Authors: Burgman, R.J.; Roos, G.; Ballow, J.J.; Thomas, R.J.

Source: Journal of Intellectual Capital, Volume 6, Number 4, 2005 , pp. 588-614(27)

Publisher: Emerald Group Publishing Limited

Abstract:

<B>Purpose</B> - The purpose of this paper is to describe the logic and processes for identifying, measuring and managing intellectual capital resources along side traditional economic resources to achieve sustainable outcomes valued by investors. <B>Design/methodology/approach</B> - The approach is founded on classical finance theory and draws on and multi-attribute value theory, system dynamics and the strands of thought known as intellectual capital in order to produce a grounded framework that both produces reliable results as well as achieves acceptance in the financial community. <B>Findings</B> - The findings from this approach, the FVMT Methodology, provide a comprehensive management framework that is agnostic as to the form of resources being utilized and the activities that are involved in the transformation of one resource form into another on the way to achieving sustainable outcomes valued by investors. <B>Research limitations/implications</B> - Whilst the approach has proven to work well the limitations are that it requires both effort and access to market makers. <B>Practical implications</B> - The implications is that for the first time an approach is now available that provides the same rigor for managing the future value component of a firm's share price as there already exist for managing the current value component of the firm's share price. This means that managers can both reduce the volatility surrounding their share price as well as predict the value outcomes of a given set of actions. <B>Originality/value</B> - The authors believe that this is the first presentation of a methodology grounded in classical finance theory for the managing of the future value component of a firm's share price.

Keywords: Intellectual capital; Return on investment; Shareholder value analysis

Document Type: Research article

DOI: http://dx.doi.org/10.1108/14691930510628843

Publication date: 2005-12-01

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