Constructivist and Analytical Approach to Intellectual Capital

Abstract

Intellectual capital as a concept is only as much useful for the theory and practice of management as it helps explaining the differences or to create value addition to the performance of organization. Multiple studies have been carried out on this account, a series of them was developed employing original framework by Bontis (1998). Their methodological findings and encountered controversies in the actual results enable us to advance the model further, to extend its applicability as well as analytical rigorousness and to suggest new aspects for the framework of our study to be carried out in the pan- Baltic region. In order to reinforce the case for the model explaining the performance of the organization by the construct of intellectual capital we begin with the constructivist approach to the problem and then continue with the analytical model. Social constructivism approach emphasizes the importance of culture and context in understanding what occurs in society and constructing knowledge based on this understanding. Contrary to the physical science where understanding about the object does not change its behavior or characteristics, impact of the subject’s expectations or belief about the object could be huge in social science. Competitive environment and constant changes create constant demand for changing management theories and once applied correctly, they facilitate the value creation in the organization both through the differentiation as well as through receptiveness to the changes in organizational environment. During the last decade, intellectual capital became one of such theories, explaining value creation for the organization through deconstructing of its three sub-domains – human capital, structural capital and relational capital. Findings from the pilot study of intellectual capital done by N.Bontis (1998) have set several lasting implications for the future research which are evaluated, analyzed and also compared to the later studies done by other authors in this article. The findings have reinforced the argument about the contextual (industry-specific) nature of relationship between the intellectual capital and the performance of the organization as well as benchmarking against industry norms. Therefore this paper should serve as a roadmap for further applications and advancements of the current model explaining why and how the phenomena of intellectual capital is a successful social construct holistically explaining the differences and shifts in the performance of the organization.