HELSINKI SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION
INTELLECTUAL CAPITAL ACCOUNTING
This master thesis reviews large amount of recent discussion on the valuation and management of companies’ intangible assets like patents, brands, information systems, R&D, management processes, etc. These assets are often referred to as intellectual capital as opposite to the financial or real capital. In theory, the intellectual capital can be measured. However, no existing practice is found superior either from theoretical or practical point of view. Most often used taxonomies categorize intangible assets to three categories: Human Capital, Customer Capital and Structural Capital.
i) Human capital includes the know-how, capabilities, skills, and expertise of the human members of the organization;
ii) Relational (customer) capital includes any of the connections that people outside the organization have with it, their loyalty, the market share, the level of backorders, and so on; and
iii) Structural capital (or organizational capital) includes the systems, networks, policies, culture, R&D, and other "organizational capabilities" developed to meet market requirements as well as intellectual property like patents.
This master thesis discusses quite much on the valuation of human capital and reviews also the valuation of (customer) relations, R&D and patents, information systems, and brands.
I point out that the operations (like a cash flow due the well-known brand) should be valued using discounted cash flow techniques and the opportunities (like an opportunity to make a business investment due to the R&D-project) should be valued using option methods.
I also try to review how these intellectual capital accounting principles could be used in Nokia Research Center (NRC). The most important recommendation is to improve the estimation of business opportunities created by research projects.
Other recommendations include suggestions to the skill management, patent portfolio management, and valuation of external contacts and information in collaboration systems.
Finally I suggest that further studies should be made concentrating on the practical measurement problems and integration of different measurement practices.
Keywords: Intellectual capital, intangible assets, real options, human resource accounting, brand, information systems, R&D, patents, customer connections, Nokia
PART I INTRODUCTION
1 INTRODUCTION
1.1 ABOUT THE STUDY
1.2 BACKGROUND AND MOTIVATION
1.3 RESEARCH PROBLEM AND ITS LIMITATIONS
1.4 METHODOLOGY
1.5 STRUCTURE OF THE STUDY
PART II THEORETICAL FRAMEWORK
2 WHAT WE CAN ACCOUNT?
2.1 WHAT IS MEASURING?
2.2 WHAT IS COST AND VALUE?
2.3 WHAT IS ACCOUNTING?
2.4 CAN INTELLECTUAL CAPITAL BE MEASURED AS ASSETS?
3 FINANCIAL VALUATION METHODS
3.1 BASIC DISCOUNTED CASH-FLOW METHODS
3.2 OPTION PRICING MODELS
3.3 FEW WORDS ABOUT PORTFOLIOS
3.4 CONCLUSION
4 MEASURING AND MANAGING INTELLECTUAL CAPITAL
4.1 CHARACTERISTICS OF INTELLECTUAL CAPITAL
4.2 CLASSES OF INTELLECTUAL CAPITAL
4.3 METHODS USED TO VALUE THE INTELLECTUAL CAPITAL
4.4 TOTAL VALUE OF COMPANY’S KNOWLEDGE CAPITAL
4.5 EXAMPLES FROM SELECTED COMPANIES
4.6 CONCLUSIONS
5 OTHER FRAMEWORKS
5.1 HUMAN RESOURCE ACCOUNTING
5.2 VALUE OF RESEARCH AND DEVELOPMENT AND PATENTS
5.3 VALUE OF INFORMATION SYSTEMS
5.4 VALUE OF CUSTOMERS, SOURCES AND NETWORKS
5.5 VALUE OF BRAND
6 FRAMEWORK FOR INTELLECTUAL CAPITAL ACCOUNTING
6.1 THE WAY TO MEASURE AND ACCOUNT THE INTELLECTUAL CAPITAL
6.2 THE COMPONENTS OF THE INTELLECTUAL CAPITAL
PART III CASE NOKIA
7 CURRENT NOKIA RESEARCH CENTER MANAGEMENT FRAMEWORKS
7.1 NOKIA RESEARCH CENTER
7.2 NRC MANAGEMENT FRAMEWORKS
8 SUGGESTIONS FOR NOKIA RESEARCH CENTER
PART IV CONCLUSIONS
9 CONCLUSIONS
REFERENCES
APPENDIXES
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