Evolutionary Trends of Intangibles Disclosure Within Non-financial Reporting

The constant evolution of socioeconomic scenarios, global competition, and internationalization
processes has led business scholars to recognize the importance of
intangible resources. Knowledge, innovation capacity, intellectual property, human
resources, and organizational competencies represent intangible value drivers that
bring about future benefits (Abeysekera, 2006). These are essential resources to
compete in the market, and their effective management is a prerequisite for companies
to obtain or preserve their long-term competitive edge. In fact, a successful
business strategy is increasingly dependent upon the management’s ability to focus
on new factors, such as relationships with customers/users, staff, and partners, and
the ability to learn and innovate. These variables can be traced back to the concept of
intellectual capital (IC), which “is the sum of everything everybody in a company
knows that gives it a competitive edge” (Stewart, 1997, p. IX). The resource-based
view (RBV) theory considers the company’s “intangible” resources a fundamental
distinctive feature and the basis for creating a competitive advantage (Hamel &
Prahalad, 1990). Thus, the terms IC, intangibles, and intangible resources are often
used interchangeably in business and management literature (Petty & Guthrie,
2000). IC is knowledge-based capital that supports a company’s knowledge-based
activities and, therefore, cannot be reported by traditional financial accounts. The
inadequacy of traditional reporting systems in identifying the elements that explain a
company’s overall performance has motivated academic studies on the possibility of identifying, representing, and measuring the IC dimension by using specific reports
(Mouritsen, 1998; Edvinsson et al., 2000). These assets contribute to the success of
firms through value-creation processes that improve corporate routines and practices
(Stivers et al., 1997). In this context, IC theory stands alongside value-creation
theories in considering intangibles key tools in the value-creation process
(Rappaport, 1986).
Edvinsson and Malone (1997) proposed a scheme to identify the single component
of a firm’s market value, focusing on the concept of IC in its main declinations
of human capital and structural capital. These considerations show the importance of
intellectual capital disclosure (ICD) to provide accounting information regarding
companies’ value-creation processes realized by intangible assets (Petty & Guthrie,
2000). Increasing attention has been paid to improving the methods and instruments
used to represent a company’s intangible assets, both in the context of mandatory
and voluntary disclosure. Reporting models have been proposed whereby, through
physical-technical indicators and economic-financial indicators, it is possible to offer
investors and lenders a complete view of the company’s knowledge, capabilities,
and relationships to reduce the existing information asymmetry.
Initially, numerous scholars and analysts promoted an “Intellectual Capital
Model.” A Swedish financial services company, Skandia AFS, developed the first
such model (Edvinsson, 1997). Many scholars have subsequently proposed several
tools to facilitate the measuring of each category of intangibles (human, customer,
and structural/organizational capitals; Abhayawansa, 2014; Choong, 2008;
Mouritsen et al., 2001). To date, the most well-known methods are probably the
Intangible Assets Monitor (Sveiby, 1997), the Balanced Scorecard (Kaplan &
Norton, 1992), the Value Chain Scoreboard (Lev, 2001), the Strategic Resources
and Consequences Report (Lev & Gu, 2016), and the Value-Added Intellectual
Capital Coefficient (Pulic, 2000). Des