Proceedings of the 8th International Conference on Intellectual ...

Gabriel Prananingrum Aryanindita and Andy Susilo Lukito Budi
We define IC as <strong>the</strong> organizational and individual knowledge elements and <strong>the</strong> potential for creating
value that derives from <strong>the</strong> internal and external relations and connections <strong>of</strong> <strong>the</strong> organization. We
define it as proposed by Bodnar et.al in European <strong>Conference</strong> in Intellectual Capital. We suggest
using <strong>the</strong> components to make a model <strong>of</strong> IC’s rankings.
Table 1: The elements <strong>of</strong> Intellectual Capital
Elements <strong>of</strong> Intangible Assets Content, meaning and feature <strong>of</strong> category
Human capital Human capital includes <strong>the</strong> education, knowledge, ability,
competency, motivation, commitment and willingness for growth and
learning processes <strong>of</strong> employee basis.
Structural capital Structural capital consists <strong>of</strong> <strong>the</strong> attributes <strong>of</strong> internal business
operations including <strong>the</strong> processes, internal cooperation and
organization culture
Relational capital In <strong>the</strong> narrow sense it stands for <strong>the</strong> external relations <strong>of</strong> <strong>the</strong>
organization-since <strong>the</strong> student related data shall not be considered
here, but among <strong>the</strong> outputs-however, <strong>the</strong> students satisfaction,
pass/fail ratio and even <strong>the</strong> quality and quantity <strong>of</strong> <strong>the</strong> students foreign
study experiences can be included.
Source: Bodnar.et.al (2008)
2.2 Intellectual capital in university
2.2.1 Intellectual capital and <strong>the</strong> knowledge economy
Knowledge economy is an economy in which knowledge is acquired, created, disseminated and
applied to enhance economic development (Maksimova and Tikhomirova, 2008). The knowledge
economy is being built on four pillars: <strong>the</strong> education and training base, information and
telecommunication infrastructure, <strong>the</strong> innovation system and <strong>the</strong> overall business and governance
framework.
Knowledge economy requires certain pr<strong>of</strong>ound in education systems. Knowledge has always been
important aspect for progressive development <strong>of</strong> <strong>the</strong> economy and society as a whole. Knowledge is
<strong>the</strong> result <strong>of</strong> cognitive processed triggered by <strong>the</strong> inflow <strong>of</strong> new data and information, integration and
reuse <strong>of</strong> ideas, experience, skills, institution and lesson learned by a person. As a result, it has always
been important aspect for progressive development <strong>of</strong> <strong>the</strong> economy and society as a whole.
Higher education institutions face challenge to prepare young people for <strong>the</strong> life in a world where
technologies <strong>of</strong> information and communication put a high respect on creative and innovative thinking
to educate <strong>the</strong>n for a digital world (OECD, 2008). It was because at present, knowledge becomes a
basic factor for production, <strong>the</strong> driver <strong>of</strong> <strong>the</strong> knowledge economy that enhances competitiveness.
Universities as a higher education institutions are producing knowledge where <strong>the</strong>ir budget should
focus mainy on research related acitivities, innovation and human resources. Therefore, <strong>the</strong>ir most
valuable assets are most <strong>of</strong>ten intangible by natures, as well as <strong>the</strong>ir outputs. It improves
universitiesto have a better management capability andto diffuse <strong>the</strong>ir knowledge creation processes
to <strong>the</strong>ir stakeholders and society at large (Sanchez, et.al, 2008).
2.2.2 IC indicators as components <strong>of</strong> university rankings
In best practices, it can be argued that IC management and reporting make sense for companies
when <strong>the</strong> exercise creates value for <strong>the</strong> stakeholders, and <strong>the</strong> value creation happens when pr<strong>of</strong>it
increases or market value increases or both (Canibano et. al, 2008]). However, universities as
business had known as nonpr<strong>of</strong>it oriented organization. As a result, universities do not make pr<strong>of</strong>its
and <strong>the</strong>re is no market value for <strong>the</strong>ir inexistent shares. Therefore, it is more complicated to extracting
value from intangibles asset.
However to measure <strong>the</strong> intangibles is a very important matter, for several reasons. First, it is
extremely hard to manage assets that one cannot describe or measure or to determine success or
failure in asset management activities. Also, if intangibles are not measure correctly, an organization
might appear to be doing poorly when in fact it is simply investing in intangibles (Augier and Teece,
2005).
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