Domenico Laise

Value added intellectual coefficient (VAIC)

Purpose – The purpose of this paper is to study, mainly from the point of view of methodological accounting principles, the value added intellectual coefficient (VAIC), introduced by Pulic as a measure of intellectual capital efficiency (ICE). More specifically, the aim of the analysis is to investigate the strengths and weaknesses of the VAIC, primarily from the accounting theory perspective. Design/methodology/approach – The approach to the study of Pulics contribution is as follows: first the authors submitted Pulics methodology to a “conceptual” test, in order to check whether it contradicts any basic accounting principles. Then the results of this methodological test were compared to those obtained by the authors who have criticized Pulics proposal, in order to check for any concordance or discordance with the literature. Findings – Several authors have discussed the crucial aspects of the VAIC. In this paper the focus is primarily on Andriessens concerns, since they relate to the theoretical acc...

Business multicriteria performance analysis: a tutorial

Purpose – The business performances of firms are measured on a set of indicators (Financial Ratio Analysis Indicators or Balanced Scorecard Key Performance Indicators). Traditional benchmark analysis considers a set of criteria, though it generally synthesizes all the results, taking into consideration only an aggregate performance criterion (reductio ad unum approach). This methodology has many disadvantages, both theoretical and empirical. The purpose of this paper is to illustrate the advantages, in terms of greater flexibility and realism, related to the application of a multicriteria methodology.Design/methodology/approach – The paper uses a tutorial approach. An exemplification of an outranking multicriteria methodology (ELECTRE type) is described.Findings – The main findings of the paper can be summarized as: first, the evaluation of a business performance cannot generally be conducted by means of a unique criterion as in the traditional monocriterion benchmark analysis; second, when the evaluation...

Benchmarking and learning organizations: ranking methods to identify “best in class”

The benchmarking analysis of organizational learning capability considers a set of criteria: clarity of purposes and mission, leadership commitment and empowerment, experimentation and rewards, transfer of knowledge, teamwork of group problem solving, etc. For this reason it assumes the configuration of a multicriteria analysis. In the traditional benchmarking the multicriteria problem is solved throughout the construction of a synthetic indicator obtained by averaging all scores assigned to an organization on the different criteria. This methodology presents many theoretical and empirical disadvantages. This paper illustrates the advantages, in terms of greater flexibility and realism, connected to the application of the multicriteria methodology founded on the notion of outranking. In fact, such a methodology solves the multicriteria benchmarking problem without using the averaging rule adopted by the traditional benchmarking approach.

Choosing and Evaluating Technology Policy: A Multicriteria Approach

The multicriteria nature of choosing and evaluating technology policy can be dealt with by outranking methods, enabling us to avoid weak approaches such as following rules or routines or imitating best practices on one hand, and fictitious multicriteria methods on the other. Outranking methods can strongly support policy makers and social scientists in choosing and evaluating technology policy. They are consistent with behavioral-evolutionary theory, and they allow us to maintain the variety and realism of problem solving in technology policy. Being based on formal and robust algorithms, they also represent a sound theoretical alternative to neo-classical approaches, both in their orthodox and hidden versions. The adoption of outranking methods has a number of theoretical and policy implications. A tutorial (and numerical) example shows how easily they can be applied. Copyright , Beech Tree Publishing.

Measuring value creation: VAIC and EVA

Purpose – This study proposes a comparison between Value Added Intellectual Coefficient (VAIC) and one of the most important performance evaluation methods, the Economic Value Added (EVA), starting from a re-interpretation of the VAIC. Design/methodology/approach – The empirical data were gathered from AMADEUS Bureau van Dijk and consist of 2,596 companies operating in Northern Italy, from six different economic sectors, observed for the year 2011. A correlation analysis was carried out in order to highlight whether there is a relationship between the two concepts of VAIC and EVA. Findings – Results show that EVA and VAIC have no significant relationships; as a matter of fact, EVA is based on financial theory, whereas VAIC is focalised on the assessment of Intellectual Capital Efficiency (ICE). Practical implications – Managers could be misled due to the fact that they often make decisions by taking into account only financial indicators such as EBIT, EVA, etc. Although methods like EVA have improved mode...

Value creation and sustainability in knowledge-based strategies

Purpose – The purpose of this paper is to place the value creation process within sustainable growth strategies. Building on Drucker (1968, 1999a, b), Pulic (2000, 2004, 2008) and other papers by the same authors (Iazzolino and Laise, 2013) the specific aim of this research is to propose an accounting-based framework able to: distinguish between knowledge-intensive firms (KIFs) and nonknowledge intensive firms (nonKIFs); and investigate the contribution of the two sets of firms (KIFs and nonKIFs) to overall sustainability, from a social point of view, of the economic system. Design/methodology/approach – The paper uses the notion of value added (VA) (Pulic, 2000, 2004, 2008) as the main indicator to measure the value creation in a knowledge economy context. As regard the first point of the framework, the approach is based on the analysis of VA and its components, starting from a reinterpretation of the concept of value added intellectual coefficient made by the same authors of this paper. An empirical ana...

Metachoice for benchmarking: a case study

Purpose – In a previous paper the authors emphasized the advantages of multicriteria methodologies to evaluate business performance. The purpose of this paper is to highlight the metachoice problem that always arises in a benchmark multicriteria analysis that can be synthesized as follows: “how to choose an algorithm to choose?” Design/methodology/approach – In order to perform a benchmark analysis, a set of criteria must be chosen. In the Balanced Scorecard approach, for example, key performance indicators (KPIs) are grouped in four different perspectives: financial, customer, internal processes and learning and growth. In this paper, the authors focus on multicriteria benchmark analysis applied to KPIs of the financial perspective. The paper considers a set of criteria used in financial statement analysis based on balance sheet, income statement and cash flow statement. A case study is described. Findings – The main findings of the paper are when the evaluation of a firm is based on different genuine cr...

Knowledge-based strategies and sustainability: a framework and a case study application

Purpose The aim of the paper is to provide some guidelines for using and not using knowledge-based strategies (KS) and for understanding the sustainability of such kinds of strategy. The paper proposes an accounting-based framework that can be used for this aim. The meaning of the guidelines is illustrated with reference to a specific case of a company that implements a KS: the Italian Loccioni Group. The work continues and develops a research already started by the same authors (Iazzolino and Laise, 2013, 2016; Iazzolino et al., 2014). Design/methodology/approach Building on previous works by the same authors (Iazzolino and Laise, 2013, 2016; Iazzolino et al., 2014), the proposed framework starts from the analysis of the value added (VA) created by the firm. To characterize a KS, the VA and its components are analyzed. To evaluate the sustainability of a strategy (from the economic and social point of view), the time trend of the VA and its composition are also analyzed. The research is theoretical and empirical: a case study has been carried out to apply the framework. Specific key performance indicators were identified to describe the context analyzed. Findings From a theoretical point of view, an inter-theory relationship (not existing in the literature) between P. Drucker’s approach of economic/social sustainable strategies (ESS) based on knowledge and Pulic’s theory of human capital efficiency (HCE) has been constructed. From results of application of the framework on the case study, it emerges that the Loccioni Group implements a KS. It can be considered a “win-win” strategy. Research limitations/implications The case study (Loccioni Group) is described to highlight that an ESS is achievable. The case study has to be understood as the description of a best practice (a benchmark) and not as a statistical test of hypothesis (a theory test). The description of the case is useful to show that companies which adopt KS are not a utopia. There are concrete examples that show that it is possible to implement such strategies. In other words, the set of companies that adopt a ESS is not “empty”. Practical implications Managers underestimate the importance of a performance measurement that takes into account advantages in terms of intangibles. The approach analyzed in this paper makes it possible to highlight the effects of sustainable strategies based on knowledge investments oriented toward the stakeholder value theory and corporate social responsibility. Originality/value The main purpose of this paper is the construction of an inter-theory relationship (not existing in the literature) between P. Drucker’s approach of ESS based on knowledge and Pulic’s theory of HCE. The existence of such a relation, in the authors’ opinion, is necessary to provide a theoretical foundation of an accounting framework useful for evaluating KS and that a KS (in Drucker’s sense) is adopted when it creates value for all the stakeholders. That is, it is adopted when it has a high VA (in Pulic’s sense).

La valutazione multicriteriale delle strategie aziendali

La metodologia multicriteriale, anche quando e applicata alla valutazione delle strategie aziendali, fornisce una soluzione razionale alle scelte strategiche senza cadere nel riduzionismo e nelle eroiche ipotesi che stanno alla base degli approcci basati sulla massimizzazione unicriteriale del valore per l’azionista (shareholder value analysis). Nella valutazione delle strategie aziendali, al fine di evitare decisioni miotiche, occorre tenere conto di una pluralita di criteri. Anche quando si assume solo la prospettiva finanziaria dell’azionistista (shareholder), non ci si puo limitare alla considerazione dei Flussi di Cassa Scontati. Altri criteri come il Cash Flow ROI, il Value ROI e il Payback Period forniscono informazioni strategicamente rilevanti che devono essere messe nel conto al fine di evitare decisioni miotiche. I l punto cruciale e che quando piu criteri sono considerati congiuntamente, le scelte strategiche sono di necessita “soddisfacenti” e non “massimizzanti”. In altri termini, le scelte strategiche multicriteriali sono consistenti con la teoria comportamentista dell’impresa, ovvero negano la logica massimizzante della teoria neoclassica dell’impresa. Key words: scelte strategiche multicriteriali, metodi di surclassamento, strategie aziendali, teoria comportamentista dell’impresa