√ Definition of Intellectual Capital, Characteristics, Components, Measurements and Theory
Definition of Intellectual Capital, Characteristics, Components, Measurements and Theory - In this discussion, we will explain about Intellectual Capital. Which includes the definitions, characteristics, components, measurements and theories that underlie intellectual capital with a complete and easy-to-understand discussion.
Definition of Intellectual Capital, Characteristics, Components, Measurements and Theory
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Definition of Intellectual Capital
Intellectual Capital / is an asset that does not have a form in the form of information resources as well knowledge whose function is to increase competitiveness and improve performance company.
The International Federation of Accountants (IFAC) in Widyaningrum (2004) states that there are several terms that are almost similar to intellectual capital, including intellectual property, intellectual assets, knowledge assets, all of which have the intention of being legitimate or capital based on existing knowledge company.
Characteristics of Intellectual Capital
Trumpet in Augustine (2007) states that intellectual capital has the following characteristics:
- Non Rivalrous. This means that the resource can be used sustainably by all kinds of users at different locations and at the same time.
- Increasing Return means being able to generate an increase in incremental unit margin income from each investment made.
- Not Additive means that the value created can be continuously increased without shrinking the main elements of these resources because these resources are codependent in value creation.
Intellectual Capital Components
Pulic classifies intellectual capital in added value (value added) obtained from the difference between the company's income (input) and all costs (output). In particular, intellectual capital is divided into capital employed (VACA), human capital (VAHU), and structural capital (STVA).
Human Capital (VAHU)
Is a combination of knowledge, skills, innovativeness, and individual capabilities in a company. Baroroh (2013: 174) high human capital will be able to encourage a combination of knowledge, skills, innovation, and the ability of a person to carry out their duties makes them able to create a value.
Structural Capital (STVA)
Menurur Baroroh (2013: 174) states that structural capital is organizational capability including infrastructure, systems information, routines, procedures and organizational culture that support employees' efforts to produce intellectual optimal.
Structural capital as company infrastructure that helps increase employee productivity. Inside millions are databases, organizational, charts, process manuals, strategies routines, and all the things that make a company's value greater than its material.
Capital Employed / Relational Capital
Is a harmonious linkage/association network that exists between the company and its partners, both originating from reliable and quality suppliers, originating from loyal customers who are satisfied with the company's services, originating from the company's relationship with the government or with the surrounding community (Arifah and Medyawati: 2012).
Intellectual Capital Measurement
The VAIC (Value Added Intellectual Coefficient) method is designed to provide information regarding value creation efficiency of assets in the form (tangible assets) and intangible assets (intangible assets) that exist in company.
VAIC is an instrument to measure the performance of a company's intellectual capital. This method is to measure how and how efficient intellectual capital and employee capital are creating value according to the relationship of the three main components namely Human Capital, Capital Employed, and Structural Capital.
This capital starts from the company's ability to create value added (VA). Value added is the most objective indicator in assessing business success and describes the company's ability to create value (value creation). Value added is calculated as the difference between output and input.
Output (OUT) shows revenue and includes all products and services sold in the market, while input (IN) includes all expenses used to earn revenue.
The important thing in this model is that labor expenses are not included in IN. Due to its active role in the value creation process, intellectual potential which is described as labor expense is not counted as a cost (cos) and is not included in the IN component. Therefore, a key aspect in Pulic's model is to treat labor as a value creating entity. Ulum, 2013: 192.
Theory Underlying Intellectual Capital
There are two theories that are closely related to intellectual capital. This theory is the most appropriate theory in underlying intellectual capital and discusses the reasons for disclosing information by companies in making financial reports. The two theories are
Stakeholder Theory
Meek and Fray (1988) in Baroroh (2013: 174) state that the consensus that develops in the context of stakeholder theory is that accounting profit is only in the form of a more accurate measurement made by stakeholders and then distributed to other stakeholders The same.
Zuliyati and Arya (2011: 114) state that stakeholder theory considers the position of stakeholders who are considered powerful. This stakeholder group is the first consideration for companies when disclosing and or not disclosing information in financial statements.
Legitimacy Theory
Degan (2004) in Baroroh (2013: 174) states that they are continuously looking for funds to guarantee their operations within the limits and norms that apply to society.
Legitimacy theory is related to stakeholder theory. In the perspective of legitimacy theory, a company will voluntarily report its activities if management considers that this is what the community hopes for.
Thus has been explained about Definition of Intellectual Capital, Characteristics, Components, Measurements and Theory, hopefully can add to your insight and knowledge. Thank you for visiting and don't forget to read other articles.
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