Individual intellectual capital

Individual intellectual capital

General issues

It is well known that IC may have an impact on organizations (Sullivan, 1999; Cabrita, Vaz, 2008; Mládková, L., 2013; Seleim, Bontis, 2013). This type of analysis is called “Strategic IC Management” and it considers IC as an organizational asset comprised of human, relational and structural capital (Edvinsson, Malone, 1997) which should be developed and whose impacts are decisive to the organizations. Strategic IC Management has been extended to regions and countries (Bonfour, Edvinsson, 2005).

However, very few studies have been made of the individual dimension of IC (Mura, Longo, 2013; Tomé et al., 2014). This fact is somehow surprising given that individuals are the essential agents of IC operations and the main constituents of organizations. IC concept helps to investigate individual intellectual capital and its influence of personal success or firm’s performance in areas where person’s contribution to overall performance can be identified.

On the current moment, empirical studies on individual intellectual capital were conducted in football coaching and mutual fund management. The results are presented in the following papers:

• Naidenova I. N., Parshakov P., Zavertiaeva M. A., Tomé E. Look for people, not for alpha: mutual funds success and managers intellectual capital // Measuring Business Excellence. 2015. Vol. 4. No. 19. P. 57-71.
• Oskolkova Marina Aleksandrovna, Tomé E., Naidenova I. N. Personal welfare and intellectual capital: the case of football coaches // Journal of Intellectual Capital. 2014. Vol. 15. No. 1. P. 189-202.

 Implications for practice

The possibility to codify IC of a person enables to analyze core competencies necessary in a particular activity or profession for success achievement. The results can be used to figure out under- or overestimation of a personal salary, providing a kind of benchmark for salary determination in a particular activity.

 Databases we have

We have databases on football coach’s and mutual fund manager’s individual characteristics and related performance. These databases are not updated.

 Future research

The shortcomings of current research can be overcame by extending current databases in time and countries. It would be also interesting to replicate or adjust proposed models to analyze personal IC in other professional spheres and systemize core factors that influence the individual welfare.

For example, the idea that relational capital influences the salary of coaches has an interesting correlation with the analysis of salaries of US university professors. It was found that bigger salaries were paid in universities which students attended because they expect to meet people with networks valuable for future career and life.

The proposed analysis can be also applied for investigation of salary’s and performance’s determinants in such professions as football players in top leagues, actors or individual entrepreneurs etc. Questionnaire surveys can be used for deeper analysis.

Stock market reaction to announcements about intangibles

General issues

Nowadays a few companies prepare specific repots on intangibles but they disclose such information in the form of announcements on their web sites. Therefore, stock market investors receive information related to investments in intangibles. It is interesting to investigate how stock market incorporates this information and whether there are country differences.

The current results are presented in the following paper:

• Найденова Ю. Н. Раскрытие информации, связанной с НИОКР, российскими фармацевтическими компаниями // Корпоративные финансы. 2015. Т. 34. № 2. С. 100-113.

Implications for practice

The results will evidence on investor’s preferences and expectations about companies investments in intangibles. It can help companies to choose disclosure strategy on intangibles and give regulators insight on which information is important for investors and whether disclosure of intangibles should be mandatory.

Databases we have

• Announcements of public pharmaceutical companies that operates in EU for 2011-2013
• Announcements of public pharmaceutical companies that operates in Russia for 2011-2013

Future research

There is a vast area for future research. For example, one can distinguish announcements by different types of intangibles, make comparative analysis of intangibles disclosure in different countries, figure out disclosure specific features in industries other than pharmaceutical one, and analyze the reaction of stock market to changes in regional or country policy that affects intangibles.

Managerial personal traits and company’s financial management

We use the upper echelons theory and behavioral economics approach to analyze the influence of the managerial personal characteristics on financial decisions. As the upper echelons theory predicts, the corporate strategy reflects the views and values of their top managers. However, in coherence with the behavioral approach, managerial decisions are not completely rational and are affected by personal biases. The research line pays particular attention to such behavioral bias as overconfidence. Current and future projects on this topic are the following:

• The influence of R&D expenditures undertook by overconfident managers on the value of the firm
• The influence of cultural characteristics of both company’s location and managers’ place of birth and education on corporate risk
• The influence of overconfident CEO on the relationship between innovative activity and financing decisions

This research line uses two databases:

1.      Database on corporate governance (CEO) in large European companies.

2.      Database on corporate governance (CEO and boards) in large Russian companies.
a.      General description: 112 large listed Russian companies between 2009 and 2014.
b.      Sources: Ruslana database provided by Bureau van Djik, companies’ websites and annual reports, open sources in the Internet. 
c.       Main indicators: financial indicators, personal characteristics of CEOs and Board. 

The research line allows to extend previous research that has primarily focused on US firms to another types of corporate systems and try to compare well-tested measures of overconfidence, such as citations in business press and option-based metrics, and complement them with additional measures based on the CEOs’ career such as age and experience. We study the circumstances under which managerial biases and other personal traits can be channeled to increase the efficiency of corporate governance and financial management. 

Networks of Board members in Russian companies

During the analysis of corporate governance in Russia, researchers usually concentrate on traditional metrics of corporate governance like ownership structure, transparency and disclosure, independence and busyness of a board to compare Russia with the other countries. However, Russian business has another one feature: the importance of relationships. Despite of the mentioned above characteristics, this part is rarely studied. The development of social network analysis gives us a good tool to estimate the importance of social contacts and relationships and their influence on corporate policy. We implement this tool to analyze corporate governance in large Russian companies from the new perspective. Current and future projects on this topic are the following:

Descriptive analysis of corporate governance in large Russian companies using traditional metrics and instruments of networks analysis for identification of directors’ centrality

• The role of independent directors in protecting minority shareholders’ rights in Russia
• Networks of politically connected directors and corporate risk-taking

The research is based on the database on corporate governance (boards) in large Russian companies:

 a.      General description: The research is based on a sample of 112 large listed Russian companies between 2009 and 2014.

 b.      Sources: Ruslana database provided by Bureau van Djik, companies’ websites and annual reports, open sources in the Internet. 

 c.       Main indicators: financial indicators, personal characteristics of CEOs and Board. 

 The results of the current research line can be implemented for the further improving of corporate governance in Russia by the government and a company’s shareholders. Thus, shareholders can hire directors with a particular experience, busyness and centrality for a better monitoring.