dr. shahram yazdani structural capital & sustainable development shahid beheshti university of...
TRANSCRIPT
Dr. Shahram Yazdani
Structural Capital & Sustainable Development
Shahid Beheshti University of Medical SciencesSchool of Medical Education
Strategic Policy Sessions: 16
Dr. S
hahra
m
Yazd
ani
Intangible Assets
Tangible Assets
The The EnterpriEnterpriseseas a as a wholewhole
Financial Capital
20%20%
10%10%
70%70%
11
70%70%
10%10%
20%20%
22
IndustrialIndustrial KnowledgeKnowledgeBasedBased
Capital Composition: Industrial vs. KB Economies
Dr. S
hahra
m
Yazd
ani
Defining Intangible Assets
Three terms are widely used: Intangible Assets — in accounting literature, Knowledge Assets — by economists, Intellectual Capital — in management and
law literature; “and on the whole they come to the same: to
the future benefits that are not embodied materially”. B.Lev, 2004
Dr. S
hahra
m
Yazd
ani
Measuring Intangible Capitals
If you can’t measure it, you can’t manage it.
George O. Odiorne
Measuring the value of intangible assets is the holy grail of accounting.
Robert S. Kaplan, David P. Norton
Dr. S
hahra
m
Yazd
ani
Measuring Intangible Assets34 methods for measuring intangible assets (1950’s – 2004)
Probably, the list is not closed!
4 approaches for measuring intangibles
1) Direct Intellectual Capital methods (DIC)2) Market Capitalization Methods (MCM)3) Return on Assets methods (ROA) 4) Scorecard Methods (SC)
Dr. S
hahra
m
Yazd
ani
Measuring the value of intangibles
Companies have to develop and utilise
new accounting methods, since those
that have been implemented so far:
Are too focused on the past
Miss anticipatory “power”
Capture critical changes too late
• Don’t take into adequate
consideration some resources,
such as intangible assets
Non-monetary methods
Hol
istic
Me
tho
dsA
tom
istic
Me
tho
ds
Monetary Methods
AFTF TM
TVC TM
The Valueexplorer TM
IntellectualAsset
Valuation
TechnologyBroker
InclusiveValuation
Methodology
CitationWeightedPatents
IC - index TM
Value ChainScoreboard TM
IntangibleAssetsMonitor
HumanCapital
Intelligence
BalancedScorecard
SkandiaNavigator TM
Tobin’s Q
Market toBook value
IAMV TM
.
KnowledgeCapital
Earnings
EVA TM
CalculatedIntangible
Value
VAIC TM
HRCA
Main Intangible Assets Measuring Models
Dr. S
hahra
m
Yazd
ani
Market value, book value and intangiblesTOTAL VALUE
=Financial
capital+
Intangible capitals
PaeseMarket value
Book Value
% tangibile
Brand value
Altri intangibles
% intangibile
Coca Cola US 104,8 11,8 11% 69,64 23,36 89%
Microsoft US 264,9 55,8 21% 64,09 145,01 79%
IBM US 138,2 22,8 16% 51,19 64,21 84%
General Electrics US 277,4 63,9 23% 41,31 172,19 77%
Intel US 112,3 35,3 31% 30,86 46,14 69%
Nokia Finland 71,1 15,4 22% 29,97 25,73 78%
In $ billions
Source: adaptation from AIAF, 2005
Country tangible intangibleOther
intangibles
Dr. S
hahra
m
Yazd
ani
Market Value Model
Market Value
Financial Capital Intellectual Capital
Social CapitalHuman Capital Structural Capital
McElroy’s modified IC map
Dr. S
hahra
m
Yazd
ani
Structural capital
Structural capital consists of embodiment, empowerment, and supportive infrastructure of an organization that enhances performance of human capital.
Dr. S
hahra
m
Yazd
ani
Special Form: Structural innovation capital
Structural innovation capital is the value of supportive infrastructure of an organization that enhances and increases the capacity of a group to innovate.
Structural innovation capital is a subset of structural capital
Dr. S
hahra
m
Yazd
ani
Strategy
Structure
Systems
Leadership
Culture
structural capital: the elements of organizational capability
Dr. S
hahra
m
Yazd
ani
What capital is missing in developing countries?
A large literature in development economics aims to understand the impediments to firm growth, particularly small and medium enterprises.
Standard growth theories have explored the importance of input factors such as capital and labor in the production function of firms and countries.
Dr. S
hahra
m
Yazd
ani
Access to finance as missing capital
At the micro level empirical studies such as Suresh de Mel, David McKenzie and Christopher Woodruff (2008), Abhijit Banerjee et al (2009), and Dean Karlan and Jonathan Zinman (2009) have estimated the impact of access to finance for capital constrained micro-enterprises (see Karlan and Jonathan Morduch, 2010, for a review).
At the macro level studies by Robert King and Ross Levine (1993), Raghuram Rajan and Luigi Zingales (1998), or Marianne Bertrand, Antoinette Schoar, and David Thesmar (2007) suggest the importance of the financial system for economic growth.
Dr. S
hahra
m
Yazd
ani
Educated citizen as missing capital
Human capital is the second traditionally studied input factor in the production function.
Most of this research has focused on how distortions in labor markets or education affect productivity.
For an example of the emerging literature that documents the effect of labor market distortions on firm productivity,
Dr. S
hahra
m
Yazd
ani
Skilled managers as missing capital
However, the role of managerial capital for production has largely been ignored in the debate on development and growth.
Classic macro growth models like Robert Solow (1956) relegate managerial or “soft” inputs into the residual of the production function, the error term.
Famously, Moses Abramovitz (1956) called it also the “ignorance term.” Modern growth theory in contrast such as Paul Romer (1990) or Philippe Aghion and Peter Howitt (1992) are more explicit in modeling endogenous technical progress as a function of technological innovation.
Dr. S
hahra
m
Yazd
ani
Skilled managers as missing capital
The seminal studies by Robert Lucas (1978) and Sherwin Rosen (1982) propose that “talent for managing” is an important factor of production
Managerial capital is assumed to be complementary to other firm inputs and leads to a convex distribution of returns.
Rosen (1982) in an extension of the Lucas model explicitly focuses on the internal managerial structure of firms and explains an observable relationship between firm size, earnings and firm profitability.
Dr. S
hahra
m
Yazd
ani
Skilled managers as missing capital
managerial capital can affect the production of firms in two distinct ways.
1. firms with better managerial inputs are able to improve the marginal productivity of their other inputs, for example labor, physical capital etc.
2. The decision to access inputs like capital or labor in itself requires managerial inputs to forecast and obtain the capital needs of the firm
Dr. S
hahra
m
Yazd
ani
This managerial capital gap can be quite significant in many situations for example in developing countries.
Dr. S
hahra
m
Yazd
ani
managerial capital gap in developing countries
Several recent papers suggest that management education, as well as management practices, are of lower quality in developing countries than in developed countries.
Azam Chaudry (2003) reports the results from an International survey conducted in 78 different countries that asked firms to assess the quality of locally educated managers the firm had hired.
Firms in lower income countries were much more likely than firms in higher income countries to say that these managers were inadequately prepared overall and that they had lower technical skills.
Dr. S
hahra
m
Yazd
ani
managerial capital gap in developing countries
Nicholas Bloom and John Van Reenen (2010) collected a measure of management practices for firms in a number of countries.
Firms from non-OECD countries scored significantly below firms from OECD countries on this management practices measure.
Dr. S
hahra
m
Yazd
ani
Managerial Efficiency
Quality of entrees Quality of Programs
Quality of Vocational Courses
Quality of Managers
Standard University-based Management Programs
Vocational Management Programs
Facilitating Organizational Context
Managerial Positions
Dr. S
hahra
m
Yazd
ani
Experiments to fill the managerial capital gap in developing countries
Two studies, Karlan and Martin Valdivia (2011) and Alejandro Drexler, Greg Fischer, and Schoar (2010), conduct field experiments that introduce exogenous variation in managerial capital across microenterprises through management training.
The training consisted of classroom-style interactive lectures
The authors find that management knowledge increased, but that no consistent improvements occurred for performance.
Dr. S
hahra
m
Yazd
ani
Experiments to fill the managerial capital gap in developing countries
Drexler, Fischer, and Schoar (2010) test different approaches of teaching managerial skills to CEOs of firms and companies.
They find that a simple, rule-of-thumb based approach to teaching does better than a more intricate training program.
Dr. S
hahra
m
Yazd
ani
Impact of consulting services
Bruhn, Karlan, and Schoar (2010) examine whether lack of managerial knowledge can be alleviated by providing consulting services to supplement the managerial skills of the business owners.
They conducted a randomized control trial in Mexico where firms and companies were paired with a consultant for the period of one year
Results show that the consulting services had a significant positive effect on firms’ productivity.
Dr. S
hahra
m
Yazd
ani
impact of consulting services
De Mel, McKenzie, and Woodruff (2008) estimate a return to capital of 5 percent per month for Sri Lankan microenterprises, McKenzie and Woodruff (2008) find 20-33 percent monthly return to capital in Mexico, and Christopher Udry and Santosh Anagol (2006) find 60 percent annualized return to capital in Ghana.
Dr. S
hahra
m
Yazd
ani
Thank You !
Any Question ?