An intellectual capital ontology in an integrated reporting context

Abstract

Purpose The purpose of this paper is to investigate the intellectual capital (IC) ontology in an integrated reporting context to explore the function that integrated report (IR) preparers assign to IC elements and the role of integrated thinking in this process. Design/methodology/approach Social ontology theory helps elucidate how an energy-sector company socially constructed an IC ontology in which IC is a core element of the value creation story told in the IR. The empirical analysis benefited from in-depth interviews with the corporate staff. Findings The subjective nature of IC ontology emerges, in that IC’s function is defined during the very process of IR preparation. The intangible elements drive sustainability-oriented financial value creation according to the sustainability approach embraced by the company’s business model. Integrated thinking both facilitates this perspective on IC is shared among various departments of the company and provides a procedure for scrutinising what counts as IC in this integrated reporting context. Research limitations/implications The research scope is limited to the IR preparation process. Further research could explore IC ontologies beyond this process. Originality/value This study is the first to explore IC ontology empirically within an innovative integrated reporting context. It opens paths to further research on the relationships between IC and integrated thinking.

Integrated Reporting and European State-Owned Enterprises: A Disclosure Analysis Pre and Post 2014/95/EU

“…Integrated reporting represents the last development in the theme of corporate reporting, based on the idea of integration in a single document of financial and non-financial information [15,34].…”

“…It constitutes a structured reaction to the growing investors and stakeholders' needs, where the former asks for more useful and relevant information about firms' financial and economic domains, mainly linked to the corporate value, and the latter require more information about social and environmental matters [13]. In this end, it is meant to overcome the drawbacks of previous stand-alone (e.g., sustainability reports) and traditional reports (financial reports), which discuss social, environmental and financial information as "unconnected silos" [13] (p. 1191), also neglecting the importance of intangible assets and governance features [34][35][36].…”

“…As such, IR is a single tool which provides a holistic representation of all the dimensions which influence the organisation's ability to create value over time in a forward-looking perspective [15,34,37,38]. It is based on principles and content elements established in the framework released in 2013 by the International Integrated Reporting Council (IIRC), "a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs" [16] (p. 1).…”

Intellectual capital accounting in the age of integrated reporting: a commentary

“…Three papers in this JIC special issue examine IR for its capacity to enable an enhanced understanding of non-financial value drivers and incorporate IC in management decision making. Doni et al (2019) Finally, Stacchezzini et al (2019) explore the conceptualisation of IC elements in the context of IR and the functions that integrated reporters assign to IC elements. The authors use social ontology theory and apply this to an energy sector company.…”

Belt‐and‐Road Initiative: Driving the need to understand intellectual capital in Chinese multinational enterprises

“…A first set of seminal conceptualizations recognize IC as the difference between a firm's market value and different accounting values, such as book value (Anifowose, Abdul Rashid, Annuar, & Ibrahim, ), firm equity (Camodeca, Almici, & Sagliaschi, ), or the replacement cost of assets (Smriti & Das, ). It was used in an attempt to account for the intangible value that would not be listed explicitly on a company's balance sheets (Stacchezzini, Florio, Sproviero, & Corbella, ). In this line, IC was described as the sum of the hidden assets of the company not fully captured on the firm's balance sheet (Abhayawansa, Guthrie, & Bernardi, ).…”