Grand theories as barriers to using IC concepts

Abstract

Purpose

The purpose of this paper is to answer the question “What are the barriers to the use of IC concepts?” by discussing and critiquing two contemporary grand theories about IC, being market‐to‐book ratios as a representation of IC and that disclosing IC leads to greater profitability.

Design/methodology/approach

The paper reviews contemporary IC literature and explores reasons why these grand theories of IC hinder its adoption.

Findings

The research finds that these grand theories mislead because they cannot be proven empirically. Therefore, managers should attempt to better understand the possible causal relationships between their people, processes and stakeholders (human, structural and relational capital) rather than adopting someone else's mousetrap.

Practical implications

In order to improve the use of IC concepts they should be examined as differentiation theories of practice that take into account the agent (people) as a unit of analysis, the actual practice of IC and the resultant changes within an organisation, rather than trying to achieve the impossible generalisations of IC grand theories. Researchers need to conduct more critical and performative research into IC rather than ostensive research.

Originality/value

Allows academics and practitioners to understand the barriers to implementing IC in organisations, potentially allowing for the development of better engineered IC practices rather than the development of additional IC models.

Citation

Dumay, J.C. (2012), "Grand theories as barriers to using IC concepts", Journal of Intellectual Capital, Vol. 13 No. 1, pp. 4-15. https://doi.org/10.1108/14691931211196187