC as an organizational asset is long noted, one area that has begun to attract attention is the way in which the communication of IC is made available. Current literature on the communication of IC is limited to reporting metrics to gauge some quantifiable aspects of IC but does not provide sufficient insights on organizational performance (OP). Yet, the need for the communication of IC is growing globally as investors are demanding for more non-financial information to reflect organization's sustainability. Hence, the objectives of this study are two-fold. First is to examine the communication of IC in terms of content, and second, to investigate the correlation of the communication of IC with OP. The dataset used in this study was drawn from annual reports and supplementary corporate disclosure (ARS) published for FYE2011 in English by 299 banks listed on the stock exchanges globally. The communication of IC was reviewed from three angles, namely human capital, relational capital and structural capital; and OP encompasses business continuity, risk management and organizational productivity. Content analysis was used to evaluate the content and to highlight nuances and trends. Findings showed that the communication of IC was prevalent in more than half of the banks in the dataset, where Human Capital information was most widely reported. Three peculiarities were also identified from analysis, namely inclusion of information on women, importance of training to organizational productivity, and extensiveness of risk management processes in banks. The significance of this study lies in its effort to highlight relevance of the communication of IC from the perspective of IC components and its correlation to OP.