Reporting on intellectual capital: why, what and how?

Abstract

Intellectual capital is an important value driver in today’s organizations. Traditional financial statements do not provide the relevant information for managers or investors to understand how their resources – many of which are intangible – create value in the future. Intellectual capital statements are designed to bridge this gap by providing information about how intellectual resources create future value. Intellectual capital statements can be used as tools to communicate the knowledge‐based strategy externally but it can also be used as an internal management tool. In this article we outline the reasons for reporting intellectual capital, introduce the elements of such statements, and present a case example from a Danish mobile phone design company.