Economics and IC Research

JC SpenderESADE, LUSEM & Cranfield

my research program

• managing ?

• practice-based theory of the firm / organization (KBV ?)

• human agency - economics as capitalism’s art-form

• how this plays into the IC agenda

• IC research methodology implications

• reasonable expectations of IC research

• what else besides IC/IA measurement and valuation ?

25 - Jun - 2010 2IFKAD 2010

K-economy and IC ?

• intangibles, skills, KIFs, pizza (Davenport)• capitalism’s evolution• science, applied & technology• luxury goods (Veblen) & roundaboutness (Böhm-Bawerk)• ‘social sciences’ & HC• private sector, public funding, regulation & risk-management• ???

25 - Jun - 2010 IFKAD 2010 3

IC analysis is about economic valuation

• knowledge always grounded in effective practice

• value streams (Rob McLean) & rents

• investor = market / manager = use

• intangible means un-priced

• convergence ?

• accounting issues - firm value FVac = f (TC + ICac)

• where ICac = le (ICach + ICacs + ICacr) or iac (ICorg + ICnet + ICip)

• investor issues: transparency, cost of capital, risk management, etc. (Lev)

25 - Jun - 2010 4IFKAD 2010

managerial IC valuation - based on a ToF/BM

• FVRBV = r (rent-earning asset) ?

• FVKBV = s (ICrent-earning) ?

• integration ?

• Adam Smith, PAT, TCE, TP, PR, etc.

• managerial ToF ... g (TC*IC)

• Penrosian / Austrian approach

• separate TC and IC ?

25 - Jun - 2010 5IFKAD 2010

Knightian uncertainty U

• U - impossible to separate (TC*IC), complementary assets

• firm value - IC as bridge between asset cost and value stream

• IC type 2: sense-making - interpretive (cognition + practice ) ... ICsm

• methodological issues

• projective / subjective ethnographic

• FV2 = w (TC*ICsm) - where ICsm is less about K-assets and more a

measure of management’s interpretative capability or ORs

25 - Jun - 2010 6IFKAD 2010

managerial agency

• IC type 3: constructivist - making both world (market) and firm

• Schumpeter versus Kirzner

• FV3 = p (TC*ICag) - where ICag is a measure of management’s

entrepreneurial / artistic ability (DCs perhaps)

• methodological challenge

• research not agency but the constraints to and context of managerial agency

• ‘bounded rationality’ ≈ f (FVmax - FVmeasured)

• where FVmax is unknowable

25 - Jun - 2010 7IFKAD 2010

IC research methods & findings

25 - Jun - 2010 IFKAD 2010 8

market - made / priced firm-made / expectations

certainty-basedmethods

FV1, market value, ICac

samples, hypothesis testingobjective assessment,

universal laws

FV2, use-discovery, ICsm

idiosyncratic,projective methods,

Kirznerian

U - basedmethods

evolution -Nature’s agency

FV3, use-construction, ICag

idiosyncratic, historical methods,

Schumpeterian

25 - Jun - 2010 IFKAD 2010 9

IC-based value-creation ≈ entrepreneurship

market - made / priced firm-made / expectations

certainty-based

methods

FV1, market value, ICac

samples, hypothesis testingobjective assessment,

universal laws

FV2, use-discovery, ICsm

idiosyncratic,projective methods,

Kirznerian

U - basedmethods

evolution -Nature’s agency

FV3, use-construction, ICag

idiosyncratic, historical methods,

Schumpeterian

AA

BB

summary

• different - actors, valuation models, ICs & processes

• no convergence - absent certainty/equilibrium

• U-based ToF/BM makes managerial IC central

• historical trend of uncertainties engaged

• is our economy K-intensive or U-intensive ?

• agentic economy - firms as engines of U-economy growth

• IC is not only about accounting/investing under U

• economic focus is NOT on ICac or ICsm - it is on ICag

25 - Jun - 2010 IFKAD 2010 10

25 - Jun - 2010 IFKAD 2010 11

the new economy