Proceedings of the 3rd European Conference on Intellectual Capital

Integrating Intellectual Capital and Sustainability
Management: Perspectives for <strong>the</strong> Internal Management
and External Reporting in Small and Medium Sized
Enterprises
Kai Mertins and Ronald Orth
Fraunh<strong>of</strong>er IPK, Berlin, Germany
kai.mertins@ipk.fraunh<strong>of</strong>er.de
ronald.orth@ipk.fraunh<strong>of</strong>er.de
Abstract: As goals for implementing sustainability management eco-efficiency, cost savings, improved
reputation, innovation ability, pr<strong>of</strong>it and sales growth are named. Sustainability management improves <strong>the</strong>
planning security, increases <strong>the</strong> acceptance and <strong>the</strong> legitimacy as well as it allows <strong>the</strong> utilization <strong>of</strong> differentiation
and market potential. Study results show that sustainability management is operated in particular by large
companies. Small and medium sized companies <strong>of</strong>ten lack <strong>the</strong> time and financial resources as well as <strong>the</strong> right
tools in order to integrate tasks <strong>of</strong> a sustainability management into <strong>the</strong> ongoing business activities. At <strong>the</strong> same
time, <strong>the</strong>re is hardly any doubt that for <strong>the</strong> successful implementation <strong>of</strong> sustainable strategies in companies, <strong>the</strong>
intelligent management <strong>of</strong> knowledge and o<strong>the</strong>r intangible resources is a fundamental basis. This intellectual
capital is <strong>the</strong> driver for a sustainable development at <strong>the</strong> corporate level, that has to be measured and regarding
an increasing <strong>of</strong> <strong>the</strong> value creation has to be applied. An integrated view <strong>of</strong> both perspectives has not taken place
yet. Therefore, within <strong>the</strong> framework <strong>of</strong> this paper an integrative approach as well as first requirements for future
methods will be examined and outlined.
Keywords: sustainability management, intellectual capital statements, sustainability balanced scorecard, internal
management, external reporting
1. Initial situation: Sustainability and intellectual capital at <strong>the</strong> company level
In a worldwide survey conducted by <strong>the</strong> Boston Consulting Group regarding "The Business <strong>of</strong>
Sustainability" about 90 percent <strong>of</strong> managers surveyed indicated that sustainability is part <strong>of</strong> <strong>the</strong>ir
corporate strategy. The reasons <strong>the</strong>refore mentioned among o<strong>the</strong>rs were customer requirements, <strong>the</strong>
legal framework, staff expectations and environmental responsibility. Companies consider as <strong>the</strong>
largest benefits <strong>of</strong> a sustainability strategy an improved image, competitive advantages and
innovation, employee motivation, and a better risk management (Boston Consulting Group 2009).
The implementation <strong>of</strong> <strong>the</strong> sustainability concept at <strong>the</strong> enterprise level is discussed under <strong>the</strong> term
"sustainability management" (Hauff et al. 2008). Sustainability management at <strong>the</strong> corporate level can
be understood as a strategy that respects not only economic goals but also environmental and social
aspects, weigh against each o<strong>the</strong>r and thus, ensures <strong>the</strong> long-term business success. Only if
companies in <strong>the</strong> future take into account environmental and social criteria in <strong>the</strong>ir activities besides
economic key figures, innovations and competitive advantages could be achieved for example by
developing new technologies, but also by committed employees. Consequently in this context <strong>the</strong>
development and use <strong>of</strong> intellectual capital provides an important lever for <strong>the</strong> implementation <strong>of</strong>
sustainability management. Thereby, intellectual capital (IC) has a comprehensive impact as it affects
equally <strong>the</strong> performance <strong>of</strong> all three dimensions <strong>of</strong> sustainability (economic, social, and
environmental).
Basically, it can be noted that <strong>the</strong> awareness in enterprises is growing that this issue will gain more
relevance for <strong>the</strong> own company in <strong>the</strong> near future. Indeed, study results prove that <strong>the</strong> number <strong>of</strong>
enterprises which are oriented towards sustainability has increased in recent years, but <strong>the</strong>
implementation still encounters a variety <strong>of</strong> limits. This especially applies to small and medium sized
enterprises (SME). Due to time and financial restrictions, many SMEs do not see <strong>the</strong>mselves in a
position to implement sustainable development as a part <strong>of</strong> <strong>the</strong> corporate strategy (ifo 2002). While
large companies and groups have pr<strong>of</strong>essionalized <strong>the</strong>ir activities <strong>of</strong> sustainable development and are
supported by <strong>the</strong>ir own departments or staff units, SMEs are <strong>of</strong>ten left alone here. Therefore concepts
and methods have to be found in order to provide new and promising instruments in particular for
SMEs which constitute <strong>the</strong> bulk <strong>of</strong> Europe’s economic strength.
In this context <strong>the</strong> intangible resources are <strong>of</strong> central importance for sustainable development <strong>of</strong>
companies. It is common sense that classical driving forces <strong>of</strong> economic growth changed towards <strong>the</strong>
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