Value creation and sustainability in knowledge-based strategies

Abstract

The purpose of this paper is to place the value creation process within sustainable growth strategies. Building on Drucker (1968, 1999a, b), Pulic (2000, 2004, 2008) and other papers by the same authors (Iazzolino and Laise, 2013) the specific aim of this research is to propose an accounting-based framework able to: distinguish between knowledge-intensive firms (KIFs) and nonknowledge intensive firms (nonKIFs); and investigate the contribution of the two sets of firms (KIFs and nonKIFs) to overall sustainability, from a social point of view, of the economic system. Design/methodology/approach – The paper uses the notion of value added (VA) (Pulic, 2000, 2004, 2008) as the main indicator to measure the value creation in a knowledge economy context. As regard the first point of the framework, the approach is based on the analysis of VA and its components, starting from a reinterpretation of the concept of value added intellectual coefficient made by the same authors of this paper. An empirical analysis based on the composition of VA in ten Italian industries, by using an overall sample of 1,000 firms, has been carried out and is described in the paper. As regards the second point, the paper analyses, from a theoretical point of view, the necessary conditions to set up a sustainable value creation strategy in social terms, using the conceptual categories introduced by Drucker (1968, 1999a, b) and Pulic (2000, 2004, 2008). Findings – From results of the empirical analysis it emerges that: first, in traditional industries the weight of the cost of employees on VA (human capital investments) is less than the other sectors (low human capital intensity). In these sectors the value creation strategy is mainly based on “dead knowledge,” embedded in machines (physical capital); and second, in nontraditional industries (consulting, advertising, research, etc.) the economic value creation is mainly based on “living knowledge,” embedded in human resources (high human capital intensity). In these sectors we have lower productivity of work (VA/human capital) and higher employment. Practical implications – The framework proposed makes it possible to reduce the risk of myopic valuation of economic performance. Through this methodology it is possible to highlight the effects of sustainable strategies based on knowledge investments oriented toward the stakeholder value theory and corporate social responsibility. The approach can be very useful for top managers and for accountants, as it underlines the importance of the VA income statement and constructs a strong link to the themes of knowledge management. Originality/value – The originality and the value of this methodological proposal can be appreciated by taking into account that in the literature there is no accounting-based methodology that is able to identify: the knowledge-intensive firms; and the firms that can contribute to overall social sustainability, within the set of all firms. © 2016, © Emerald Group Publishing Limited

A theoretical analysis of the value added intellectual coefficient (VAIC)

“…They further explore the relationship between HCE and SCE, identifying that the VAIC formula generates a null value of ICE for HCE = 0.618. Furthermore, Iazzolino and Laise (2016) and Iazzolino et al (2019) praise the VAIC for supplying a measure, namely, HCE, consistent with the importance of creativity in today's economies and with the continuous increase in the productivity of knowledge work.…”

Conceptual Framework for the Strategic Management: A Literature Review—Descriptive

“…e academics and professionals are more and more interested in the concept of sustainability (integrated measure of the economic, social, and environmental performance) [63]. For Iazzolino and Laise [64], the strategies must be socially sustainable, creating value not only for the shareholder but also for the other interested, for the employees. According to Radomska [65], the sustainability issues in the strategies are becoming a natural element of the business policies, and their actions are important for the business of the company and for the financial result, as to cost reduction, cleaner production, gas reduction, and so on [66].…”

The Status quo of Knowledge Management and Sustainability Knowledge

“…In other words, there is recognition of the need to DEFINE, but the concept is not further developed. Iazzolino and Laise (2016), and Iazzolino, Laise, and Gabriele (2017) develop a value-added perspective of sustainability knowledge in a socio-economic context. An explicit KM framework is not presented, rather a valuation system.…”