Un-locking Intellectual Capital

The purpose of this paper is to investigate how organizations work with IC when it enters the organization from an accounting or measurement perspective. In this paper, the phenomenon of ‘lock-in’ is used to conduct a longitudinal analysis of the design and implementation of IC practices in an Italian firm which was initially a ‘newcomer’ to managing IC. The IC measurement and management system adopted by the company was developed using an interventionist research approach whereby one researcher was directly involved in implementing the system. In particular, we show that when accounting for IC is the point of entrance into a firm new to IC, the firm remains for a period of time, locked-in to measuring IC. However, firms can be freed from a narrow accounting perspective and over time allow more attention to be paid to the process of mobilizing IC. Over time, IC becomes ‘un-locked’, allowing IC to be mobilized rather than just measured leading to management actions not possible while IC remained ‘locked-in’ to accounting. We also find that the “lock-in” to measuring IC is not always detrimental because at times the “lock-in” is necessary to allow actors to make sense of IC. By understanding the lesson learnt from the case, other organizations who implement IC practices can be made aware that the ‘lock-in’ phenomenon can take place and devise strategies to avoid the possible detrimental aspects of ‘lock-in’ and understand when it may be beneficial to do so. Our study is limited to the one Italian company studied and thus our results may not be generalized directly to other organizations. It also has been influenced by the active involvement and interventionist approach of the researcher. Thus the resultant practices will have in part been influenced by the researcher. The paper provides a novel example of how academics can get their ‘hands-dirty’ inside an organization in the process of implementing an accounting innovation such as the process of measuring and managing IC. The paper helps to take accounting research out of the ivory towers of academia and into the field of accounting practice