How And Why Do Organizations Identify, Measure And Report Internally On Intellectual Capital?

The emergence of intellectual capital (IC) can be seen as originating in three different branches between the 1970's and the 1980's. In Japan, Hiroyuki Itami did groundbreaking work on the subject in 1980 (translated to English in 1987: Itami and Roehl, 1987). In this work, they examined the effect of IC, that they called invisible assets, on Japanese organizations and management thereof. They found that there were differences in performance between companies, which were caused by differences in IC between the companies (Harrison and Sullivan, 2000). Hiroyuki Itami was one of the first to see assets broader than only production capital, such as plant and equipment. The second origin of IC was the result of research by a number of economists (for instance Wemerfelt and Penrose). This work was accumulated by Teece (1986), who described that complementary assets are needed in order to achieve the benefits of a certain innovation. 'For example, the commercialization of a new drug is likely to require the dissemination of information over a specialized information channel' (Teece, 1986, p. 288). Finally, Sveiby and Lloyd (1987) looked specifically to the human capital dimension of IC by measuring the knowledge of and competencies of the employees in a Swedish organization.
Since then, the importance of IC is more and more recognized. In 1997, Wiig (1997) argued that managers were starting to realize that management of IC and knowledge management are vital aspects in an organization to ensure sustained viability. It is not only important to have sufficient knowledge in the organization, but it should be used appropriately and should be renewed continually. In order to achieve this, organizations have to manage the in-house knowledge, for instance by creating balanced IC portfolio's. The knowledge in the organization represents the firm's future potential (Roos and Roos, 1997). Roos and Roos (1997) state that the growth or decline in IC is an indicator of future performance. Therefore, they think that the amount of IC will become more important as a measure of the value and health of an organization.
That IC can be important for organizations, is recognized by many researchers. Vafaei et al. (2011) executed an international study on the IC disclosures of 220 listed companies in Australia, Hong Kong, Singapore en UK. They found that IC disclosures are value relevant to investors, because they found a significant positive relationship with share price and the ratio of earnings per share to book value per share.
Teece (1998) states that management of IC is increasingly needed, now markets are more and more liberalized and markets for intermediate products are created. Therefore, IC is needed to create competitive advantage. That IC can be a source of competitive advantage is described by many authors, for instance Nahapiet and Ghoshal (1998), Roos and Roos (1997), Dess et al. (2003), Bontis (1999; 2001), , and Subramaniam and Youndt (2005).
Although it is recognized that IC can play a vital role in the operations of organizations, there are still a lot of difficulties surrounding this topic. Organizations encounter problems in the management, measurement and reporting on IC (Boedker et al., 2005). Boedker et al. argue that an integrated approach (in their case the ICVC framework) will help organizations to manage, measure and report on IC.
Van der Meer-Kooistra and Zijlstra (2001) argue that it is important for organizations to manage and control IC in the right way, to achieve the potential benefits of it. For this management and control of IC, it is needed that the organization identifies, measures and reports internally on IC. However, organizations have a poor understanding of which components of IC are relevant, and therefore are not able to manage and control IC effectively. Moreover, traditional accounting focuses mainly on financial reporting, and reporting on IC is not incorporated in traditional accounting. Thus, organizations have difficulties in reporting on IC both to the internal and external environment. The consequence of this inability is that managers and investors cannot take IC information into account in their decisions, and therefore these decisions will be suboptimal. Van der Meer-Kooistra and Zijlstra state that the allocation of resources will not be optimal in this situation. To solve the difficulties in reporting on IC, they develop a reporting model on IC, based on the findings of case studies in three Dutch companies with a high degree of IC and of discussions with financial analysts. In their paper, they discuss the building blocks of an IC reporting model. These building blocks contain the following assumptions: a managerial perspective, cause and effect relations, incorporation of a company's strategy, and a forward-looking perspective. Furthermore, the definition of IC and its components should be described clearly, because there is no consensus about the right definitions.
Moreover, the reporting on IC should describe the measuring methods, i.e. which measures are used for which IC component. Although Van der Meer-Kooistra and Zijlstra (2001) argue that organizations should use several measures, such as financial and non-financial measures, and process descriptions, they state that organizations should quantify as much as possible. However, quantification is not always possible, because there can be tacit knowledge as well. Besides the fact that organizations should use various measures, they should also take the relationships between the components into account. This can be done by giving information about the variables that drive IC value creation (Van der Meer-Kooistra and Zijlstra, 2001, p. 472). Further, the authors argue that the role of network relations, for instance with suppliers, should be taken into account. Trust is an important concept in this aspect. Finally, segmentation of the information in the IC report contributes to the transparency
Van der Meer-Kooistra and Zijlstra (2001) provide a useful framework for practitioners. However, their framework is focused on external reporting, which is recognized by Guthrie et al. (2001), who state that 'Van der Meer-Kooistra and Zijlstra (2001) contribute to debates on the development of a reporting model on IC'. Van der Meer-Kooistra and Zijlstra recognize that reporting on IC for internal purposes is very different from external reporting on IC. They state that 'for internal purposes each company can develop its own more detailed model' (Van der Meer-Kooistra and Zijlstra, 2001, p. 471), and that 'an important difference between an internal report and an external one is that the internal report does not need to follow general guidelines' (p. 473). On the one hand, the internal purpose of reporting on IC is to support decision making of management, by giving a good view and understanding of the IC in the organizations. On the other hand, the external purpose of reporting on IC is to show external stakeholders about the current state of IC in the organization (Kale, 2009). This information is not immediately used for decision making in the organization. These different uses are called instrumental value and representational value respectively (Guthie et al., 2001).
Besides the work of Van der Meer-Kooistra and Zijlstra, this study is inspired by Swart (2006). She provides a review of the literature on IC and tried to 'disentangle' some of the key concepts in the literature. She found that IC consists of several sub-components, of which human capital, social capital, structural (or organizational) capital, and client or customer capital are the most important. These sub-components are inconsistently described in the literature, which gives confusion about the boundaries, levels of analysis and function of the sub-components. She argues that more research is needed, inter alia to get a better understanding about the interconnection between the sub-components and IC management. In this study, I try to execute this research by doing a case study in a professional organization, which gives more understanding of the management of IC inside organizations.
The debate in prior research focuses mainly on the effects of reporting on IC in external reports, and not on the implications for management accounting (Mura and Longo, 2013). In this literature, many researchers have tried to come up with a framework for external reporting on IC, for instance Van der Meer-Kooistra and Zijlstra (2001), Chang and Chen (2012), and Curado et al. (2011). However, the processes around IC inside organizations are not clear. Guthrie et al. (2001) draw attention to the gaps in the literature on IC. Based on research in three areas, namely critical, measurement and organizational processes, they argue that there are three issues that should underlie future research on IC. First, a better definition of the concept of IC is needed. Second, measuring and managing IC results in information that is useful for decision making. Third, firms that measure and manage their IC will have a better understanding of the creation of extra value by IC. Based on these issues, they suggest some focus for future research. The main argument is that practically oriented research is needed. Some of the possible foci for future research, that are interesting for this study are (Petty and Guthrie, 2000; Guthrie et al., 2001):
- What tools or techniques are used for the measurement and management of IC in organizations? And do these techniques support decision making?
- Why do organization use those techniques or tools?
- What is the 'fit' between the management of IC and the strategy of the organization?
- What is the role of information technology in the measurement and management of IC?
- Do organizations make a cost-benefit tradeoff of their IC management systems? And if they do, how do they assess the costs and benefits of those systems?

Because it seems important to look at how organizations deal with IC inside their organizations before looking at the effects of this on external reporting, the approach in this research is to take one step back in the process, and look at the internal processes of organizations around the identification, measurement and reporting on IC. This research takes place inside an organization of 'flesh and blood', to get a better understanding of the internal processes and practices. This focus on organizations in practice is recommended by many authors, for instance Petty and Guthrie (2000) and L??nnqvist et al. (2009). The research question of this thesis therefore is:

How and why do organizations identify, measure and report internally on intellectual capital?

This research is scientifically relevant, because it aims to provide initial impetus for the contours of a new framework, aimed at internally identifying, measuring and reporting on IC, based on practice. This is relevant, because in prior literature several frameworks are presented, but none of these frameworks is generally accepted. Guthrie (2001) states that consensus is needed on what and how to report on IC. Moreover, Bontis (2001) states that IC measurement is mainly useful as an internal management tool. Therefore, looking at a case study organization, to understand how and why organizations identify, measure and internally report on IC, can be interesting, because it provides a better understanding of the practices in the internal identification, measurement and reporting on IC in organizations. Based on this research a contribution can be made to develop a general framework on IC. Moreover, this framework can be the basis for future research on this topic. Besides, scientific relevance, this research also has practical relevance. In this thesis a case study will be performed to see how organizations deal with internal reporting on IC. It is useful for organizations to see how an organization deals with this practice. In this way, they can learn how other organizations are doing it, the challenges, the benefits and the costs of this practice. Moreover, managers that do not know about internal reporting on IC are made aware about the practice. Finally, practitioners can get a better understanding of the processes surrounding IC in organizations. This thesis will provide some building blocks for a framework that shows why and how organizations identify, measure and report on IC for internal purposes.

The outline of the thesis will be as follows. In chapter two, prior research on the subject will be assessed to give a theoretical answer to the research question. Chapter three describes and explains structuration theory. The findings of the case study can be found in chapter 4. Finally, chapter 5 provides conclusions and limitations of this thesis.
2. Intellectual Capital
2.1. Identification of Intellectual Capital
2.1.1. Definition of Intellectual Capital
Not much consensus exists on the definition of IC (Van der Meer-Kooistra and Zijlstra 2001; Petty and Guthrie, 2000; Guthrie et al., 2001; Kale, 2009). In this section, the specific characteristics of these definitions will be described, in order to formulate a general definition on IC. Perhaps the easiest definitions come from Edvinsson (1997) and Brennan and Connell (2000), who argue that intellectual capital is the difference between market value and book value. However, in this thesis it is believed that this is not fully attributable to intellectual capital. For instance, the economic situation at a certain point in time can have an influence on the difference between market value and book value. Therefore, other definitions are used to describe IC in this thesis.
A common characteristic in the definitions of IC is that it is about assets that are not tangible. This is mainly put forward by Bontis et al. (1999, p. 11), who state that 'IC is all intangible resources and its interconnections'. Another important feature of IC seems to be that it adds value to the organization. Edvinsson and Malone (1997) state that IC is information or knowledge that is used to create value. Steward (1997) has a somewhat broader view and argues that besides information and knowledge, also intellectual property (for instance patents) and experience of employees can create value for the organization. Finally Lev (2001) states that IC is the source of future benefits, based on the opportunities for innovation, unique organizational designs, or human resource practices. However, what is important in the identification, measurement and reporting on IC, is that it should be clear what organizations are talking about (Van der Meer-Kooistra and Zijlstra, 2001). When this is not clear, management of IC cannot be done effectively. Therefore, Klein and Pruzak (1994) state that IC is intellectual material that should be formalized, captured and leveraged to increase the value of the organization. However, in this thesis, we refer to Van der Meer-Kooistra and Zijlstra (2001) that not all IC can be formalized and captured. It is possible that an organization has IC that is not formalized, for instance tacit knowledge or experience. This is also recognized by Hall (1992) who distinguishes between IC assets and IC skills. The assets are formalized IC components, while the skills are tacit.
Teece (1998) states that people are the basis of IC, because they are the basis of knowledge, expertise and experience. However, Haanes and Lowendahl (1997) argue that IC is not only created at an individual level, but can also be created on an organizational level. This last level contains for instance technologies, connections with suppliers and customers, organizational routines or culture, and organizational databases.
Finally, Mouritsen (1998) takes another point into account. He states that organizations should adapt to their changing environment in order to survive. In his paper, he argues that IC, which he sees as broad organizational knowledge, can help the organization with adapting to the continuously changing environment.
Based on these definitions in prior research, the definition that will be used in this thesis is: IC are all intellectual assets, both on an individual level and an organizational level, formalized or tacit, that can create value for the organization or help the organization to adapt to its environment.

Although this definition is useful, and will be used in this thesis, it is crucial to recognize that the definition of IC is context and time dependent (Giuliani and Marasca, 2011). The identification and definition of IC is strongly related to the people in the organization who are responsible for developing the definition of IC. Therefore, the social and organizational dimensions have a large impact on the definition and boundaries of IC. In order to deal with this fact, it is important to not only look at the IC values per se, but to also examine the processes that lead to the valuation of IC in an organization and the use of an IC system. These processes can provide a 'never-ending learning process that is useful in better supporting managerial processes' (Giuliani and Marasca, 2011, p. 388).

2.1.2. Categories in Intellectual Capital
More consensus exists about the categories in IC. Although authors often use their own reporting model and naming of IC components, these categories often come down to the same thing. Van der Meer-Kooistra and Zijlstra (2001) describe that these models contain at least the following components:
- Knowledge and experience embodied in people, either formalized or tacit;
- Organizational systems and processes supporting IC creation;
- Innovation and technology; and
- Business relationships (business networks and customer networks).
Further, Brennan and Connell (2000) conclude that the categories of many researchers can be summarized by internal, external and human capital. In this research, we use the wording by Tayles et al. (2005), who categorize IC in human capital, structural capital and relational capital. Moon and Kim (2006) state that 'although there is little agreement on the best way to measure IC, most authors favor a tripartite model, agreeing that IC consists of human capital, structural capital, and customer, or relational capital'. Therefore, these three dimensions will be used in this thesis and will be discussed in the remainder of this section.
As described above, IC exists of individual and organizational intellectual assets. Human capital is part of the individual kind of IC. Bontis describes human capital as 'combined knowledge, skill, innovativeness and ability of the company's individual employees' (2001, p. 45). Besides this knowledge of individual employees, human capital contains the culture of the organization as well. Although this capital is inside the organization, it can never be owned by the organization.
Structural capital belongs more to the organizational kind of intellectual assets. Bontis describes it as 'everything that gets left behind at the office when employees go home' (2001, p. 45). The most prominent example of structural capital is intellectual property, which includes patents and trademarks. According to Vafaei (2011) this part of IC is the most reported on. An explanation for this fact could be that it are intellectual assets that are relatively easy to identify and capture. Other elements of structural capital are technologies, routines, and procedures. Brennan and Connell (2000) describe structural capital therefore as knowledge that is in the organization and independent of the employees.
Finally, relational capital can be seen as both individual and organizational capital. In many of prior researches in the literature, this element of IC is called external capital, because it is about the relationships with external parties, such as customers, suppliers and other organizations (Bontis, 1999). Bontis argues that because of this external nature of the relationships, this dimension of IC is particularly difficult to identify and capture for the organization.

Although the different dimensions are discussed separately above, the interrelationship between the components of IC appears to be important in the daily practice of organizations (Cuganesan, 2005; Murthy and Mouritsen, 2011; Sydler et al., 2014). It is important to understand that the components of IC (human, structural, and relational capital) are not separate entities, but are connected to each other. Cuganesan (2005) shows this by conducting a case study in an organization that is trying to create value by launching an e-business innovation. In this case study, the author looks at 'IC-in-action'. He finds that the IC inter-relationships are different from the expected inter-relationships before the start of the innovation program. Moreover, he shows complex, pluralistic and inseparable relationships between the components. The transformations between the elements were not simple cause-and-effect relationships, as is frequently described in prior research, but they are more complex. For instance, relational capital can both enhance or impede the transformation of human capital (in this case knowledge about customers) and structural capital (in this case the e-business innovation). In the same way, human capital both enabled and limited the development of new system. Moreover, Cuganesan (2005) argues that more 'in-action' research is needed in the area of IC, to be able to look at the way IC resources are deployed, instead of focusing on the IC resources themselves.
A similar conclusion can be drawn from the work of Murthy and Mouritsen (2011). They contrast the findings of a literature review with the practice of a case study. It is argued that in the literature the relationship between the elements of IC and between IC and financial capital (FC) is simplified. It is described as a causal relationship, which leads from human capital, to structural capital (which they call organizational capital), to relational capital, and results in financial capital. However, their case study shows that these relationships are more complex in reality. Even in a situation in which the relationships between the different elements was assumed to be relatively clear (employees satisfaction leads to higher customer satisfaction, which leads to higher financial capital), the relationship between the IC elements was not as simple as stated in prior literature. Basically, there are two relationships described; the relationship between the IC elements, and the relationship between IC and FC. First, it is stated that the IC elements are not entities that stand on their own, and have their own properties and power. In practice, these elements are dependent on each other, and interact with each other. To understand one element, one has to understand the relationships with the other elements, and that is why the causal relationship in prior research does not hold according to Murthy and Mouritsen (2011). Second, the relationship between IC and FC is not as simple as stated in the literature as well. The case shows that FC can be both input and output of the process. Specifically, the fact that it can also be input is surprising when contrasted with prior research. FC can be input, because it determines the investments in IC, for instance when it is used as a budget. This results in a trade-off by the manager about which element to invest in. This can lead to negative relationships, for instance when is invested in structural capital (a new automated system for instance) at the cost of human capital (employees are fired for instance). In this case, FC is input in the process, because it constraints the organization from developing their IC. The conclusion by Murthy and Mouritsen is that 'the relationships between elements of IC and positive associations with FC are optimistic stories which are difficult to master in practice. The case study shows that, contrary to much cross-sectional research, IC can be a managerial challenge or problem rather than a solution' (2011, p. 643).

2.1.3. Identification of Intellectual Capital in Organizations
One of the most documented ways to identify IC in organizations is a technique called concept mapping, which is 'a form of structured conceptualization that incorporates and processes the opinion of a set of experts' (Mart??nez-Torres, del Roc??o, 2014). The process of concept mapping in the context of IC can lead to knowledge maps, which are 'the visual display of captured information and relationships, which enables the communication and learning of knowledge by observers with differing backgrounds at multiple levels of detail' (Vail, 1999, p. 17). In a concept map, both quantitative and qualitative features can be included. The process of concept mapping is as follows:

'First the participants are required to generate information through brainstorming. Next, the data are structured, quantified and analyzed using a double statistical procedure that includes a multidimensional scaling and clusters analysis. Results of concept mapping show the main categories of mathematically determined ideas derived from the participant's input. Each subset of ideas is represented on the map in cluster form. Clusters closest to each other are said to be more directly linked. In summary, the maps represent the opinion of the participants'. (Mart??nez-Torres, del Roc??o, 2014)

Mart??nez-Torres (2014) describes the process of concept mapping in a Spanish university. Participants were asked to identify intangible assets that contributed to the achievement of strategic goals of the university. Examples of intangible assets that were mentioned during the process are image, relationships, research management, research and teaching skills, et cetera. Based on this identification of intangible assets and a rating about the amount of contribution to strategic objectives, concept maps were developed. These maps could be input to the process of clustering the intangible assets, for instance based on activities in the departments or according to the components of IC. With this clustering, it is possible to see the contribution per IC component to the achievement of objectives. In case of the university in the case study, social capital was seen as the most important source of IC. Mart??nez-Torres also tested the reliability of the central phases in the concept mapping process (analysis, development and representation), and found that 'a high level of reliability was found within our case study' (2014, p. 49). It is concluded that concept mapping as a scientific technique is able to replace personal experience in identifying IC items.
2.2. Measurement of Intellectual Capital
After the identification of IC items in organizations, it is possible to measure these items. It is widely recognized that the traditional accounting system, which uses financial indicators, is not sufficient for the measurement of IC in organizations (Moon and Kym, 2006). However, although it appears to be difficult to identify and measure IC, it is important to do this in order to be able to manage it. Moon and Kym (2006) argue that this is possible with well-articulated and useful models. Therefore, many measurement techniques of IC are proposed in the literature (Bontis, 2001; Andriessen, 2004; Sydler et al., 2014; Uziene, 2010). However, it is beyond the scope of this thesis to discuss all these techniques in detail. In this thesis, a more general and comprehensive perspective will be used to discuss the measurement of IC.

Andriessen (2004) argues that IC is becoming more and more important for organizations because it is a source of competitive advantage. Therefore, the identification, measurement and reporting on IC becomes crucial in organizations. However, it is widely recognized that the measurement of IC items is difficult for organizations (for instance Roos et al., 1997; Van der Meer-Kooistra en Zijlstra, 2001; Andriessen, 2004, Sydler et al., 2014). Roos et al. (1997) names three reasons for these difficulties, namely:

'1. Time delays. The flow of an investment in a particular aspect of IC can take its time to create its intended effects, for example, investment in training.
2. IC is not zero-sum. Small investments can have an enormous impact and large investments may fail.
3. IC assets are not only measured in financial terms. Other measurements are used, such as numbers, hours, and ratios.' (Roos et al., 1997, in Van der Meer-Kooistra and Zijlstra, 2001, p. 461)

According to Andriessen (2004) measurement of IC consists both of a valuation element and a measurement element. In the valuation process, one is looking for the value of an item, which is 'the degree of usefulness or desirability of something, especially in comparison with other things' (Andriessen, 2004, p. 237). In practice, the valuation process can be used to make a choice between multiple alternatives. According to Andriessen, there are four methods that can be used to determine the value of an (IC) item. First, in financial valuation the value of an item is determined in monetary terms (for instance Intangible Scorecard). Second, value measurement uses non-monetary criteria and translates them into observable phenomena (for instance Inclusive Value Methodology). Third, with value assessment it is impossible to translate the item in observable phenomena, so the value is determined by the judgment of an evaluator (for instance, IC benchmarking). Finally, measurement does not have a criterion for value of the item, but is about a metric scale that relates to observable phenomena (for instance Skandia Navigator) (Andriessen, 2004). This sum-up immediately shows that measurement is different from valuation. Where valuation looks for the value of a certain item, the measurement process looks more at the size or magnitude of that item.
In the four groups mentioned above, Andriessen (2004) found 25 methods for measuring IC in prior research and evaluates these methods. He argues that three problems arise with these methods. First, there are problems of scope because it is not clear what IC exactly is. Second, the problems for which the valuation is used is not clear. For a good valuation or measurement, it is important that the underlying problem is understood. Finally, it is often unclear which method should be used. For instance, the difference between valuation and measurement is not well understood. Andriessen provides a new method in which 'it seeks to combine the relevant, more academic theories of management with the rigor of management theory and practice as shown in popular management literature' (2004, p. 15). The author argues that, since valuation is a human exercise, social practices play a role in this process. Therefore he adopts two propositions from social sciences, namely empirical propositions and practical propositions. Empirical propositions explain or predict the world, while practical propositions are the diagnosis in situations or the definition of problems. The method of Andriessen (2004) starts with practical propositions; diagnosing or defining the class of the problem. For each of these classes of problems, the author has developed a general solution. So, by identifying the class of problem in an organization, the organization will find the right solution for that problem, using the method of Andriessen (2004) as a guideline. After the development of the method, the method was tested in six Dutch organizations. The results of these tests are that the method provides good guidance to assess which intangibles are important for the organization in creating competitive advantage. It shows the impact of management on IC and how management can improve its IC. However, the tests also showed that this method was not usable for external purposes.

Sydler et al. (2014, p. 245) argue that 'a single valuation model does not easily describe the value of intangible assets such as IC, which makes them even harder to manage'. Therefore they develop a more simple model that uses financial statement information as input. This method exists of a proxy for IC in monetary terms. With this method in use, the authors show that there is a 'significant positive correlation between the firm's IC over time and their profitability' (Sydler et al., 2014, p. 245).
By using standard financial statement information, it is easy for managers to calculate the value of the organization's IC, and to put this information in use in their decisions to allocate resources. The conclusion then is that they developed a new and accurate model to measure the impact of IC on the performance of the organization.
Bontis (2001) also recognizes that measurement of intangible assets is difficult for organizations. IC measures are seen as needed for the organization, but are not well enough developed to be used. Where Sydler et al. (2014) developed a method that was based on financial data, according to Bontis (2001) the focus should be more on non-financial measures on IC. Therefore, Bontis presents an overview of models used for this purpose (for a description of these methods, see appendix 1).
Marr (2004) discusses a method called IC benchmarking. Benchmarking is defined as 'the process of identifying, understanding, and adopting outstanding practices from organizations, including your own, anywhere in the world' (Marr, 2004, p. 563). Marr states that Marti (2001) has created an IC benchmarking system to allow organizations to compare their practices around IC against 'best in class competitors'. However, he concludes that this practice is a failure. There are multiple reasons for this failure. First, it is difficult to duplicate best practices of other organizations, because they operate in a complex environment. Second, IC is a dynamic concept. IC benchmarking is not useful, because it is a static device, and therefore does not give a good understanding of IC. Finally, the IC benchmarking tool lacked a look at the operational processes in organizations, which appeared to play a role as well.
Roos and Roos (1997) ask the question how organization can better visualize and even measure the growth and/or decline of intellectual capital? They argue that 'most management practitioners simply do not seem to take the capturing, measuring and managing of IC seriously' (p. 415). But there are organizations that do monitor their IC. Roos and Roos (1997) state that Skandia used a Balanced Scorecard approach and that with this approach it was 'one of the pioneering companies in developing and implementing a systematic way of visualizing and measuring IC' (p. 415). The conclusion Roos and Roos draw from interviews in small- and medium-sized organization is that measures of IC will be more and more in the forefront in discussions of the health and value of organizations, both inside and outside the organization. Further, they argue that organizations should combine a balance sheet approach in measuring IC (for instance the Balanced Scorecard) with a form of P&L approach. The balances sheet perspectives gives a snapshot of the organization at one point in time. Therefore, it does not give a view of causes underlying changes in IC items and the transformation from one IC category into another category. Adding a P&L approach could give a better picture of the actual IC performance of the organization. This approach 'takes into account the flows between different IC categories' (Roos and Roos, 1997, p. 419). To be able to develop a P&L approach, an organization needs to develop strategy specific indicators that can provide a view of the flows between IC categories. Moreover, it is then crucial to understand the 'specific time delays between cause and effect' (p. 421).

As can be concluded from the literature that is discussed above, no common view on IC measurement exists at the moment (Uziene, 2010; Sydler et al., 2014). Uziene tried to 'consolidate knowledge of previous research and propose a conceptual model based on it. The proposed model should refer to the bottlenecks of IC measurement methodology' (2010, p. 151). Uziene (2010) states that there are many differences between the methods that are mentioned in the literature, based on different management paradigms, theoretical backgrounds, methodological approaches, number and type of indicators used, benchmarks, et cetera. Based on these different features of measurement models, Uziene distinguishes between two groups, namely IC measurements for internal management purposes and IC measurements for external reporting purposes. It is stated that different IC measurement methods are needed for these different purposes.
Uziene (2010) further describes some 'bottlenecks' of IC measurement methodologies. These 'bottlenecks' are summarized in table 1.

First, many methods are developed without looking at the specific measurement context (Uziene, 2010). 'This guides to the inert operation of traditional measurement techniques and the absent of clear requirements for measurement process' (Uziene, 2010, p. 153). Questions need to be raised about the background of the need for IC measurement, the context of this need, who is going to use the method and which results the organization want to achieve. Second, often the role of customers is overvalued and the value of other stakeholders is not taken into account. This leads to measurement methods that have an cost-income approach. However, it would be better for organizations to not only look at the financial numbers, but also take into account numbers of sustainability and other non-financial information. Third, the uniqueness of organizations is often overlooked. Developers of IC measurement methods want to use the same method for multiple organizations, but this is often not possible because different organizations all have their own competitive advantages

and therefore need to develop their own indicators that fit the organization's strategy. 'Strategic background should be taken into account when measuring IC (Uziene, 2010, p. 153). Fourth, an organization can use state measurement and/or flow measurement. Uziene (2010) argues that both measurement methods are necessary. State methods are based on retrospective information, mostly involving only monetary measures and a single indicator. These methods are important for both managers and external stakeholders because they show the financial result of the organization, but do not give a complete view on IC performance. Flow measurement are more directed at the present and the future of the organization, instead of showing the past in financial numbers. These methods give organizations some possibilities to predict future and generate forecasts. Therefore, Uziene (2010) argues that a combination of the state and flow method is necessary:

'Methods based solely on the state approach do not provide full view on IC performance. Transformations from one IC to another as well as their impact on financial results are important not only for managers, but for external stakeholders as well, for example, investors. Flow measurement opens the door to forecasts and hypothesizing. Therefore, consideration of the combination of both the state measurement and the flow measurement should be considered when designing IC measurement solutions.' (Uziene, 2010, p. 153)

Fifth, implementation difficulties are often ignored in IC measurement methodologies. It is crucial that the developers of measurement methods ensure that the methodology is useful in practice, and not only as a theoretical model. Therefore, the model should be adapted to the specific organizational environment and based on clear methodological reasoning. Finally, the results of the measurement process should be useful in practice. Additionally, it should be possible that the measurement results could be used for unanticipated management or assessment decisions (Uziene, 2010).
Based on the above mentioned bottlenecks, Uziene (2010) develops a model of six steps that enable a systematic and purposeful IC measurement process. It is stated that this process eliminates the bottlenecks of previous measurement processes. The stages in this process are (1) situation analysis, (2) target development, (3) measurement possibilities assessment, (4) measurement method selection, (5) measurement process organization, and (6) decision making. Based on this measurement process, IC measurement methods for internal management purpose and external reporting purpose are described. It is stated that for internal management purpose, it is useful to use a set of indicators based on the strategy of the organization to monitor the organization's progress. Measurement techniques that are proposed for this kind of management are value chain designing, success factors identification and corresponding indicators selection, and causal interrelationship testing (Uziene, 2010, p. 156). For external reporting purpose, it is stated that 'IC measurement methods designed on the basis of the set of indicators meet these requirements the best. Measures should be selected according to the clearly considered format and be based on the unified way of their selection, illustration and interpretation' (Uziene, 2010, p. 156). Measurement techniques that are proposed for this purpose are essay disclosure, core competencies identification and corresponding indicators selection, and several illustration techniques (Uziene, 2010).
2.2.1. Indicators
In the literature described in this thesis, indicators are often used as a device for IC measurement. For instance, Roos and Roos (1997) state:

'The vehicle for measuring intellectual performance is a set of indicators used for each intellectual capital category. It is these indicators that permit measurement, not the categories. Contrary to the method of categorizing, developing and refining measurements seems to be more of a bottom-up process simply because these measurements must make sense to the people who do the measuring and be understood by those wo are to be measured. The discussions involved in developing indicators often increases the awareness of what is really important in the daily life of people in a company.' (Roos and Roos, 1997, p. 419)

For this thesis, IC indicators are defined as 'measurements of the enterprise task environment and the enterprise internal environment ' e.g. enterprise level op know-how, enterprise competences, state of relations with business partners, etc. ' that are monitored during a project implementation to assess progress toward the enterprise strategic objectives' (Jussupova-Mariethoz and Probst, 2007).
According to Roos and Roos (1997) there are three ways to develop indicators for IC. First, the indicators can be grounded in the strategy of an organization. The expressed vision or direction of an organization can be the basis for indicators of IC. These indicators are organization specific. Examples of this kind of indicators are product quality and market share. Second, it is possible to develop indicators based on the categorization of IC that is chosen by the organization. In many instances, this will be based on groupings within the categories of human, structural and relational capital. 'An example is 'Percentage of turnover attributable to products or services introduced during the last three years' as an indicator of Renewal and Development Capital and 'Customer satisfaction index' as an indicator for customer capital' (Roos and Roos, 1997, p. 423). Finally, indicators can be derived by looking at the flows between IC categories. These indicators are about the transformation of one IC item in a certain category into an IC item in another category. For instance flow from human capital to structural capital, which can be monitored by the indicator 'Percentage of available man-hours spent on developing and maintaining an IT-based experience library' (Roos and Roos, 1997, p. 423).

Many indicators for IC are described in the literature. Therefore, it is interesting to look at the indicators that are used in practice. 'The selection of IC indicators is a multi-criteria decision problem which needs resolutions involved with different stakeholders' interests' (Han and Han, 2004). Therefore, according to Mehralian et al. (2012) it is useful to develop and prioritize the most important indicators. They do this in a 4 step process, consisting out: (1) generation of critical elements, (2) expert review and questionnaire development, (3) data collection, and (4) data analysis. Based on prior research and experience of experts, Mehralian et al. (2012) categorize the IC indicators in several groups. For human capital they have formed the groups learning and education, experience and expertise, and innovation and creation. For structural capital these groups are systems and programs, research and development, and intellectual property. Finally, for relational capital the following groups can be distinguished: strategic alliances, licenses and agreements, and relationships with and knowledge about partners, suppliers and customers. Further, it is measured which indicators are found to be the most important. The results of this research can be found in appendix 2.
Although Mehralian et al. (2012) have focused on the pharmaceutical industry (because all three components of IC play a role in this industry), these tables give a view of the most important indicators for the several categories.
Moon and Kym (2006) developed a model of IC in which the three key dimensions of IC, the subfactors and its indicators are included. To be able to create this model, the authors distinguish between human capital, structural capital and relational capital. But they divide these 'key dimensions' further into subfactors. For human capital these are employee capability, employee satisfaction and employee sustainability. For structural capital these subfactors are culture, organizational process, information systems and intellectual property. Finally, for relational capital the subfactors are customer, partner and community. Based on a review of the literature, they come up with a list of indicators for all these subfactors. This list can be found in appendix 3. Because Moon and Kym (2006) combined overlapping indices and removed firm-specific indices, this list provides a more general list of indices than Mehralian et al. (2012). According to Moon and Kym (2006) this list of indicators can be used to create a model which could be useful for managers because it shows them the strengths and weaknesses of elements in their IC. Moreover, it gives insight into the resource needs of the IC elements, because it 'underlines the various components and subcomponents of intellectual capital that should be resourced more generally' (Moon and Kym, 2006).
Mura and Longo (2013) tried to develop a model for the assessment and valuation of IC in an organization. The input for their model is data, related to individual employees. For each dimension of IC, they developed separate indicators. For human capital, they looked at innovation, intrinsic work reflection and practical application. For structural capital they looked at group cohesiveness, communication, trust and contribution. And for relational capital, they looked at organizational networks and the perception of customers and consumers by employees. They argue that based on these indicators, an 'Internally Generated Intangible Assets Index' (IGIA) can be developed. In order to do this, first a measurement model should be developed by using multivariate statistical techniques to look at the relation between IC dimensions and the contribution of the indicators to the dimension. Second, the indicators should be weight based on their contribution to the dimension. Third, the average value of each indicator should be determined and multiplied by the weight of that indicator. Finally, the IGIA index can be calculated by adding the values of each indicator together per IC dimension. Mura and Longo argue that this index could be useful for managers, because it could help them with the 'assessment of internally generated intangibles, thus supporting and integrating existing management accounting practices' (2013, p. 447)
Roos and Roos (1997) argue that using IC indicators in organizations can lead to difficulties. The examples that they name are:

' - Selecting the right indicators among the almost limitless number of potential ones.
- Ranking the importance of indicators for a specific category.
- Ensuring high precision for indicators.
- Establishing reliability of numerical values of indicators.
- Tracing all sources of error or noise in the logic used to identify indicators, which may otherwise lead to erroneous or irrelevant indicators.
- Tracking the high multicollinearity among many of the indicators, meaning that they are not reciprocally independent.' (Roos and Roos, 1997, p. 423)

According to Han and Han (2004) one of these difficulties can be resolved, namely the ranking of the importance of indicators. Han and Han (2004) provide the criteria on which the assessment of the weight of indicators can be made. For developing these criteria they use an analytic hierarchy process (AHP). This process is as follows: first a decision hierarchy is developed, based on interviews. In these interviews all useful criteria are collected. Second, the criteria are compared pairwise on importance in achieving the goals. Third, the comparing data are translated into relative weights for elements of the indicators. Finally, the weights of those elements are aggregated and composite priorities of those elements are given, which leads to a numerical ranking of the possible alternatives. In executing their research with this AHP process, they found the following selection criteria for IC indicators: relevance, reliability, comparability, representational quality and risk of disclosure. Consequently, they find that in the researches industry (telecommunications) risk of disclosure is the most important criteria, followed by relevance, reliability, comparability and representation respectively. Han and Han (2004) conclude that this procedure can be done in other industries as well.
2.3. Reporting on Intellectual Capital
A distinction must be made between reporting on IC for internal purposes and reporting IC for external purposes (Van der Meer-Kooistra and Zijlstra, 2001; Guthrie et al., 2001; Mouritsen et al., 2001a; Marr et al., 2003; Uziene, 2010; Mura and Longo, 2013; Huang et al., 2010, Kale, 2009). The purpose of internal reports on IC is to support the management in making decisions, while the purpose of external reports on IC is to inform external parties (for instance investors or creditors) about the state of the organization, on the basis of which they could make their allocation decisions. In this thesis the focus is on the internal reporting of IC.

Huang et al. (2010) argue that traditional accounting methods are not suitable for reporting on IC. 'Regarding internal reporting, companies need more comprehensive information to better monitor and manage their IC' (Huang et al., 2010, p. 6). Because prior research focused only on the characteristics that determine the extent of external reporting on IC, Huang et al. (2010) investigated which factors explain the variance in levels of internal reporting on IC. They found three characteristics that significantly influence the availability of internal IC information in organizations. First, the business strategy of the organization appears to play a role. Because organizations with a differentiation strategy focus more on innovation and development than organizations with a cost minimization strategy, they need to have better information about their IC. Therefore, Huang et al. (2010) find more internal IC information at organization with a differentiation strategy than in organizations with a cost minimization strategy. Second, companies with a more developed customer service system are found to have more internal IC information available in their organization than organization with a less well developed system. 'It is increasingly acknowledged that profitability and performance are enhanced by greater customer focus. As such, more information on customer capital including non-financial information that is related to performance of intangibles should help companies to better manage their IC' (Huang et al., 2010, p. 23). The above two findings were in line with the hypotheses developed by the authors. However, they also found that environmental uncertainty had a significant negative relation with the availability of internal IC information. According to the authors, a positive relationship would be more obvious, because in uncertain environments, the financial data do not give a complete picture of management performance, and therefore should be supplemented with non-financial information about IC. The explanation given by Huang et al. (2010) is that in an uncertain environment, organization need more information about the flow of IC (how it used) instead about the stock of IC, as it was included in the questionnaire.
Organizations that do report on IC, often choose for a balanced sheet approach for these reports (Roslender and Fincham, 2004). From the six organizations they examined in the UK, all three of the organizations that reported on IC used the balance sheet approach. However, Roslender and Fincham (2004) also found that these reports were not used comprehensively in the organization, but often only at one division of the organization. When asking on alternative reporting models, it showed that most respondents were not aware of the alternatives, such as the Skandia Navigator and the Intangible Assets Monitor. Moreover, the organizations appeared to use these reports only for internal purposes. Not much was known by the respondents about external reporting on IC.
Kale (2009) provides a framework to identify, classify and measure knowledge assets in construction organizations. In developing this framework, he makes a clear distinction between two types of IC thinking. The first generation IC thinking focuses on the identification of stocks of knowledge assets. In this thinking, the three categories of IC described earlier in this thesis can be distinguished. The second generation of IC thinking goes one step further, focusing on interstock flows. The argument is that the identification of IC and measuring the stock of knowledge assets is not sufficient, because only having IC stocks available is not enough to create value for the organization. Therefore, it is important to also look at the flows between the different categories of IC, and to measure and manage these flows (Kale, 2009). Based on these two generations of IC thinking, Kale (2009) develops a Fuzzy Intellectual Capital Index (FICI) model. This model consists of six steps: (1) identifying the evaluation criteria for measuring IC, (2) building a hierarchical structure for those evaluation criteria, (3) determine the weight of the evaluation criteria, (4) determine the stocks and interstock flows in linguistic terms based on indicators in linguistic terms, (5) calculate FICI by combining the rates and the weights, and (6) translate the score in linguistic terms. It is stated that this 'is an internal reporting model that can guide executives of A/E/C [architectural/engineering/construction] firms to evaluate their firm's ability to achieve their strategic objectives and to pinpoint their firm's strengths and weaknesses in order to neutralize threats and to exploit opportunities presented by today's construction business environment' (Kale, 2009, p. 508).

In the literature, the IC statement is a commonly found report that organizations use to report on their IC. Differing from financial accounting (aimed at auditability) and the finance view (aimed at cash flows), the IC statement is aimed at creating shareholder value, without viewing the organization as a certain value in dollars. Instead of trying to determine the value of the organization, it is about identifying which mechanisms create value for the organization. Therefore, this is a more dynamic view (Mouritsen et al., 2001b). To be able to create this dynamic view of the organization, IC statements are build up from three elements:

'Indicators create seriousness because they are published. Stories create comprehensiveness of the strategy proposed although it cannot be defined in its details. Sketches, which visualize the relations in the story, are produced, and suggest the connectivity in the indicators reported'. (Mouritsen et al., 2001b, p. 415)

Although it is recognized that indicators can never give a comprehensive view of the organization, they are included to show that top management takes IC serious. It shows that top management is not afraid of supporting their propositions with indicators. Moreover, indicators make it possible that comparisons between different periods or organizations can be done. The combination of indicators, stories and sketches gives a never-ending narrative about the way in which the company is considered to be functioning. It is about the procedures and relations that are necessary to prepare the company for the future.
Although the IC report is a supplement to the annual report of organizations, it is used both by internal and external users (Mouritsen et al., 2001b). The internal purpose of communicating the IC report is the explain that the organization is working in the directions of realizing some kind of capabilities or competencies. The external purpose of the IC report is not only showing the capabilities of the organization to the external stakeholders, but also to show internally that the propositions in the stories are taken seriously. 'The external communication is thus not only there for the external audience; it is also ' and perhaps more importantly ' one of the mechanisms used to transform the firm from within' (Mouritsen et al., 2001b, p. 419).
That the sketches could be important in reports is confirmed by Davison (2014). He gives five reasons why images could be important to accounting. First, visualization is ubiquitous in the modern society. There are many forms in which visualization can take place in financial statements, for instance charts and diagrams, but also cartoon graphics, video presentations and web pages (Davison, 2014). Second, visualizations are complex and multi-faceted. In contrast to texts, pictures can have multiple messages or perspectives at the same time. Interpretation plays a major role on this aspect (Davison, 2014). Third, pictures can simultaneously be incremental information and a form of impression management. This is caused by the fact that pictures can have conscious and unconscious messages at the same time. For instance, this could lead investors to value annual reports with pictures better while they are unaware of this underlying reason (Davison, 2014). Fourth, pictures are more easily remembered than texts. And finally, pictures have emotional power. For instance, a picture could attract investors or could reflect the image of a company. Because traditional accounting methods are often not applicable in the area of IC, visualizations are of particular importance in the area. 'Intellectual capital has special characteristics, such as investment in human and often emotionally linked attributes, or in abstract concepts such as strategy, which visual images can better bring to life than words or numbers' (Davison, 2014, p. 21).
Mouritsen et al. (2001a) investigated 17 Danish organizations, in order to get a view in the contents of their IC statements. They conclude that there are many differences between the statements of different organizations. For instance, the range of indicators used in the statements vary from only 5 indicators to 50 indicators. However, there are some similarities as well. All the IC statements are organized around three dimensions. First, a narrative is described about the knowledge in the organization. In this narrative, the organization argues what its special capabilities are and why these capabilities are relevant. Second, the narrative leads to challenges for the management of the organization. The challenge is to deploy the knowledge in the organization as good as possible. Third, these challenges lead to the desire to monitor the achievements of the management. This is done by developing some indicators. These indicators can be categorized in four groups, namely employees, customers, technologies and processes. The numbers of the knowledge narrative support the narrative of the organization. A report is then developed, which contains the narrative, the indicators and some visualizations of the situation in which the organization is at that time. This combined report shows the development of knowledge in the organization (Mouritsen et al., 2001a). It can be concluded that the IC statements found be Mouritsen et al. (2001a) are in accordance with the theory behind these statements, described by Mouritsen et al. (2001b).
2.4. Reasons for Identifying, Measuring and Reporting on Intellectual Capital
Mouritsen et al. (2001b) describe the motives of the interest in IC by organizations. First, 'an interest in intellectual capital and related ideas was associated with a desire to avoid re-inventing the wheel' (Mouritsen et al., 2001b). Organizations are concerned that solutions for a certain problem in one division of the organization are not communicated to other divisions of the same organization which is facing the same problem. Therefore, knowledge sharing of the solutions in the organization is important. Moreover, the respondents are concerned with losing knowledge when employees leave the organization (Mouritsen et al., 2001b). Second, the respondents associated IC with a more effective style of operations. For instance, in one of the respondents' organizations, a BSC was being developed. This initiative was perceived to enable the organization to react quicker to environmental changes. This perception was caused by the view that the BSC would ensure a bottom up generation of innovative ideas. Third, avoiding the same mistakes happening again is one of the motives for the interest in IC. Therefore, it appears useful for organizations to develop a system to aggregate and analyze incident data, and to establish good routines and procedures that are observed in a strict manner.

Marr et al. (2003) performed a systematic literature review to look at the internal and external reasons for organizations to measure their IC. In the research available to that date, they found 5 reasons for organizations to measure their IC. First, measuring IC can contribute to strategy formulation. It is stated that the competencies of an organization have to fit with the strategy of that organization. Since IC is becoming an increasingly important resource, and IC can bring competitive advantages for the organization, it is important to have an understanding of the relationships between IC, competitive advantage, and profitability. However, Marr et al. (2003) argue that there is not much evidence that organizations really use IC measurements as a basis for strategy formulation.
Second, IC measurement can help to develop performance indicators, which enable the organization to assess whether the organization is going in the direction that the management wants the organization to go. Again the link between IC and strategy is important. Measuring IC can help to challenge and test the assumptions that are underlying the strategic direction. However, again there is not much evidence that the measurement of IC is used in practice to change the strategic direction (Marr et al, 2003).
Third, when organizations want to improve or diversify their IC resources, or they want to expand them in the form of acquisitions and mergers, they often link with other organizations, who have additional IC. Examples by Marr et al. (2003) are joint ventures, strategic alliances or mergers and acquisitions. Often, large parts of the takeover prices are based on goodwill or IC. Therefore, it is useful for those organizations to be able to identify and measure both their own IC, but also the IC of the target firm, because it prevents them for overpaying for the target firm or overlooking potential target firms. Practice shows that this is a difficult process for organizations. There is not much empirical testing done on this subject in the literature that is available (Marr et al., 2003).
Fourth, IC measurement could be used for compensation purposes. It is recognized that financial measures are too much focused on short term and backward-looking. Therefore, non-financial measures could be a useful supplement on those financial measures, because it is showed that these non-financial measures often have a better link with strategy and performance. However, it is also acknowledged by a number of authors that the fact that an indicator has better predictive power than traditional numbers is not enough to state that it should be used as a basis for compensation (Marr et al, 2003).
Finally, there is regulation about the IC measures that organizations will have to communicate with their external stakeholders. These regulations put more and more pressure on organizations to report about their IC metrics. Besides these mandatory regulations, some organizations are already trying to disclose information about the measurement of their IC, beyond the required information. Marr et al. state that 'one of the drivers for a company to measure its IC is to ensure a fair and stable share price and therefore a more favorable cost of capital' (2003, p. 450). More and more organizations are also disclosing IC indicators in their annual reports. It is found that this information is valued by investors, which leads to more satisfactory market valuations (Marr et al., 2003). The best-known example of IC disclosure in annual reports is R&D information. Although some research is done in the areas of R&D and organizational capital, other areas of intangibles are not much researched (Marr et al., 2003).
From this list, it can be concluded that IC measurement is used for both internal and external purposes, or, in other words, for instrumental and representational uses. The first four reasons to use IC measurements in the list of Marr et al. (2003) are internal uses, and the fifth reason is an external use. The conclusion of Marr et al. (2003) is that much research has been done in stage 1, which is building theories and raising awareness. Research of stage 2, which is about theory testing in practice, is not often found in the literature until now. Therefore, more practical based research is needed.

Mouritsen et al. (2001a) did a research on the IC statements of 17 companies. In this study, they also surveyed the reasons why organizations choose to develop and publish IC statements. They found that both external and internal reasons played a role in this choice. On the one hand, external reasons are about the communication with outside parties, for instance customers and potential employees. By presenting these external parties information about the IC of the organization, and therefore the strength of the organization, these organizations try to attract the attention of these parties. On the other hand, internal reasons for IC statements have to do with the development, sharing and retaining of knowledge in the organization. Further, the authors conducted a number of interviews to be able to interpret these results. The findings of these interviews are that the interviewees expected the IC statements to have an effect on their knowledge management tools, which would lead to improved sharing of knowledge. Another expectation was that the IC statements could be used for communication with potential employees and customers. The statements could then be used to support the identity of the organization, and to make the vision of the organization clear to the readers. Moreover, it was expected that the IC statements would have an effect on human resource development. With the IC statement, the organization is able to look at the current composition of the workforce and compare the competencies of this workforce with the desired competencies. When a gap exists, the organization could try to fill this with training or attracting new employees.
2.5. Intellectual Capital in Organizations
The first organization that started to focus on IC was Skandia. The reason for this was the 'need for a new logic regarding the development of knowledge intensive services' (Edvinsson, 1997, p. 366). Edvinsson (1997) acknowledged a paradox, that the more there is invested in knowledge improving activities, the less the value of the organization on the balance sheet is. The reason for this is that the investments go to invisible assets. Therefore, he argued that a new balance sheet approach, which included the presentation of intellectual assets, would be better. Edvinsson (1997) described the process at Skandia in six steps, namely missionary, measurement, leadership, technology, capitalizing, and futurizing. IC was seen at Skandia to consist of two elements; human capital and structural capital. Structural capital can be described as everything beyond human capital that is left behind when the employees are going home. Examples are customer databases and IT systems. Skandia emphasized that it was important to make intangible assets tangible, by supporting the IC statements with numbers. The numbers were the language with which the IC information was communicated. Therefore, they developed a device that looked a lot like the balanced scorecard of Kaplan and Norton, called the Skandia Navigator. This device combined financial and non-financial indicators to present the value of IC in the organization. However, the focus of this Navigator was on renewal and development, so it was more focused on the future. This device was used for multiple purposes. First, it was used for internal purposes. The indicators acted as target indicators or follow-up indicators. Edvinsson (1997) states that more insight in the IC of the organization would lead to better decision making. Later, an overview of the device (and therefore the value of IC) was added to the annual report of the organization. Eventually, the Navigator was used to assess the performance of individual employees and determine the rewards (or punishments) for them.
2.6. Recapitulation
Because there is no consensus in the literature about the definition of IC, a definition is developed in this thesis which contains the common features of the definitions that are mentioned in the literature. The categories of IC can be drawn upon from prior research and are described to be human capital, structural capital and relational capital. But in categorizing these different elements of IC, it is important to recognize that these elements are not standing on their own, but the interaction between these elements is what is important. In the literature to date, concept mapping is described as a tool for identifying IC in organizations.
In the literature, it is recognized that the measurement of IC in organization is difficult. Difficulties can arise when the definition of IC is not clear, when it is unclear for what purpose IC should be measured, or when it is not clear which method should be used. Despite the fact that IC measurement appears to be difficult, many measurement techniques are described. There are many similarities and differences between these techniques, for instance they could be based on financial measures or non-financial measures, benchmarking could be used, or a choice can be made between an balance sheet approach or an P&L approach. It is found that the reason for these differences is the purpose of the measurement. On the one hand it could be used for internal purposes, which needs indicators based on strategy to monitor the performance on certain goals. On the other hand it could be used for external purposes, which makes it necessary to select measurements on clearness of the format and uniformity of use. Indicators are used a lot for IC measurement, but again many varieties exist. Some of these indicators are described in this chapter. But using indicators for IC measurement can lead to difficulties as well, as described by Roos and Roos (1997). One of these difficulties is the ranking of the importance of indicators. This difficulty is solved by a other authors, who developed a method for the prioritizing of indicators, based on an analytic hierarchy process (AHP).
In the reporting section again it is crucial to make a distinction between internal purposes and external purposes. The internal purpose of IC reporting is to support management decision making, and internal reporting on IC is the focus of this thesis. It is recognized that traditional (financial) accounting is not always sufficient to provide a view of an organization. Therefore, the accounting numbers should be supplemented with additional information, which is mainly forward-looking instead of the backward-looking financials. An IC statement is a medium that is commonly used for this purpose. The goal of this IC statement is not to reflect the value of an organization with a certain dollar value, but to create value for the organization. This is done by incorporating three elements in the statement, namely indicators, stories and sketches. Together, this provides a more comprehensive view of the organization.
Finally, a number of reasons for the identification, measurement and reporting on IC are described. These goals can both be internal as external purposes. Some examples are the communication of solutions throughout the organization, a more effective adaptation to the environment, the formulation of a strategy, the development of performance indicators, and to be the basis for more forward-looking compensation systems. '
3. Structuration Theory
3.1. Description
Roberts and Scapens (1985) argue that the structuration theory of Giddens can be a valuable framework for management accounting research. In this section, structuration theory will be described, and the reasons why it is interesting in this research will be explained.
Structuration theory can be used to understand management accounting in the social context of organizations (Macintosh and Scapens, 1990). Giddens (1976) distinguishes between structures and structuration. On the one hand, structure refers to a static relationship or a stable concept. 'Structure is understood by Giddens as sets of norms, rules and resources that are contextually embedded and institutionalized' (Manning, 2010, p. 554). On the other hand, structuration focuses on the process in which human actors use structures and simultaneously shape those structures. 'Social actors more or less mindfully apply norms, rules and resources in interaction, and, in doing so, impact on the continuous flow of events' (Manning, 2010). Structuration theory can be used to look at the relationship between activities of employees (in Giddens' words knowledgeable human actors), and the structuring of social systems (Giddens, 1976; 1979; 1984; 1987). Giddens makes a distinction between systems and structures. Systems are 'situated practices per se (i.e. what people actually say and do), and structures are 'that which generates such practices (i.e. that which underlies and produces the 'patterns' as such' (Englund et al., 2011, p. 496).

'Social systems then, (i) comprise the actual activities of human actors, (ii) are always situated in specific time'space settings, and (iii) are always linked to specific subjects. Social structures, on the other hand, constitute (i) the structural properties (i.e. the general and institutionalized templates for human action) which allow for the
'binding' of time'space, (ii) are out of time and space with only a virtual existence, and (iii) are marked by the absence of the subject (Giddens, 1981, 1984).' (Englund et al., 2011, p. 496)

Structures provide binding for systems, which contain comparable social practices that are reproduced by actions of humans across time and space (Macintosh and Scapens, 1990).
An important concept in structuration theory is the duality of structure, which is explained by Giddens as follows: 'structure is both medium and outcome of the reproduction of practices' (Giddens, 1979, p. 5). This means that structures are shaped by human action, and at the same time, these structures are a medium for this shaping by humans. In other words, systems give form to practices, but every single act can have influence on the system (Ahrens and Chapman, 2002). Giddens states this by the following words: 'In seeking to come to grip with problems of action and structure, structuration theory offers a conceptual scheme that allows one to understand how actors are at the same time the creators of social systems yet created by them. It is an attempt to provide the conceptual means of analyzing the often delicate and subtle interlacing of reflexively organized action and institutional constraint' (Giddens, 1991, p. 204). According to Manning (2010) this duality of structure is caused by the fact that social practices are prominent in structuration theory:

'One central concept in structuration theory is that of social practices. These are more or less context-specific, regularized activities actors repeatedly engage in by referring to schemas, norms, and resources of power. By engaging in social practices, actors legitimize and give meaning to their actions, and contribute to the reproduction of the very institutional structures that enable and constrain their actions.' (Manning, 2010, p. 555)

Giddens looks at three dimensions of social structure, namely signification, legitimation and domination (Giddens, 1979). These dimensions are often referred to as respectively meaning, morality and power. In the structuration theory, these dimensions are interrelated, as shown in figure 1. The domination structure can have influence on signification and legitimation structures, for instance when command over management accounting processes is used to exercise power in the organization (Macintosh and Scapens, 1990). One dimension can never exist on its own, it always needs the other dimensions as well. It can be said that management accounting is involved with all three dimensions of structuration theory, and accounting signification is an important source of power in organizations.
Important in the theory by Giddens, are the actions by individuals in social environments. Giddens (1984) calls this agency, and argues that this is a continuous flow of action. With these actions, human agents can affect the social structures in organizations. The notion that 'at any point of time, the agent could have acted otherwise' (Giddens, 1984, p. 56) is important, because it shows that human agents behave purposefully, and not only with automatic responses. This means that humans know what they are doing and why they are doing it, and they are able to understand the consequences of their actions for a large part, although it is recognized that their actions can have unintended consequences. This is called 'reflexivity' by Giddens (1984). This reflexivity is relevant because Giddens starts from human knowledgeability and action, to look at social practice. 'Reflexivity is central to the continuity of social practices because it acknowledges the purposiveness of human agents' (Jones et al., 2000, p. 162). Giddens (1984) further argues that this reflexivity can take place at two levels of consciousness, namely the discursive level and the practical level. At the discursive level, agents are rational in what they are doing in social environments. They give explicit reasons for their behavior. At the practical level of consciousness, agents act more on their implicit knowledge. At this level, they know what they are doing, but they do not really understand why they are doing it. These two levels of consciousness are affected by an agent's unconscious motivations. In structuration theory, Giddens argues that the need for ontological security (feeling safe in your environment or context) is the unconscious motivation why agents 'routinely reproduce social terms, even those which they might readily recognize as excessively coercive' (Macintosh and Scapens, 1990, p. 459). To be able to deal with this unconscious motivations, agents will search for comfortable situations, which can be characterized by predictability, stability, and order. This is a situation with what Giddens calls social order. Social order is important in organizations, because it is a way to save energy (Beckerman, 2006). For instance, when employees are performing routine work, it is beneficial for the organization that certain patterns are generated, because that is more efficient than finding a solution for the same problem every time this problem appears. This leads to what Giddens calls the recursive nature of social life. Management accounting systems can play a role in the fulfilment of agent's unconscious needs for ontological security, because they can add predictability, stability and order to an organizational situation. For instance, planning, budgets, or targets can bring predictability and order to a situation. In sum, 'structuration theory is concerned with the interplay of agents' actions and social structures in the production, reproduction, and regulation of any social order.' (Macintosh and Scapens, 1990, p. 459).
As described above, structuration theory includes the dimensions signification, legitimations and domination. The signification structure in the case of management accounting systems can be seen as the concepts that are used to make sense of organizational life, for instance income, assets, profits, et cetera (Roberts and Scapens, 1985). Management accounting systems can be seen as the interpretive schemes, with which these common concepts are communicated. This is also called modality of structuration by Giddens (1984, p. 28) (see figure 1). What is important in the theory is that the interpretive schema (i.e. management accounting system) depends on the signification structure (common concepts), while simultaneously it also reproduces that structure. 'Modalities are used by actors in the creation of interaction, while they are also the medium for reproducing the structural components of interaction' (Jones et al., 2000, p. 163). This relation can be explained with a well-known analogy (Macintosh and Scapens, 1990). Language is used by using grammar and vocabulary, to communicate a certain message. However, language is a result of the message as well, because the message can affect language. In this relationship language is the signification structure, grammar and vocabulary are the interpretive schemes or modalities, and the message is the communication. 'Thus, as human actors communicate, they draw on interpretive schemes to help make sense of interactions; at the same time those interactions reproduce and modify those interpretative schemes which are embedded in social structure as meaning or signification' (Beckerman, 2006, p. 3). In sum, 'systems of signification (structure) allow agents to communicate (interaction) with each other through the application of interpretative schemes (modality)' (Jones et al., 2000, p. 163).
The legitimation structure is about morality and norms that determine behavior, because it places sanctions on bad behavior. Management accounting systems can be seen as a legitimation structure, because they enable managers to hold their employees accountable for their results, and when the expectations are not fulfilled, these employees can be punished. Legitimation structures show what is appropriate behavior and what is not (Macintosh and Scapens, 1990). Beckerman articulates this as follows: 'moral codes (norms) help determine what can be sanctioned in human interaction, which iteratively produces structures of legitimation' (2006, p. 4). To summarize, 'systems of legitimation (structure) permit the sanctioning (interaction) of interaction through the application of norms (modality)' (Jones et al., 2000, p. 163).
Finally, the domination structure is about the distribution of resources in the organization. Giddens categorizes two types of resources that play a role in the power distribution, namely allocative resources and authoritative resources. Authoritative resources are based on the co-ordination of the activities of employees, and allocative resources derive from command over material products, which gives a human agent control (Beckerman, 2006). It is important to recognize that not only the manager will have resources, but also the subordinates, who for instance have more information and contacts, with which they can affect the behavior of their managers (Macintosh and Scapens, 1990). In terms of structuration theory, 'the facility to allocate resources is enacted in the exercise of power, and produces and reproduces social structures of domination' (Beckerman, 2006, p. 3-4). Again, a management accounting system can play an important role, because it can be a medium for power. To conclude, 'systems of domination (structure) enable actors to affect each other's conduct via the exercise of power (interaction) through the application of facilities such as rules and resources (modality), although through the dialectic of control suggests that actors with apparently little 'power' can affect change' (Jones et al., 2000, p. 163).

3.2. Structuration Theory in Practice
To be able to use structuration theory in this research, it is useful to look at prior research that has used structuration theory. This provides insights in the use of the theory, the use of the different concepts, the interpretation of qualitative data with structuration theory, and the conclusions that can be drawn by structuration theory. Structuration theory has only seldom been used in a IC context. However, some structuration theory research has been done on related topics. First, knowledge management is strongly related to IC. Both in knowledge management and IC, it is about managing the knowledge, experience and skills that are available. However, IC is a somewhat broader concept than knowledge management. Knowledge management focuses on human capital (knowledge, experience and skills of employees) and structural capital (intellectual property, knowledge databases, et cetera). Another related topic is organizational intelligence. The basic conceptual definition of organizational contains the following elements:

' - capacity for information processing, learning and problem solving;
- ability to adapt to and reshape [the organization's] environment;
- ability to understand the feeling, thoughts and behaviors of people, and to act
appropriately upon that understanding (Sternberg and Kaufman, 1998; Sternberg,
1985).' (Akg??n et al., 2007, p. 274)

The intelligence of an organization and the different elements of organizational intelligence are part of IC. Therefore, it is interesting to look at papers that use structuration theory on these related topics.
First, Beckerman (2006) did a case study at four hospitals in Europe and the USA to look at the consequences of transformation in the work processes, due to the fact that they started to use computerized patient records. He distinguishes between two concepts that affect work processes in knowledge intensive professions, namely knowledge structuring and knowledge domination. Knowledge structuring is important because executing knowledge is a structured activity. The computerization of the patient record adds even more structure to the activities of anesthetists. Beckerman (2006) investigates the consequences of this structuring of knowledge. The benefit of the new system in this light is that it creates routines for the anesthetists. However, it can also cause the anesthetist to pay not enough attention on the patient anymore, because he thinks the new system will do it for him. Anesthesia is seen as a profession in which there is much tacit knowledge, and it is argued that this tacit knowledge cannot always be transformed into codified knowledge. A consequence of a more structured system, which tries to make more knowledge visible, is that certain tacit knowledge is lost. So, the system has costs and benefits. Knowledge domination is about the person(s) who have the domination over the structuring of the knowledge in an organization. Beckerman (2006) does not agree with the assumption that all knowledge is manageable. Instead, she argues that knowledge is locally and embedded. Therefore, someone leads the knowledge in an organization. The case studies show that 'the person that dominates over knowledge influences what and how transformations take place' (Beckerman, 2006, p. 8). For instance, sometimes an employee knows more about an issue than management does, but he can keep this for himself, when he will not gain when sharing this knowledge. Creating knowledge costs energy, so to stimulate this knowledge creation, the person with the ideas should be rewarded for his efforts. Beckerman also recognized that resistance could be initiated against knowledge management systems, because some professionals do not want that the public gets insight in the details of their actions. This resistance could even lead to a decreasing execution of knowledge in the organization.
The conclusion of the paper by Beckerman (2006) is that the results of knowledge management are never certain. Transforming the work of knowledge workers, in this case anesthetists, with new systems, has an influence on the work processes of those professionals, for instance because it determines which questions should be asked to the patient, which medicines should be given and how, and how the documentation should take place. Because the transformation means a decrease in ontological security, this could lead to resistance. However, according to Beckerman, this resistance can only be temporary, because there is increasing pressure in society to be more flexible. The duality of structure is represented in this research by the recursive relationship between the patient record system and anesthetists: ''The clinical eye' is a cognitive style and it is important both for the anesthesist and anesthesia nurse and something they have trained themselves to get. If the document demands too much time, it will disrupt the harmony in how the patient is taken care of' (Beckerman, 2006, p. 10).
Second, Akg??n et al. (2007) performed a case study at a small electronic manufacturer. They used structuration theory to get a better understanding of organizational intelligence in organization, because they argued that until then there was not much consensus about the concept. In their research, they formulate three propositions. First, it is stated that organizational intelligence is not determined by only cognitive factors, but by the interaction between cognitive, behavioral and social phenomena. These interactions are dynamic and initiated, reproduced and changed by structures of signification, legitimation and domination. Second, organizational intelligence is operationalized through reciprocal interactions of multiplexity, loose coupling and redundancy. Multiplexity is about the strength of the relationships between individuals, redundancy is about the distribution of information, tasks and relations, and loose coupling prevents the organization from repeating certain mistakes or dysfunctional behavior. Finally, it is stated that organizational intelligence cannot be seen separately from individual intelligence, because intelligence is shaped by the interaction between individuals.
Two important concepts of structuration theory in the work by Akg??n et al. (2007) are duality of structure and reflexivity. Duality of structure comes to the front in the case organization in the fact that organizational intelligence shaped and is shaped by organizational rules and resources. Information and knowledge reshaped both the roles of individuals as the routines and procedures in the organization. Reflexivity is about the statement that organizational and individual intelligence cannot be separated: 'reflexivity explores organizational intelligence based on the tensions and interrelationships of meaning, realities, and theorizing ' a weak theory of organizational becoming, because organizational intelligence is not separate from the people who compose it and live in it' (Akg??n et al., 2007, p. 285). Structuration theory is used in this study because it emphasizes the role of not only the cognitive element of organizational intelligence, but also the social/emotional and functional elements. Therefore, it gives managers and employees insight in how they can design, improve and manage their organizational intelligence. Finally, structuration theory depicts organizational intelligence as an activity, rather than an entity as in some of the prior research.

Structuration theory has also been used in a number of researches outside the area of IC. In this study, the focus is on structuration theory-based research that employs the case study methodology. Macintosh and Scapens (1990) applied structuration theory on a case study from Covaleski and Dirsmith (1988) on the relation between the State and University of Wisconsin. Before the 1970's, they used the enrolment funding formula (EFF), based on quantitative information, to distribute funding to the university. This was a rational device, and gave the university much freedom. However, in the 1970's, less money was available, and therefore, less funding went to the university. Because the university was afraid of losing control over the process, they came up with a new, qualitative system. This seemed to work, because new allocations were largely improved. However, in the end, it appeared that they were paying for the funding themselves, because the State stopped the increase in salaries. The State benefited from the situation. The case shows that a signification structure was used to show that the procedure of the University lacked rationality. Moreover, domination was used to stop the increase of the salaries. Therefore, the rationality of the old system was reinforced, and the new system was not used. Thus, structuration theory was used to show the relationship between the University and the State over a long term period and during a crisis incident.
Another well-known example is the study by Ahrens and Chapman (2002) about a case study in a UK restaurant chain. They used structuration theory because in their case, the performance management system had different meanings for agents in the organization. Structuration theory was useful in this case to look at the social interaction. Ahrens and Chapman (2002) state that structuration theory can be applied to accounting systems, because these systems have to do with communication, moral relationships and the operation of power. In their research, they use the structuration theory to understand how local restaurant managers apply the standards for service, quality and financial performance. The structuration in this process is that the trade-off between the different performance measures (for instance profit against food margin), has an influence on the performance measures themselves. Ahrens and Chapman (2002) conclude that the accounting systems were exposed to interpretations, which continuously changed the relative significance of the systems. The three dimensions of structuration theory could be used to explain this. The domination dimension was about the power of the Operational Area Manager, who could for instance determine that, although profits were good, the high food margin should be decreased. The signification dimension was about the measures. The question was for instance whether a high profit was caused by management skills or by a good economy. Finally, the legitimation dimension was about how much extra profit could justify for instance a higher food margin than the standard. These contests of accountability were part of the day-to-day business (Ahrens and Chapman, 2002).
Roberts and Scapens (1985) distinguish between accounting systems and systems of accountability. In accounting systems the analysis is abstracted from practice; design determines what people do. In this dominant paradigm, the implementation of a new concept is linear and follows an expected path. However, in a system of accountability it is recognized that unanticipated conditions or consequences can occur. Therefore, it is important to look at practice and see how different people perceive and interpret a certain system. Systems of accountability are seen as a binding element for organizational time and space. In this research, interaction is analyzed based on meaning (signification), morality (legitimation), and power (domination). Different compositions of these structures create specific forms or patterns of accountability, in a specific context. To illustrate this, the authors contrast face-to-face contact with contact at a distance. In face-to-face contact, accounting is often not the only source of information, and therefore often has a small influence on the knowledge of others. This contact is useful because it gives space to the interpretations by the subordinate and manager. In more distant forms of accountability, accounting plays a more important role, because it is often the only source of information. Therefore, the individuals in the contact do not know each other's interpretation. Accounting can only partly bridge this gap, because subordinates can for instance manipulate the accounting information. Therefore, trust in each other and in the accounting information starts to play a role. This paper is relevant, because it shows that it is useful to look at accounting in practice, and that structuration theory can be helpful to do this. All dimensions of structuration theory are present in this case study. The signification structure is reflected by the (accounting) concepts that are used. It determines for instance what income, profit, or assets are. The legitimation structure contains the norms and rules in the organization. It determines what an employee can or cannot do. The domination structure is about which resources are accessible to who. For instance, not only the manager has power, but the subordinate has power as well because he has more knowledge about the details of the information discussed in the meetings.
Structuration theory has also been used in research on innovation processes in organizations. Coopey et al. (1998) used structuration theory in three case studies to look at the changes in organizations caused by the adoption of innovations. In particular, they used the concept of duality of structure to explain that innovators use their knowledge, skills and access to resources to make their innovation successful in the organization, and that it will get adopted by the organization. This adoption leads to changes in the organization, for instance new hierarchical structures, new procedures, new rules or new norms. So, the adoption of the innovation changed the social system and structure of the organization. But these changes were also an influence on the behavior of organizational actors, because they could be seen as constraints or opportunities, which could be the start for the search for new innovations. 'Yes, managers in shaping the organization also 'shape themselves as human beings' in the process. But in doing so they also create new structures which, in turn, serve to constitute ' no less directly but in more subtle ways ' the identities of the organization's members, including the innovators' (Coopey et al., 1998, p. 280).
Where Coopey et al. (1998) looked at the individual innovators, Jones et al. (2000) looked more at the innovation process at the organizational level. Structuration theory is used to emphasize social practices across space and time in these innovation processes. The authors state that it is not only about the structures in an organization, but also about the relation with human action that is created by the structures. They look at how social action influences structural properties that determine the behavior of individuals in the innovation process. The social action is reflected by the concept of modalities from structuration theory, and this paper gives clear examples of those modalities in practice. First, there were several interpretive schemes in the case study organization. The technical director wanted to raise the level of sophistication, while the financial director (who may these days be a virtual FD or part time FD - see e.g. emphasized cautiousness in risky investments. Second, the facilities (in this case financial resources) play a role in the innovation process. This modality consists of allocative resources and authoritative resources. Considering the allocative resources, the innovation project in the case study was getting larger than expected. Therefore, the budget of the project had to be adjusted time after time. Just when all technical problems seemed to be resolved, the concerns of the financial manager were taken up by the rest of the organization, and the project was stopped. Authoritative resources had influence in two ways: (1) managers of the case study organization had no control over the employees at the university with whom they were working together, (2) there was a continuously debate about the allocation of financial and human resources. This disagreement caused that the project was stopped. Third, the norms between the firm and the university were very different. In the company they were thinking about 'manufacturability' or product development, while in the university the norm was to do good research. Moreover, inside the organization there were different norms as well. The norm of the technical manager was the importance of high-technology solutions for organizational problems, where the norms of the financial manager was 'balancing the books' and cautiousness in risky investments. The case shows that the modalities can have an influence on the organization. Structuration theory is a useful theory in this research, because it is a process-oriented model, that sees structure both as the product as the constraint of human action. It provides insight in complex social and political activities of the technical and financial directors.
Bresnen et al. (2004) look at how innovations are adopted in organizations, particularly in project-based organizations. Structuration theory is used to include the relationship between structure and individual agency, which has an influence on the distribution and enactment of management knowledge. Bresnen et al. (2004) name three characteristics of project-based organizations that make the distribution of knowledge difficult: (1) decentralization, (2) emphasis on short term performance, and (3) much inter-professional and inter-organizational work. In a case study they followed the introduction of a planning tool in a construction organization. Problems arose, because the objective of the tool differed between the head office and project managers. Moreover, there was a mismatch between performance according to the planning tool and actual performance according to financial targets. Therefore, the organization stopped using the system. The authors argue that the reasons for this failure can be found in structural conditions and existing working practices. Structuration theory is mainly used to describe the structural conditions. Signification rules were strongly influenced by the decentralization in the organization, which gave managers space to interpret and enact the new tool in their own way. Thus, decentralization made it difficult to introduce an organization-wide perspective. The legitimation dimension has two elements, since the reaction of the project managers was largely informed by regional politics and the characteristics of project-based working. In the northern region, managers were afraid of losing autonomy. Moreover, managers did not know what the tool was used for and they did not prioritize the use of the new system. Finally, project managers had relatively much power to resist or disturb the new initiative. The sources of this power were their own knowledge of project management and the existence of social networks in which experiences between project managers could be exchanged and collective action could be mobilized. The influence of existing project management practices was that managers who used similar tools as the new tool were more willing to accept the new tool. The conclusion of the authors is that 'The rules and resources available to managers across the projects at ConstructCo produced different patterns of interaction in the process of embedding Dashboards, leading to different outcomes and uses of the tool' (Bresnen et al., 2004, p. 1549). Rules of signification and legitimation caused by relatively much autonomy gave project managers much freedom to determine how to react on the new tool.
Manning (2010) also looks at project-based organizations with a structuration theory perspective, but he focuses more on the composition of project networks as organizational form, with an interaction between network composition and the career of individual project entrepreneurs. He uses structuration theory to understand the role and context of strategic agency better than prior research suggests. Structuration theory provides an opportunity to look at the interplay between agency and structure, where prior research focused only on structures. Manning (2010) executed a case study in on a European education researcher, and finds that he uses three practices to establish his network, namely (1) making and renewing project-based contacts, (2) pooling of potential project partners, and (3) maintaining core project partnerships. These practices cannot exist without one another and have an influence on each other. This research illustrates the concept of mutual association of position and practice by Giddens:

'['] the ability of FA [the researcher] to act as network coordinator, using these practices, derives from his ability to combine resources from multiple social positions ' his formal authority as project coordinator; his discretion over budgets, expertise and support staff as professor; his network contacts to potential project partners; and his field reputation as professional. As FA combines these resources over time to build up and coordinate his project network, he also establishes and reproduces resource properties of network coordinating positions in his field. In other words, project networks in this field are likely to be coordinated by researchers whose status positions are similar to FA's.' (Manning, 2010, p. 569)

To conclude, Englund et al. (2011) look at structuration theory in accounting in the last 25 years. They identify four themes that are discussed using structuration theory, namely: (1) how accounting is conceptualized, (2) how accounting is implicated in organizations and social practice, (3) how accounting continuity is theorized, and (4) how accounting change is theorized. Englund et al. (2011) argue that structuration theory has had three main achievements. First, it introduced a duality perspective in accounting research. This perspective reduced the boundary between structure-centered and agency-centered research. Second, accounting is conceptualized as consisting of structures of signification, domination and legitimation and these dimensions are interrelated. Finally, it provides a framework for theorizing both accounting continuity as accounting change. However, Englund et al. (2011) also find limitations of structuration theory. Their main critique is that structuration theory provides few unique empirical insights. The authors argue that many of the contributions of structuration theory are also provided by other streams of thought, like actor network theory and institutional theory. The reason for this according to the authors, is that structuration is not a specific theory with concrete concepts and relations. It is more an ' 'ontological point of departure' for how to understand the reproduction and transformation of accounting practices more generally' (Giddens, 1991). Although the authors think this is a limitation of structuration theory, they state that structuration theory has many competitive advantages left that could 'add further insight(s) to the broader alternative accounting literature' (Englund et al., 2011, p. 506).
3.3. Structuration as Sensitizing Framework
Structuration theory is interesting in this research, because it looks at management accounting as structuration instead of as a structure. This is interesting because the objective of this research is to investigate the process surrounding identifying, measuring and reporting on IC in organizations. Moreover, management accounting is seen as a social construct instead of a natural phenomenon. Because reporting on IC is not mandatory, for certain not internally reporting on IC, it is interesting to look at the processes from a socio-economic perspective. With structuration theory, it can be examined how and why organizations identify, measure and report on IC internally. Internal IC reports can be used to make sense of the day-to-day activities of managers, and therefore can be seen as interpretive schemes. Thus, structuration theory is used as a sensitizing framework in this research. Furthermore, Macintosh and Scapens (1990) state that structuration theory is particularly useful for case studies, because it provides the opportunity to the researcher to take a holistic approach towards the case organization. It is a more focused, informative, integrative, and efficient, yet comprehensive, way to analyze case studies of management accounting than many of the frameworks used in previous case studies (p. 475). Structuration theory gives an organized way of sense making of social life and a sensitizing device for researchers. Therefore, this approach will be taken in this research.
Structuration theory will be used to investigate the choice of an organization to internally report on IC. Why does an organization decide to report internally on IC, or why does the organization decide to not report on it? And when an organization chose to measure and report on it, how does it do that and why? These questions will be answered in this research by looking at the different dimensions of structuration theory, namely legitimation, signification and domination structures. It is investigated whether these dimensions give an explanation to the internal reporting on IC of the investigated organization.
3.4. Recapitulation
In this section, structuration theory is discussed an some examples of the application of structuration theory in research are given. A number of concepts are crucial in structuration theory. In Table 2 the key elements of structuration theory are explained.

Besides these key elements, it is worthwhile to mention the distinction between structures and structuration. Structures are stable concepts that can be used by actors, while structuration is the process in which the agents use the structures. This distinction is important because it shows that structuration theory has a process view, which is crucial for the application of structuration theory in the case study of this thesis.
In structuration theory, three dimensions are central. With the signification dimension it is about how accounting systems can be used to make sense of organizational life and communication. The legitimation structure is about morality and norms that determines the behavior of actors in the organization. Finally, the domination structures includes the distribution of resources, which can be used by the actors in the organization to influence each other.
After describing structuration theory in full, some examples of the application of structuration theory are discussed. Structuration theory has been applied in related areas as in this thesis (IC), namely in the area of knowledge management and organizational intelligence. But it is also used in studies outside of this area. The discussed papers provide a view on how structuration theory can be used in research and in this respect contributed significantly to this thesis.
The conclusion of this section is that structuration theory is a useful framework for in-action accounting research and therefore will be used in this thesis. Organizations can be seen as social constructs and structuration theory can be used to analyze such constructs. Moreover, the research question focuses on processes in such social constructs, which makes structuration theory with its process view interesting for this thesis. Finally, structuration theory is specifically useful for case studies.
4. Methodology
4.1. Interpretive Perspective
This research takes an interpretive perspective on IC in organizations. This perspective states that actions can only be understood when they are viewed in relation with their meaning (Chua, 1986). These actions take place in social interaction. The assumption is that reality is 'subjectively created, and objectified through human interaction' (Chua, 1986, p. 615). It is about the explanation of human intentions. Interpretive accounting research acknowledges complexity and diversity of organizational and social situations (Van der Meer-Kooistra and Vosselman, 2012). Therefore, the actions are observed within their context. This is also called looking at 'accounting in action' (Cuganesan, 2005). According to Van der Meer-Kooistra and Vosselman (2012), this perspective does not have instrumental relevance, because it does not provide so-called 'value-free' effective and efficient means or tools. However, it does have conceptual relevance, because it seeks to explain action and to understand how social order is produced and maintained in a specific organizational setting. It looks at social interactions in organizations, and how accounting and control may be vehicles in that process. Moreover, this perspective has legitimate relevance. The findings in specific organizational situations may help practitioners in other organizations to legitimize their actions and decisions (Van der Meer-Kooistra and Vosselman, 2012).
The interpretive perspective fits the aim of this research, because not much is known about internally identifying, measuring and reporting of IC. Therefore, it is interesting to look at the different meanings of IC for organizations internally. Moreover, it is about the interaction of the concept IC with human actors inside organizations. To get a good understanding of the processes around IC in organization, it is necessary to take a look inside organizations to see how they cope with the concept; what is the interaction between human actors in the organization and IC?

4.2. Methodology
The methodology of this thesis is qualitative. Chua states that qualitative field researchers agree that 'social reality is emergent, subjectively created, and objectified through human interaction' (1986, p. 615). In performing this kind of research, the researcher has to reflect his data to the theories to interpret the data, and to come up with conclusions about the situation (Ahrens and Chapman, 2006). This kind of research is useful in exploring fields on which not much knowledge is available. This is the case of this thesis, that focuses on internal processes around IC, instead of external effects, which are the subject of much of the prior research. According to Ahrens and Chapman, 'qualitative field studies collect data in the domain 'field, and employ 'qualitative' methodology' (2006, p. 821). One of the characteristics from this kind of research is that it contains both structured data, for instance from interviews, and unstructured data, from observations. Baxter and Chua state that theorizing in field studies is about 'moving from the general to the local to the general' (1998, p. 80). This process requires a problem to be investigated, a theory, and the collection of data. These three inputs have an influence on each other, and they have to fit with each other to come to a good research. Moreover, Ahrens and Chapman (2006) state that in order to generate findings that are interesting for the community, it is necessary to draw a connection between practice and theory. In this thesis, the structuration theory is used to bring some structure in the data. As described by Macintosh and Scapens, structuration theory is useful for case studies, because it gives an 'organized way of making sense of social life and a sensitizing device for researchers' (1990, p. 469). This theory is used as a kind of 'glasses' to look at the case study.
The focus of this kind of research is on processes in organizations. In the case of this research, it is interesting to look at the processes around the identification, measurement and reporting on IC. Questions that are interesting in this respect are: How is IC identified and measured? How is IC used inside the organization, and how came this into being? What are the consequences for other processes in the organization? The reason for the choice for qualitative research is that a number of researchers have acknowledged that practically grounded research is needed in the area of IC (Guthrie et al., 2001; Cuganesan, 2005). According to Guthrie et al. (2001) the reason for this need is that there exists a gap between theory and practice:

'Any research should also be innovative and original. Merely affirming what is already known is not adequate. In addition to aspiring to discover something new, research in the field of intellectual capital should, particularly in the short-term, be motivated by a desire to close the gap between the work of researchers and the needs of the commercial and practitioner community. Increasingly, there has been recognition on all sides that there is a need for more practically grounded research. This recognition has been coupled with calls in the literature from academics that researchers should attempt to produce research that is more practically oriented (see Foster and Young, 1997; Shields, 1997; Petty and Guthrie, 2000).' (Guthrie et al, 2001, p. 374)

This call for research which focuses more on processes in practice is also brought forward by Cuganesan (2005), who states that more intellectual capital-in-action research is needed to get an understanding of how IC is used and how it is deployed to create value for the organization.
4.3. Method
Within the interpretive perspective and qualitative methodology, for this research is chosen for a case study. A case study method is useful in this research, because it can produce insights that go beyond simple statements about the relationships between variables (Ahrens and Chapman, 2006). It contains much flexibility, and therefore it is able to respond to new insights from the field. This is useful in this research, because not much research is done on the internal handling of IC. Therefore, the meaning of IC inside organization is not clear yet. According to Czarniawska-Joerges, (1992), case studies can be used to search for this meaning. In fact, the unraveling of meanings of management accounting practices in certain situations can be seen as one of the most prominent tasks of case studies. It is used to explore a field in which not much research has been done before, and therefore not much knowledge is available. This certainly counts for the current research. Moreover, qualitative research prevents 'thinning out the data' (Ahrens and Chapman, 2006). The point is that certain data is only relevant or interesting when it is seen in the particular context in which it is collected. In a case study, this environmental aspect is taken into account. It is recognized that these environments are very complex. In a case study the social roles of accounting in these complex organizational environments are investigated. Ahrens and Chapman (2006) state that this social reality is not easily captured in variables. Because this research looks at processes around internally identifying, measuring and reporting on IC, and not much knowledge is available in this area, a case study approach is useful to look at the (social) relationships that determine how and why internal processes around IC are established.
4.4. Data Collection
The case study will be performed at a professional firm, because Swart (2006) argues that this would be an area of particular interest in researching IC. In professional firms, the main asset is IC. Therefore, in these organizations IC has the greatest importance. The organization that is subject of this research is one of the big four accounting firms, which will be referred to as BFA in the remainder of this thesis. Through observing the organization, it became clear that the organization as a whole was too large and complex to cover in this research. Therefore, it was decided to focus on the (global) Assurance service line of BFA.
To perform the case study, interviews will be executed with members of BFA. For the purpose of this thesis, semi-structured interviews will be deployed. According to Vennix (2005) this means that it contains open end questions. This provides room for the respondent to formulate the questions in his own preference, which gives the interviewer more information on the researched phenomenon. However, this kind of research is not entirely unstructured. The researcher has prepared a question list, which can be seen as conversation guideline. This ensures that relevant aspects will be discussed during the conversation. This guideline leaves space for the interviewer to adjust the questions to the flow of the conversation, or ask additional questions. The interview guideline was developed, based on a bachelor thesis of last year that had a comparable subject as this research. The question guidance of that thesis was supplemented with questions that focus more on structuration theory. The question guidance can be found in appendix 4. In totality, 8 interviews were conducted, which lasted about 30 to 60 minutes each. The distribution of respondents per IC dimension was 4 of human capital, 2 of relational capital and 2 of structural capital. The reason that the respondents of human capital seem to be overrepresented is that the interviews showed that human capital was seen as the most important dimension of IC. Moreover, several departments of BFA focused on the human element of IC, while this was much less the case for structural and relational capital. A list of the interviewed functions within BFA can be found in appendix 5.
Besides the interviews that are held in BFA, documents contribute to this research as well. The researcher actively searched for documents that could confirm the data obtained in the interviews. For instance, the annual report, including supplements, and the corporate website are consulted. These documents contribute to the thesis, because they give insight in what the case study organization is communicating about the IC in their organization. The analysis of these documents was done by reading the full documents and making notes when the information in the documents related to the measurement and reporting on IC. The contents of these sections in the documents are discussed in chapter five.

4.5. Data Analysis
In order to analyze the interviews, most of these interviews were recorded and transcribed in full (in Dutch). After transcribing the interviews, a summary of the interview was sent to the respondent for confirmation of the interpretation by the interviewer. Only when the respondent did not want the interview to be recorded, a transcript was not been made, but a summary of the interview was typed out and sent to the respondent for confirmation of the content. The (Dutch) summaries of the interviews can be found in appendix 6. The transcripts of the interviews are available for request at the author.
After all interviews were conducted and transcribed, the transcriptions (or summary in case there was not a transcription), were codified. The codes were based on the literature described in chapter two and on structuration theory, which is described in chapter three. In appendix 7 a scheme is depicted that is used for the codification of the interviews. This codification helped in finding relationships among the conversations with different respondents. Subsequently, a narrative was developed based on the codified interviews, which can be found in chapter five.
4.6. Recapitulation
The research can be placed in the interpretive paradigm, using a qualitative methodology. The reason for this is that the research question focuses on social interaction in organizations that determine how the organization is internally identifying, measuring and reporting on IC. Moreover, these processes are analyzed in its context, which is important because the environment of the organization is complex, making it impossible to capture this environment in variables. Finally, the fact that not much is known about the subject contributes to the choice for the qualitative methodology in the interpretive perspective. The qualitative methodology deployed in this research can be summarized as consisting of the following steps. First, prior research in the subject is discussed to get a view of the relevant knowledge about the subject. Subsequently, based on this research a situation in practice will be analyzed, which leads to certain research results. Finally, these results are then contrasted with the knowledge that was available beforehand. So, this research goes from general knowledge, to local knowledge, and back again to general knowledge.
The method used for this thesis is the case study method. This is a flexible research method, which is necessary because not much knowledge is available about the subject. Moreover, this method takes the context of the situation into consideration, which is found to be crucial in the interpretive perspective and the qualitative methodology. For the case study, a professional accounting organization (BFA) is selected, in which eight interviews are held. Besides these interviews, the researcher had access to several documents. In order to analyze the data, the interviews were recorded and transcribed. Subsequently, a codification of these transcripts made it possible to process the data in the next section.

5. Field study
In this section the findings of the research will be outlined to tell the story of IC at BFA. The chapter is divided in three subsections, according to the research question, namely identifying, measuring and reporting on IC. In the different subsections, elements of structuration theory will be used as a sensitizing framework.

5.1. Identifying Intellectual Capital at BFA
Of the eight interviewed employees of BFA, only two did not know the concept of IC. Both of them found themselves in the area of human capital, an area in which one would think to have touched upon the concept of IC somewhere. However, it can be concluded that the concept of IC was known by many of the employees in the organization. But that does not mean that the respondents could come up with a definition of IC easily.

'Yes, I am familiar with the term, but [the meaning of it] is of course more interesting. I think it is possible' I think books have been written about that.' (Respondent 3, HC)

The focus of the definitions that were given by the respondents was clearly on the human capital part of IC. Elements that were named in the proposed definitions were 'collective knowledge or thinking ability', 'the knowledge organization', 'knowledge workers', 'people assets', 'knowledge, skills and experience of people' and 'in the heads of people'. Some examples of the definitions given are listed below:

'In our context I would say the collective thinking ability of, and the collective knowledge of all the professionals at [BFA].' (Respondent 3, HC)

'Intellectual capital actually is the knowledge organization that we are. And keeping investing in the competitive advantage of our people, by means of learning. Because at the end, they sell their knowledge to the clients.' (Respondent 5, HC)

'Well, look, I think it is everything inside an organization, but also inside people, that exists of knowledge, and skills, and experience, the immaterial part so to say, with which the organization earns its money.' (Respondent 4, RC)

'What it means for me, is the knowledge in particular. (') Knowledge that our people have, knowledge that is at customers. But meanly in the heads of our people.' (Respondent 8, RC).

Interestingly, it were the respondents with the structural capital expertise that had the most broadly defined definitions of IC, and that came closest to the definition in the literature. Although respondent 2 (SC) recognizes that IC is mainly about the 'people assets' of the organization, he argues that it is more broad than that. He underpins this with a number of examples. For instance, more and more organizations are trying to show the impact of the organization on its environment next to the hard, financial data. Another example is called 'True Pricing', in which an organization tries to show what the organization is contributing to the 'treasury of the state'. BFA sees these initiatives as challenges and therefore tries to do more than average by not only looking at profit.
Finally, respondent 7 describes IC as 'value in the organization (besides material matters) in the knowledge and skills of the people, the brand name, and in relation with clients and relations, so the network'. In this definition not only the human capital element is taken into account, but also the relational capital element.

After the definitions were given by the respondents, the definition and different elements of IC that can be found in the literature were explained to them. Subsequently, the respondents were asked to indicate which elements of IC were of most importance for the organization. On this question, many different answers were given by the respondents. Two of them, both have expertise in human capital, believed human capital to be the most important element.

'Well, I think when you look at the element in which BFA can distinguish itself from competitors, specifically from other not-big-four offices, than it is just the knowledge that is available in the organization.' (Respondent 1, HC)

'When I have to give an order of importance, I think I would go for the human part, then the relational part, and then for the procedural part. Because I think that our right to exist is coupled on expertise and credibility.' (Respondent 3, HC)

But others, in all three parts of IC, name relational capital as the most important element.

'Well, I think that of those three capital forms, that relational capital got more important recently. And is going to be more important in the future as well. (') Especially because of the mandatory rotation, when it goes about how you get new clients, and how can you win rotations' That it is mainly about relationships.' (Respondent 6, HC)

'The most important part of IC according to the respondent is a good reputation. Negative publicity can have a negative effect on both the employees ('do I still want to work here') and the clients ('I will look for another office'). The brand name is seen as a 'guarantee' of the three elements of IC in the organization'. (Respondent 7, SC, from summary of interview)

'I think that the relation with our clients is the most important. (') Because it creates a kind of atmosphere in which issues can be discussed openly. Then you could differ from opinion, without this leading to all kind of clashes. But then at the end it is possible to draw your conclusions from it. It gives another shaping of atmosphere, another context, in which parties can communicate more openly with each other.' (Respondent 8, RC)

Although it seems that human capital and relational capital are seen as the most important elements of IC, it is also argued by the respondents that structural capital plays a role as well. Moreover, in accordance with the literature, many of the respondents argue that the elements of IC cannot be seen as concepts that stand on their own. In fact, the relationship between the elements is pointed out to be important. Some of the respondents even argue that they could not point to a single element that is more important than the others, just because of the relationship between the elements. At least one respondent in all three parts of IC stated this.

'I think they are all very important, and cannot live without each other. So, it is difficult to make choices about this. Of course, at the end of the day we sell knowledge. So, the intellectual capital should have a solid basis.' (Respondent 5, HC)

'The respondent states that one element is not thought to be more important than another. 'The chain is as strong as its weakest link'. Everything has to be good inside the organization to create value for stakeholders and clients.' (Respondent 2, SC, from summary of interview)

'I think the first thing, the intellectual capital in people, the knowledge and experience, is what you sell as organization. So, in fact that is your product. The processes and procedures around it, are needed to make it possible, which is needed in an organization that is so large and complex as [BFA]. Without those methodologies you would get lost. And finally, the last capital at the end is of crucial importance, because when you do not have that, you won't sell anything. (') And then the first and second element of intellectual capital lose their value.' (Respondent 4, RC)

In total, five out of eight respondents explicitly mentioned that the relationship between the IC elements was important.

Although concept mapping is described in the literature to be a method for identifying intellectual capital, this method is not used by any of the respondents. In fact, the respondents did not mention any method. As can be concluded from the elaboration above, in BFA there was not a formal definition of IC or its categories. The respondents formed definitions by themselves, based on their own knowledge and experience of IC. Moreover, it was not centrally determined which IC items were important or which IC items should be handled in the organization.

Summarizing, it can be concluded that many of the respondents only focused on the human capital element of IC and only the respondents of structural capital had a more broad view that was more corresponding to the definition in the literature. When looking at the importance of the elements of IC, human and relational capital are mentioned as the most important elements. However, many of the respondents explicitly stated that it is the relation between the elements that is important and creates value for the organization.

5.2. Measuring Intellectual Capital in BFA
In this subsection the findings on how IC is measured at BFA will be discussed. Because there are many differences between the different elements of IC, these elements will be discussed separately.

5.2.1. Measuring Human Capital
When looking at human capital, some of the respondents in the first instance answered that it was not measured at all. But when the respondents were asked further questions, they all came up with some measurements or indicators that were linked to human capital.
One of the most important measures in human capital is called the Performance Management and Development Process (PMDP). This is a process in which the employee is reviewed based on his/her performance at a certain job. For the purpose of this process, the employee determines certain goals at the start of a period. During the period, he assesses with his supervisor to what extent these objectives are achieved. Based on this assessment, the employee can get a score from one to five, in which five means that the objectives are exceeded. Part of this this performance review is an evaluation of the knowledge of the employee and his/her technical skills. This is a qualitative process, which goes as follows:

'[The employee] is asked, certainly for the larger jobs, so jobs that require more than 40 hours, to request feedback of the job from the supervisor. And there is a kind of sheet to do this. Based on the collection of these feedbacks, which are sent to the counselor also, you make a self-assessment. Of course, you will have a view of the areas of personal strength and weaknesses, but based on these feedbacks those areas can be better portrayed and areas for development can be indicated. Say, knowledge is a point for development, for instance you are behind in reporting, then it is possible to follow extra training on it, or to be more engaged in this area on the next job.' (Respondent 1, HC)

Besides the PMDP process, there are a number of other indicators or measures that are used to evaluate employees, which are mainly focused at the high potential employees of BFA. A measure that is a result of the PMDP process is called the 4/5 rating. This measure is used to distinguish the high performers from the rest of the employees.

'Someone gets a four or five, based on the objectives that are set at the start of the year, or when he exceeds these objectives. Besides the achievement of the objectives, there is a normal distribution of 35 percent, so there is also a bit of first ranking. Because only the best 35 percent can have a four or a five score. So, actually, officially you have to exceed your objectives, but also be better than your peers.' (Respondent 6, HC)

Furthermore, BFA is developing new measures that are aimed at distinguishing high potential employees from other employees. The first one is a competency measure. Competencies that are important for a certain rank are identified. Examples are results orientation, commercial drive and problem analysis. Based on a questionnaire, they score the second year managers on these competencies. These managers can get a score from one to five on each of the competencies. These scores can be used to assess which competencies are good and which competencies are underdeveloped. The questionnaire is developed by an external party, so how this questionnaire is developed exactly, is not known in the organization. With this measure, the qualitative competencies of the employees are turned into a quantitative score on these competencies, which enables BFA to manage the competencies.
Another measure that is in development is called the 'nine grid' box, which is a classification based on how well employees are performing and how much potential these employees have. The performance is measured in the PMDP process that is described above. For a part this is objective, for instance when looking at productivity numbers. But another part of this performance indicator is subjective, for instance when looking at the way in which an employee works or how well s/he did as a counselor. Thus, the performance is based on quantitative numbers and a qualitative assessment by the managers. When looking at the potential of an employee, HR managers at BFA try to make an estimation of the career opportunities of the employee.

'But potential refers actually to the career opportunities you see for someone. (') And potential remains to be a subjective estimation.' (Respondent 6, HC)

Furthermore, BFA has measures in place to identify the extent to which employees are engaged to the organization. Again, an external party is hired to measure and report on this issue. That external party developed an indicator to measure in how far people are really engaged and report the scores on this measure to BFA.

Another area in which BPA measures its human capital is the area of the development and training of employees. This is important, because the organization should provide training programs when the employees need it.

'Where my responsibility is, is in the learning. Ensure that we offer a range of trainings that fit the development needs of the people. So, that is an important starting point, but certainly not the only one. Because, you got to provide knowledge whenever the people are ready for it.' (Respondent 5, HC)

In order to be able to do this, the first thing that is recorded is the period in which people are inside the organization and on a certain rank. This enables the HR managers to estimate how far these employees are with their education and what level of knowledge they might need.
Furthermore, BFA uses many web-based learning modules. In these modules, tests are included and the employee has to achieve a good result on these tests, for instance to be able to move to a higher rank in the organization. Another measure in this area is the management assessment. These measures can be classified as qualitative in nature.

'When you want to become a manager, you will be invited in this [office in Rotterdam], ('), and then you got a whole day of tests and you have to review a dossier, and consequently you have kind of a final interview with a partner and a senior manager. It is a simulation. And then at one moment, they look whether this interview went well, and has that employee picked up the right issues from the audit, and has thought carefully about how to spend executive time? And then the whole day, with the tests and the interview, you name it, at the end is assessed whether someone can be a manager or not.' (Respondent 3, HC)

These trainings and assessments are evaluated within BFA and the results of these evaluations are recapitulated. These evaluations are a permanent routine within BFA, and they are done because it provides insights in the extent to which the trainings fit the demands of the participants and therefore can be input for new trainings. Other measures that are input for the trainings are quality measures that are executed both inside and outside (in contact with clients) the organization. These quality reviews show possible gaps in the knowledge of employees, which can be the basis for new or different trainings.

Finally, there are a number of rather simple quantitative indicators in place, such as the level of education of a (new) employee, whether an employee has a title as chartered account, and success rates of the trainings and tests. Another measure in this area is the target group identification, with which is determined which employees have to follow which tests or assessments. A distinction can be made between trainings that have to be completed by all employees and trainings that are provided for only a few, for instance high performing, employees. Further, there a number of indicators around diversity within BFA, because the organization finds equity between males and females important in large organizations. KPI's for this are focused for instance on the distribution of females in the employees with a four/five rating, the distribution of females in a senior manager rank, or the percentage of females in the partner population.
Another part of human capital inside BFA is focused on external knowledge that is of interest for the organization. BFA obtains licenses for external information which she thinks is of value for the organization. Examples of valuable information are sector specific information about developments in a certain sector, exchange rate information, information on changes in (tax) regulations, subject-specific journals, et cetera. The organization has created a database in which this knowledge is stored and can be accessed by employees all over the world. While the interviewed respondent was mainly about the acquiring of licenses for external information, internal knowledge about for instance manuals and work routines was stored in this database as well. When asked to measures or indicators to measure the value of the information in the database, the respondent answered that there were no direct measures to this purpose.

'Well, in my view it is not being valued. Anyway not in that way. I mean, when you have the financial matters' Well, valuating could mean different things. When you talk about valuating in financial terms, that is not being operated in this organization.' (Respondent 3, HC)

However, when asked further questions about indicators and measures that have anything to do with the subject discussed, the respondent recognized that there are a number of indirect measures in place.

'Well look, we do measure, but that is more' Perhaps I have to be careful now. We often measure, ('), how many contributions we get around a certain topic, around a certain sector, and so on. But that is just a very rough measure, in which you only state that you have 25 contributions on this topic and they are read 83 times.' (Respondent 3, HC)

In this area there are two quantitative measures, namely the number of contribution per subject or sector and the number of times in which the information is accessed. Besides these quantitative measures, there is a qualitative measure, which is a survey that is held every quarter of the year.

'From the knowledge organization we do a survey every quarter of the year, with questions as 'which sources did you use'?, 'what are the most important sources that you use in your job'?, 'how much time have you saved in certain activities'?, 'did you save time in your daily routines'?, 'did you save time in attracting new commercial contact'?. These kinds of questions are asked.' (Respondent 3, HC)

However, the respondent recognized that the statistical results of these measures did not say much about the value of the information. For instance, when a contract is only used by 500 users on a population of 175.000 users in the organization, one might consider whether this is a valuable source. However, it could be possible that the information is extremely valuable to a limited number of employees, who really need it for their daily job. So, the statistics do not really reveal the true value of the information.

When looking at the dynamics of the measures in BPA, there are a number of developments recognized by the respondents. One of the most frequently mentioned development is a shift in focus from pure technical knowledge to more soft skills in the commercial area.

'Well look, what I have told in the beginning of this interview, is that we have started with indicators with a strong focus around the technical skills. So the expertise. And that over time, the focus is more and more on the market-oriented indicators. So, for instance the relational aspect.' (Respondent 3, HC)

So, it can be concluded that a shift is taking place from a focus on measurement in the human capital area to measures in the relational capital area. This development is also visible in the new trend of looking at the competencies of employees. Within BFA, it is more and more recognized that having only technical expertise on accounting is not enough for the organization to be successful. Other competencies, also referred to as soft skills, are needed as well, for instance in the commercial area. One example mentioned by one of the respondents is the fact that having a title as chartered accountant is no longer a hard requirement to become a manager in BFA. When people behave as and have the competencies of a manager, those people can do the manager assessment to assess to what extent they really have the right competencies, and eventually become a manager without the chartered accountant title.
Moreover, it is recognized that BFA is installing more measures in the area of IC. This certainly is the case in the area of training. On the question whether BFA is measuring more in the last years, respondent 5 answered:

'No, but that is going to come, but then the infrastructure should be ready for it. So we are going to see trainings now in which more can be seen on the performance of participants. And that is only the beginning of trainings that have that characteristic and in the coming year and later years, many will follow.' (Respondent 5, HC)

After identifying the measurements on human capital, it is interesting for this thesis to look for what purposes these measurements are used. Structuration theory is used as a sensitizing framework in this respect. First, the measures can be used as interpretive schemes in the structuration structure. Almost all of the measures can lead to action initiation in the organization.

'Measurements are used, actually as a control circle. You are going to investigate what is the cause of issues, and determine whether something can be done about it. That can be on an individual basis as well.' (Respondent 5, HC)

In the interviews at the case study organization, many examples have been given by the respondents. One example is in the PMDP process. As described above, in this process individual objectives are described. When these objectives are not met, it is determined which actions should be undertaken to improve this. These actions can be 'on the job', for instance concerning the employee a certain topic on the next three engagements to improve that aspect of his functioning. Actions that can be undertaken 'out of the job' are extra training programs or education. When an action is taken, the progress on these actions will be monitored again. This example immediately shows the concept of duality of structure. The measurements have an influence on the actions that will be taken, but at the same time, the initiated actions will have an influence on the measurements that will have to be done to monitor the progress of the new actions.
The same story goes for scores on the competency tests. When BFA founds out that the score on certain competencies is below the minimum requirements, some actions should be undertaken to improve these competencies. As mentioned above, it is recognized that the soft skills in particular need more attention.

'Much information is available. What you can see in some of the tests, ('), is that on some of the topics the score is relatively low and on other topics the score is better. And then you have to analyze what causes this. It could be that the questions were just not good, because that happens from sometimes. But it could also be that we are going wrong on some subjects, and then we have to do something about it.' (Respondent 5, HC)

'In terms of competencies, we are going to use it a lot more as 'well, on which aspects do we have to develop our people, and how can we help them with that'?. And maybe, when you measure this for a longer period of time, it might be necessary to hire different employees. When you find out that certain competencies are just not developed well enough, then perhaps you have to select other people.' (Respondent 6, HC)

Another common feature of the measures is that it determines which employees need some extra or different attention. The measures help the organization to make sense on who are the persons that need extra attention because they are not performing well. An example of this is the management assessment.

'A score is determined, and that score is leading for the development process that follows on the assessment. Say that someone who does not excel in such a manager assessment, but who is good enough to become a manager, than it could be that he needs a bit of extra training.' (Respondent 5, HC)

But it could also be the other way around, that employees that have an outstanding performance need extra training to develop turn their high potential into valuable competencies and skills. In particular, the four/five rating and the 'nine grid' are measures to this purpose. With these measures the organization can determine who are the talents and high potentials in the organization, and who therefore should have access to several talent development programs. This is a way for the organization to invest in their high potential employees and to give them the attention that fits with the needs of the employees. The measure whether someone has a title as chartered accountant is used in a similar way. It is a way to make sense of the extent to which an employee could have the knowledge, skills and experience to become a senior manager. Although it is recognized that this should not be a hard measure, because not have that title does not immediately mean that you cannot be competent enough to be a manager, but it is still used as a guideline within BFA.

The measures on the use of information from the databases is also used as an interpretive scheme. It is a factor in the determination on which information should be obtained in the future and which information can be missed. For this purpose, the organization is using 'data mining' to found out which information is used frequently and by whom. But it is recognized that this 'data mining' does not give a complete view of the use of the information.

'You can do data mining, but the fact that something is used a lot is not always an indicator of value. (') When a receptacle of information is used a lot, yeah, then you still do not know whether it is used in accordance with the objectives, or that people just finds something else than you expected.' (Respondent 3, HC)

Therefore, the surveys are of great importance as well. These give more information on the purposes for which the information is used. Moreover, the respondent argues that it is more valuable to look at trends in the use of information than only looking at the absolute frequency of use, because it is impossible to define when the information sources are used successful. Therefore, it is more interesting to look at the causes of increasing or decreasing use of information. In practice, this information is used to terminate collections of information or contracts for licenses for certain information.

Besides that the measures are used as interpretive schemes in the signification structure, the interviews revealed that they are used as norms in the legitimation structure as well. In fact, the PMDP process is an assessment of the performance of employees of BFA. Therefore, it is used to monitor whether these employees achieve their personal goals. When someone reaches a four or five score in this process, this score will be translated into his salary or a bonus. So, the four/five ratings are clearly used as a norm for good behavior, and this good behavior will be rewarded.
Moreover, many of the measures are used as an accountability device. In a sheet provided by one of the respondents, it is clear that measurements on engagement, employer brand strength, talent development (including PMDP process), and talent management and leadership pipeline strength (including retention of four/five scores and gender diversity measures) are communicated per region and service line. The accountability of these measures lies in the fact that the measures are compared between the different regions and service lines. However, there are also many absolute benchmarks, which means that the manager has to explain why one or more of the measures are below a certain target value. The reason that the measure on competencies and the 'nine grid' measure are not yet included in this sheet is the fact that these measurement are still in development and still have to be adopted in full.
Other norms that are set are certain tests and exams that have to be completed successful by (some of) the employees. An example is a test for independence. New employees have to complete this test in order to document that they are aware of the rules for independence, they understand these rules and will act according to the rules. Other examples can be found in knowledge tests.
'Well, for instance we have an ISA test, which is an equivalent of what the MBA makes available as knowledge test. There we say that people have to have 70% of the questions right, that is the norm. And then, people have to make this test until they have reached a successful result. (') In the end, the norm often is that the test has to be completed at some point and then it is only the question how many attempts someone needs.' (Respondent 5, HC)

The results on the knowledge tests are going to be used in next year for accountability of the HR managers as well.
The measures can also be used to be accountable for the rest of the organization and to show the value of a certain department for the organization as a whole. This is mainly the case in the department that obtains licenses for external information or knowledge. They show the value of their department by giving numbers around the frequency of use and the user groups. With these numbers they show that they have an important contribution for the organization, which cannot be missed.

'(') every organization wants to keep itself intact. So, the trick in the reports is to try to distinguish yourself what is actually used or trying to prove what we deliver as knowledge organization.' (Respondent 3, HC)

When looking at the domination structure, it is recognized that there is a flat and open structure at BFA. This is underlined by all respondents, who argued that in all instances it is possible to discuss unannounced, perhaps sensitive, issues. These issues can be discussed in one of many formal consultation structures, but can also be discussed in more informal work meetings ('during a walk in the corridor').
In large and complex organization as BFA, there are many formal consultation structures. This is also the case when looking at the area of human capital. For instance, there are sector and industry groups who follow the developments in certain sectors or branches and will act to these developments when necessary. However, the initiation of action as a result from developments in the environment, do not only come from these formal consultations. In the organization, there is a natural attitude towards improvement and response to the environment.

'There is also sector knowledge or industry knowledge. There are sector groups and industry groups, which focus on these topics in their own way. That could be in meetings, but also through intranet and databases. (')
Look, ('), everybody has kind of his own alertness, when he notes something that should be updated or something is missing, then he knows where to go for that sector or industry. In this way, we also get signals from colleagues at Eindhoven, who say 'well, I see on the intranet this and this, but that is not correct, is it'?. And yes, I then agree with that and pass it on to the right channels in Rotterdam [headquarter].' (Respondent 1, HC)

Also for the development of employees there are many consultation structures. The Learning Leaders from the different countries or regions will meet frequently in a regular meeting. In the Netherlands, the Learning Leader from the Audit service line will meet with Learning Leaders from other service lines. Moreover, there are frequently meetings between Diversity Leaders with the Board and Talent Leaders. And for special projects there can be special meetings with managers from a more broad array of involved departments. In many of these meetings, the measurements are not a fixed agenda point, but they can be discussed when interesting trends are identified or incidents have to be resolved. Although these meetings have a formal frequency in which they are organized, many of the respondents characterize the content of the meetings to be informal. Often, there is no fixed agenda for the meetings, and unannounced issues can be discussed in the meetings as well.

'Yes, the consultation is more informal. However, there is a formal question underlying the meeting. We just want to have clear management reports.' (Respondent 3, HC)

Furthermore, managers at BFA have much influence on the measurements that will be used by the organization. Although many measures are programmed in the web-based trainings, managers in the regions definitely have influence on how the measurements are executed in their region.

'It is determined by the origin of whether the training is EMEIA global. Then it is often programmed already and therefore it is really a given. And it is often, when at one moment that measure is placed in the program, it is validated with the areas and regions that are involved. That does not mean that it is such a democracy that everything I think is going to be expressed, but you can have influence.' (Respondent 5, HC)

When the measurements are not automatically programmed in such a program, then the influence of local managers is even bigger. There is space in the departments to discuss which measurement are useful and therefore should be used in the organization.
'Well, let's give an example from my own portfolio, that is the easiest. I am discussing with my boss and a couple of other people about the indicators for my department. I said, we process licenses for external information. Then they want an indicator of how many contracts are renewed. I then response 'that is not exciting at all, because I know how many contracts I have and I can draw you today how many contracts we will renew every month, because we know when they will expire and we should replace them by then'. So, that's a useless indicator. (') Then they say 'then you have to come up with statistics about the use'. And I respond 'that's not my responsibility, because we have a department that ensures awareness and training and that kind of stuff. When they do not do their jobs well, you cannot blame me. It's not that I want to escape, but I think the essence of our department is to get clear' to find indicators that show how well we obtain information that fit the needs of the organization.' (Respondent 3, HC)

5.2.2. Measuring Structural Capital
In the area of structural capital, again many measurements can be found. One of the respondents stated that hundreds of KPI's are used in the organization, which are dependent on the processes.

'There are very simple KPI's, such as the man-woman distribution in the personnel. Also, for the processes inside the organization many KPI's are developed, for instance charged hours per FTE, effective utilization, and hours spent on education. Besides these KPI's, there are hard measures as well, for instance sales development. And there are KPI's that are more forward-looking.' (Respondent 2, SC, from summary of interview)

When looking at the planning process in the organization, a number of specific measures are used. First, for the Planning department, the ratio between productive and non-productive hours is an important factor. The objective is to pull off a production that is as high as possible with the available people. Therefore, it is important to have a critical look at the indirect activities. For this purpose, every year an estimation is generated that states how many percent of the hours should be planned productively per function level and office. Consequently, during the year the realized productive hours are contrasted with the estimated productive hours to monitor whether the organization is meeting the estimated number of productive hours.
A second measure in this respect is a measure for team structure, which is important because it determines part of the cost price for the service of BFA. This takes place in the year planning process. A client planning or engagement budget is developed. Consequently, it is assessed how the cost price of an engagement can be made as optimal as possible. For this purpose, a pyramid model is developed and used, to which the structure of an engagement team should comply in ideal situations. In practice, an engagement manager proposes a planning application for their engagement, stating which employees they would like to have on their engagement. Consequently, this application is compared with the pyramid model. When the application does not meet the model, the Planning department will discuss the reason of the deviation with the engagement manager to assess whether this deviation is permissible. For this end, the experience of the planning manager is important, because planning the engagement is not purely an objective process, in which the teams have to comply to the model strictly. The model gives a starting point for the planning, but much is dependent on the quality of the employees, which will not always be reflected by the rank of those employees. Obviously, there is difference in quality between employees in the same rank. Therefore, each of the offices of BFA has a local planner, who knows many of the people of the office and who can judge the quality level of these employees. This is important for the planning process.
Many of the measures in structural capital can be characterized as quantitative measures. This also holds for both of the measures in the Planning department. One of the respondents stated that 80 percent of the measures in structural capital was quantitative in nature and the remaining 20 percent are qualitative measures. Another respondent argued that many people in the organization liked this quantification.
Although the respondents argue that not much has changed in the KPI's, it is recognized that minor changes have taken place. Since BFA has a new CEO and changes its vision to more focus in growth, the KPI's have changed to be able to monitor the growth of the organization better. Therefore, the KPI's changed into more sales-related indicators. Moreover, it is argued that there is getting more depth in the measures, enabling the organization to see more details per engagement or team. Again, the experience and knowledge of the local planners is important, because they know employees at the different offices the best. The increasing depth in measures is necessary, because the organization wants to give the Planning department more the mandate to intervene when a manager has proposed a 'bad' planning. This change is accompanied by a culture change, in which BFA wants to react quicker on new developments in its environment. Finally, BFA is trying to standardize many of its measures and indicators. The reason for this is that many of the used KPI's can then be used globally in the organization. For this purpose, books have been aggregated in which is stated how certain KPI's, and variance therein, can be explained.

According to the respondents, the abovementioned measures are used for steering in 60 percent of the instances. In general, at the start of a cycle (financial year), a planning is made. The KPI's are used as an interpretive scheme to monitor the actual results and compare these with the planned results. In this comparison, changes and influences of the environment are taken into account. Moreover, every quarter of a year, the KPI's are assess and it is determined whether action are necessary, and if so, which actions are needed to bend certain trends into a positive trend. For instance, the number of productive hours according to planning and the realized productive hours are contrasted. Differences between the realized and budgeted productive hours can lead to actions or improvements in the organization.
The measures can be used as a sense making device as well. The measure for team structure is mainly used to engage in conversation with the managers about why they choose a team that does not comply to the pyramid model. So, the team structure model is a device that enables communication between the Planning department and the engagement managers when necessary. This is crucial, because a bad planned team has a negative impact on the cost price. Besides this effect on the cost price, when too many people of a certain rank are planned in a team it is possible that they hinder each other and that they do not have the possibility to learn on the engagement as well. Therefore, the manager can propose a certain team planning, but the Planning department always has the possibility to interfere when the reasons for deviation from the model are not legitimate.

The measures are used for legitimation purposes in the remaining 40 percent of the instances. The system for legitimation is as follows.

'The Board of Directors determines the policy for the oncoming year. They determine in which direction the organization will go. Consequently, this direction is translated by, inter alia, the respondent into operational actions. For instance, they want more growth, then we have to hire 300 extra people. Consequently, these operational actions are then translated into for instance a finance plan or a people plan. These plans are then again translated into personal objectives of the employees. Individuals are held responsible for these objectives. There are, inter alia, the PMDP and MY Development process. In these programs, the objectives are formally recorded. Based on an evaluation, every period a rating is given to the employees. The evaluation determines this rating, but the environment is taken into account. This rating is connected to a rewarding system, in the form of a bonus and/or a promotion to a higher rank. In this way, the organization tries to reward special performance.' (Respondent 2, SC, from summary of interview)

Another area of this legitimation structure, is that the measures are used as a norm for behavior in the organization. This is clear from the use of the pyramid model for team structure and the measure for productive hours. In this respect, there is a form of 'comply or explain' culture. When a manager did not meet his planned production or his proposed team does not comply with the pyramid model, then he has to explain these deviations. There can be several reasons that legitimize the choices of the manager, but when this is not the case, it is possible that other managers (for instance from the Planning department) have to intervene.

In developing the KPI's, the domination structure in the structural capital area is a bit similar to the domination structure of the human capital area.

'The KPI's are determined by a mix of employees in the organization. Often the idea for a certain KPI originates locally, when there is a local issue. Consequently, a discussion takes place in more regional teams. When the KPI could be useful for other countries as well, it is transferred to global. But the KPI's can also come from the top. Recently, a new CEO was hired, who composed a new vision. This new vision needs new KPI's, that will have to be implemented locally. So, the development of KPI's can both be bottom-up and top-down.' (Respondent 2, SC, from summary of interview)

The domination structure also plays a major role for the measurement of the team structures. Because it is recognized that the measures will not give a complete view of reality (for instance because there are differences in experience in each rank), the measures are often the basis for a conversation between the engagement manager and the Planning department. In this process, the engagement managers gets a possibility to allocate part of the firm's resources and is allowed to deviate from the pyramid model when he has good reasons for it. However, in the end, the Planning department will be responsible for the planning of the engagements, and therefore has the final voice in the process (for instance when the reasons for deviation are not found to be legitimate).
In the structural capital area a number of consultation structures exist. First, the Finance department periodically evaluates the KPI's together with the management teams of the service lines of BFA. This consultation with the management teams is the basis for the reports that will be communicate with both internal and external users. The exact content of these reports will be discussed later in this section.
Second, the Planning department consults with the engagement managers about the team structures for the engagements and with the Finance departments and management teams about the productivity measures.

'These consultations take place multiple times per year. Consequently, the conclusions from the last consultation are discussed with the involved departments, for instance Learning. Depending on the outcome of the MT and the actions being taken, this is communicated with the rest of the organization. Furthermore, every few weeks a forecast is made by the Planning department, which is communicated with the Finance department. This is used to monitor whether the realized production numbers are in line with the estimated production numbers.'. (Respondent 7, SC, summary from interview)

The respondents argue that there is a mix of formal and informal consultations. Moreover, it is recognized that the form of the consultation depends much on the leadership style of the involved managers. The experience of the respondents is that not many of the consultations are formal. This is supported by the fact that the organization is creating a more open space at the offices, and only a few employees have their own desk in these offices. Therefore, the respondents hear much in the informal contact with colleagues. One of the respondents argued that this is a system with a low threshold and therefore leads to much interaction.
Unannounced and sensitive issues can be discussed in the formal consultation structures, which for instance happens when the Planning department does not agree with the proposition of an engagement manager. However, it is also possible to discuss these issues outside the formal consultation. It is argued that where these issues are discussed, depends on the leadership style of the manager. It is argued that sometimes it could be better to discuss these issues in informal conversations with the involved people. This prevents the managers from damaging other people, which is found to be important for some of the interviewees.

5.2.3. Measuring Relational Capital
Also in the area of relational capital, a number of measurements can be found within BFA. However, it is recognized that measuring contacts with clients and the contributing value of these contacts is difficult.

'Look, I already mentioned networks. Look, that is a very broad story. It ranges from a Hofstad lecture where important persons from the business community are invited for a lecture by a CEO. There are a lot of people, including [people from BFA]. And there you try to get in touch with as many people as possible. To bring the [BFA-brand] to the forefront. To stimulate a conversation, to distribute business cards, making them interested in [BFA], to plan a follow-up appointment. (') I count that all under the term 'the network'. (')
Yeah, it is difficult to measure this. There is always a discussion around investing in Marketing and Communications and Sales departments. There is not much to be measured. Look, one-on-one contacts, there you can easily say 'well, after speaking to someone three times, I have a change for an engagement'. That is relatively easy to measure. But when you go to for instance a Hofstad lecture, where around four, five or even six thousand people walk around, you speak to some of these people, and what is the added value of these contacts' Well, that cannot be measured. (') And that also holds for issues as round tables with Supervisory Board members. Of course, the partners who are on these tables, get familiar with our network. That means that the network is going to know us. They get to know our added value. And of course, that has much value. However, it cannot be valued or assessed quantitatively. You only notice it in later choices by the Supervisory Board members, when they choose to co-operate with [BFA] or not. And of course, what is important, is that they got to know us via the network.' (Respondent 4, RC)

Although it is recognized that it is difficult to measure the value of relational capital, some measures are used for this purpose. First, there are two quantitative measures in this area, which are incorporated into the PMDP process that is described earlier in this thesis. The first one is the number of client contacts per employee. This is an important measure for the Business Development department, but also a measure for employees in other departments who have contact with clients, for instance the partners in the organization, who will have to generate engagements from the contacts that are created by the Business Development department.

'How that is measured exactly, is difficult to specify. But for everyone a number of client moments are included in the yearly objectives. And you have to comply to these numbers. And then it is about client moments with clients in your target group.' (Respondent 4, RC)

But the number of contacts with clients is sufficient for assessing the effectivity of employees in these contacts. Therefore, it is also monitored to what extent these contacts lead to new engagements for the organization. For employees in the Business Development department, the indicators for this purpose are for instance the contribution to new revenues, the contribution to client contacts, the contribution to the acquiring of new clients, the winning of a requested proposal, et cetera.

Besides these quantitative measures, BFA also uses a program for a qualitative assessment of the client contacts. This system is called ASQ. Interestingly, the respondents who mentioned this program in the interview both gave another explanation for the abbreviation. One stated that it stands for Assessment of Service Quality, and the other argued that it stands for Audit Satisfaction and Quality. In both cases, it is about the quality of client contacts and the satisfaction of the client in these contacts. The ASQ measure exists of an interview with the client, which is executed by someone independent from the engagement team. The interview gives feedback about the performance on an engagement and which issues can be done better or different next time.

'At the same time, such a conversation with the client can have commercial value, because it could give information on potential additional services. What have we seen, and how can we help the client with that.' (Respondent 4, RC)

Although the focus of the measure is on qualitative information, some of the questions lead to a score. So, it can be concluded that part of the qualitative measure is translated into a quantitative measure. The results from the ASQ measure are included in the PMDP process as well. However, this is not a purely objective assessment.

'Well, there are four elements in the PMDP process, namely quality, operational excellence, people, and another one. I've lost that for now. But [ASQ] is a specific part of operational excellence. It is about the behavior in client contacts, how difficult issues are discussed, et cetera. So, that plays a role. And well, that is a part of the [PMDP] assessment. Well, if it is bad, but the all the rest is good, it could still lead to a fine evaluation, but it has a weight in the overall package. (')
It is a PMDP rating, so everybody gets on all those elements a score from one to five. But it is not clear-cut that when it is assess as bad, that it automatically leads to a one or two score. There is a subjective element in it, yes.' (Respondent 8, RC)

When asked on the developments in the measures in the area of relational capital, both of the respondents argued that the measurements itself have changed not much. However, three trends can are recognized by the respondents. First, it is argued that the organization is measuring more quantitatively, where it would measure qualitatively some aspects in the past.

'What you can see, is a shift in the control environment in particular. Where in the past a conversation took place like 'well, how was your year and did you have a good time and were you able to contribute to the organization and if so, what did you do', it is now more quantitative. It is now more completing lists. It is now more checking off your plan. Let me say it this way, it is more American, more Anglo-Saxon than it was. That has also to do with the fact that our global organization is much more Anglo-Saxon than our member firm is. And the influence of the global and EMEIA [Europe area] is getting bigger. So they are influencing us more. You can see that the indicators are not rocket-science different than in the past. Only, they are more measured and made quantitative now.' (Respondent 4, RC)

The fact that more measurements are done, allows for greater transparency in the organization. The activities of employees are more visible in the organization because of the measurements. However, this sometimes leads to the paradox that someone acts to achieve his objectives, while these objectives are not always aligned perfectly with the well-being of the organization. So, there is a tension between too much control and too much freedom.
Another development in the measures of relational capital is that they became more professional. This change is not in the measures themselves, but more in the process before those measures, particularly for the ASQ measure.

'I really got the idea that [the measurements] are taking place a bit more professional. (') Well, [this results in] looking in advance at region level or sector level like 'yes, which clients should be evaluate'. That can be clients where there is a problem, for instance because they were in the media. It can be clients where there is a problem in work in progress from us, that we just think that we should get more money for the services we deliver. Or it could be that the engagement partner says 'am I the right person for the job'?, so from that perspective. So, it is more thought off in advance, and it also takes place more frequently.' (Respondent 8, RC)

Third, a shift is recognized in the indicators. BFA is built up from several service lines, who sell their services to the client. Because the managers are accountable and get paid for what they sell to the client, the indicators focus on the sale per service line. However, these 'service line indicators' are now changing to more integrated indicators.

'Look ,where in the past the indicators at the client handlers were focused on their own service line, so the sale of their own product, a shift is now visible towards indicators about the sale to clients in total. A difference is visible there. Where in the past the indicators were mainly focused on the own service line, a shift is visible from product level to client level.' (Respondent 4, RC)

The abovementioned measures are used for a range of purposes. First, they can be used as a base to change and improve the organization. This associates with the signification structure of structuration theory, where the measurements are used as interpretive schemes. The feedback from the measurements is used to make sense of the opinion from external parties, which enables the organization to improve the position of the organization towards their (potential) customers. They try to put their brand as positively in the market as possible and use the feedback from the customers to respond to the changing needs of their (potential) customers. These improvements can be in the methodologies, the processes, the approaches, but also in the actual services and products that the organization delivers. The focus in these improvements is in focusing more on the demands of the customer and create customizable products. A number of examples of these improvements are given by the respondents.

'For instance, what we got as feedback from listed companies was that possible comments of an independent review team came quite late in the process. Of course, this is annoying to the client, because they have to do something with the comments just before the deadline. And for us it is annoying as well. But I think in that case we tried to address the problem, by sharing the issues earlier with the independent reviewers as well.' (Respondent 8, RC)

Another example was the fact that during the feedback it turned out that some of the employees were not in the right environment and therefore performed not as expected on a certain engagement. This eventually led to changes in the engagement team.
But positive feedback can be used to improve the organization as well. For instance when a client indicates that the performance on a certain engagement went well, the working method of that engagement could potentially be used for other engagements as well.

'Well look, at the moment that a client argues that we did a good job, which should actually be a 'one off', at which they argue that 'well, this was actually an action that was designed specifically for that client'. But with some smart designing we could make it more broad and more usable for other clients. And the one time this might be better possible than another time of course. But based on the feedback that we get, via the system, via the indicators, we can say 'this product is well established, and we can develop it further'.' (Respondent 4, RC)

The measures can also be used as a legitimation device, for which the indicators can act as a norm to determine what is a good performance and what is not. Especially the quantitative indicators are used to determine whether an employee has underperformed or had a good performance. However, also the qualitative feedback from the ASQ interviews can be part of the evaluation of employees' performance.

'Besides the improvement of the organization, the indicators are used for the personal legitimation of people and departments, in the sense of 'what is your department contributing to the organization? What is your group contributing? And what are you contributing as a person'?.' (Respondent 4, RC)

The evaluation of the indicators on relational capital takes place within the frame of the PMDP process. When an employee is underperforming on one of the relational capital indicators, it is questioned whether that person is in the right position in the organization, or that there may be a better position for him. The evaluation could also lead to more training or guidance when the employee needs it. Moreover, the indicators and feedback by clients are part of the overall evaluation of the employees, and therefore can lead to bonuses or promotions.

'What is so, is that at the moment that on the personal level, so managers, partners and directors in particular, deviate from the norm, both in a positive or negative way, that has a weight in the evaluation of those colleagues.' (Respondent 8, RC)

However, the indicators are not only used on a personal level. They can also be used on the evaluation on the level of groups, departments, service lines, national level, and international area's (for instance EMEIA).

'Every group, department, country, area, has its own objectives, that, if everything is okay, (') should be aligned. And added up they come to a certain sum.' (Respondent 4, RC)

Finally, it is interesting to look at the domination structure around the indicators of relational capital. When it comes to the initiation of indicators, employees in lower levels of the organization have relatively much power. The process of developing new indicators is described as a mix of bottom-up and top-down approach. Often, new ideas for indicators originate at lower levels in the organization, where people have changing needs for information. These new ideas are consequently discussed with employees at higher levels in the organization. Although ultimately the Board will determine which indicators will be used, the debate about these indicators runs through all the layers of the organization.
The same story goes for the initiation of new ideas for products and services. There are not much fixed frameworks in which the development of these ideas should be done. Many of the ideas start in the bottom of the organization, where the employees are in direct contact with the clients. Moreover, it is recognized that the organization holds almost only intelligent people, and this intelligence should be used for the benefit of the organization.

'There are actually only smart people in this organization I think, who have much contact with the outside world, and therefore pick up ideas from it and generate their own ideas. And these ideas are dropped at colleagues and managers. And the one time more is done with these ideas then the other time. Then we are talking about ideas. And sometimes it happens that a product is developed that fits such idea. Then you are really talking about the product development part.' (Respondent 4, RC)

In the interviews, three consultation structures were recognized by the respondents. First, in the Business Development department the indicators focus on the contribution of the department in the acquirement of new clients, and therefore they deliver a service to the 'fee earners' of BFA. Therefore, in this department it is discussed why the indicators are in place and why they are important for the organization. Moreover, it is discussed how the indicators of the Business Development department relate to the indicators in the rest of the organization. This consultation structure is characterized as formal, because the process is specified in BFA's processes.
Second, there is a consultation between the manager and the employee in a so-called progress interview. These interviews are part of the PMDP process and in these interviews the score on the indicators is discussed with the employee.

'You frequently have a conversation with your manager, your progress interview. And in these conversations it is assessed whether you meet the expectations and whether you comply to your plan. And during the ride, steering can take place based on this conversation and the indicators.' (Respondent 4, RC)

Finally, consultation takes place around the ASQ interviews. The ASQ questionnaire is determined globally, but the local ASQ interviewer has influence as well.

'The questionnaire is designed by [BFA] global. Consequently, not so much the content of the questionnaire, but more which questions are actually going to be posed, where is the emphasis of the interview, that lies at the ASQ interviewer in particular.' (Respondent 8, RC)

Consultation around these ASQ interviews takes place in three stages. Before the interview with the client, the ASQ interviewer and the engagement manager will discuss the client and its environment. This ensures that the ASQ interviewer has an understanding of the client and the client's context and a feeling about who he is going to talk to. Consequently the interview with the client takes place and this interview is recorded in writing. Then the content of the interview is discussed with the engagement manager. In this second consultation between ASQ interviewer and engagement manager, it is discussed which aspects of the audit went well and what are potential concerns. Third, the outcomes of the evaluation with the client are communicated with the rest of the organization, depending on the client. For smaller clients it is communicated with the office chairman, and for larger (listed) organization, it is also communicated with the Board of the Assurance service line. Again, these consultation structures are recorded in fixed procedures and therefore are characterized as formal processes.
The last point of the domination structure is the possibility to discuss unannounced (potential sensitive) issues in the organization. All the respondents argued that there is space for these issues in both the formal and informal conversations in the organization. Especially the ASQ interview is specifically designed to create an open discussion in which all issues from the client to BFA and vice versa can be discussed with each other.

'Yes, no, there is full space for this. It really is meant as a completely free and open discussion. So, when someone did not function well in the perception of the client, whether it is true or not, but it is specifically the intention to discuss this openly.' (Respondent 8, RC)

However, it is also recognized that many of the unannounced issues will be discussed in informal conversation, just because they cannot be pushed into a formal model. When there are issues, sometimes they just have to be discussed, without waiting for a formal moment to discuss it. The style of management plays a relatively large part in this.

5.3. Reporting Intellectual Capital at BFA
In this thesis, a distinction is made between internal reports on IC and external reports on IC. Internal reports are used for communication inside the organization, while external reports are used to communicate with external parties. For external reporting, the same reports are used for all three elements of IC, namely the annual report and the transparency report. For the internal communication, several reports are used for each of the elements of IC. Therefore, the external reports are discussed in general first, and consequently the internal reports are discussed per IC element.

5.3.1. External Reporting on Intellectual Capital at BFA
Although the annual report (of the fiscal year 2012-2013) of BFA does not have a separate section to discuss IC, some parts of IC are reflected on in different sections of the document.

'Concerning the external reporting, we use mainly the annual report. In the annual report many KPI's are included. This annual report focuses on a broad audience. Besides the annual report there are some separate reports that specifically focus on a certain target group, for instance the transparency report.' (Respondent 2, SC, from summary of interview)

In the description of the organization, some numbers around the number of employees, the male-female distribution, hours spent on training and development and employee satisfactions are given. Furthermore, there is a program to stimulate entrepreneurship under the employees, and this program is described in the annual report. What is more interesting, is that in the annual report some strategic issues and the impact of these issues on the organization are identified. Based on these issues, actions and KPI's to deal with the mentioned issues are developed. Interestingly, for all of these issues and actions, it is determined on which parts of the organization it has an influence. The categorizing of these impact area's in financial capital, human capital, intellectual capital and social and relationship capital largely corresponds to the categorizing of IC in the literature. However, this categorization does not come back in other parts of the annual report. Finally, there is a part focused on the talents of the organization, in which it is stated that people are the most important factor of the organization and therefore should be retained and developed. In order to achieve this, five priorities and related actions are described.
Another external report that is used to report on IC, is the transparency report. This is a mandatory report that focuses on the quality level of the services by BFA. The main subject of this report is to show that the organization is working independently and integer and that it stimulates these characteristics in their employees. Therefore, all actions that have to ensure the independence and integrity are included in the transparency report. Some topics in the report are for instance an ethics hotline, an internal quality control system, client acceptance and continuance, the methodology and technology of performing audits, audit partner rotation, an external quality assurance review, compliance with legal requirements and independency practices. However, the transparency also covers a part of (the measures on) IC. First, it is described how the external auditors of BFA are evaluated in the PMDP process. Although this happens for all employees in the organization, the transparency report focuses only on the evaluation of partners and executive directors. It is argued that the ratings have a direct effect on the promotions and other development possibilities for the evaluated partners or directors. Second, one section focuses on the formation of audit teams, which also is a measure for structural capital. For the different ranks in the organization it is displayed how much time is spent on auditing financial statements per type of audited organization. Third, an Audit Quality Review (AQR) process is described, which has much in common with the ASQ interviews from the previous section. In the AQR process, some of the engagements are picked out and examined further to see whether the systems of quality controls at BFA work properly. Finally, a relatively large part of the transparency report focuses on the development of high-performing teams. The competencies which receive attention in the recruitment and hiring process are described and it is argued that diversity plays a major role in this process. Further, it is argued that it is important to keep educating the employees. It is stated that all around the world, employees of BFA get the chance to keep improving themselves, both technical and personal. This section was discussed with one of the respondents.

'There is, in broad outlines, the learning program of [BFA] depicted, and how much time is invested in people, and which elements are part of that. On the one side that is a bit of knowledge development that belongs to people that do not come in the organization as an accountant, but who eventually will be an accountant. There is a part of professional training [in Dutch: beroepsopleiding], and there are sometimes mandatory topics at the NBA, for instance professional critical attitude last two years. And now it is 'Say what you see'. And we show that kind of learning separately. And also per rang, so that you can see that [BFA] is investing very much per colleague as knowledge organization.' (Respondent 5, HC)

The section about the training and development of employees is supported by numbers around the time spent on education per rank. Moreover, the PMDP (evaluation) process for other employees than partners and directors is described further.
In sum, relatively much is reported externally about the human capital element of IC. The reporting on human capital is about the employees and training and development. Although one of the respondents thought that the transparency report would contain some information about the impact of the department that acquires licenses on the rest of the organization, nothing was found about this in the transparency report of fiscal year 2012-2013. For structural capital, only some KPI's were included. However, many of the reported indicators had to do with human capital as well. Of the planning department, the measure around engagement team construction was included, where the respondent around this topic did not expect anything from planning to be included. Finally, from the relational capital area, only the AQR process was described.

5.3.2. Internal Reporting on Intellectual Capital at BFA
Several internal reports are used besides the external reports mentioned in the previous subsection. First, the internal reports around human capital are discussed. There is a quality policy memorandum (in Dutch: nota kwaliteitsbeleid), in which it is stated who is responsible for which forms of quality, for instance who is responsible for Learning in the organization. Moreover, the objectives and direction for the short and medium long term are included, as well as the actions that have been executed in the previous period. These kinds of issues can be found partly in the transparency report as well, which makes the transparency partly usable for internal purposes.

'The quality policy is particularly aimed at the intern, but is used externally as well. And the transparency report is particularly externally aimed, but is used internally as well. That is just the other way around.' (Respondent 1, HC)

These two documents are seen as policy papers inside the organization, because they give directions to the actions taken and the actions that will have to be taken.
Another internal report is about the acquirement and use of licenses and databases. This report is needed, because the knowledge organization has to report about their contributions to the organization.

'Look, we are a club of 800 people globally who are engaged with knowledge, [BFA] Knowledge. Such a club cannot exist without reporting about where the money is used for.' (Respondent 3, HC)

This report contains quantitative data about the frequency in which the databases and knowledge sources are used, how many requests are processed, how many databases are used, how many times the analysts are called in, how many priority accounts have been supported, et cetera. These quantitative data are supplemented with anecdotal stories, to show the impact of the Knowledge organization on the rest of the organization.
Although continuous training and development is found important in BFA and these topics are found in the external reports, there are not many internal reports on this subject. When there are incidents or special cases, the Learning Leader gathers information on the involved individual and distributes this information to local managers, that have to do something with the information.

'What I do, but that is more ad hoc, is that when I see that someone is not reaching sufficient PE points, that I will collect information of that, which will go to the person who is responsible for People on the control side. Because they have to know that, and perhaps have to take actions. And we see that more often, when people fail on certain elements, both score or behavior, then that will have to be communicated.' (Respondent 5, HC)

And besides this rather incidental internal report, there is an administration about the stage in education in which the employees are.
Finally, there are two reports in the area of talent management. First, it is documented who achieves a four or five score in the PMDP process and therefore get a bonus or promotion. This information is stored centrally. Second, there is an internal sheet that contains many KPI's in the area. This sheet contains for instance the engagement of employees, the learning hours per person, PMDP completion, retention of top performers (four/five scorers), and gender equity. These KPI's are reported per region and service line. This enables the organization to create a benchmark between the regions and service lines. However, there is an absolute benchmark as well, which means that an explanation will be requested when the score on a certain KPI is below minimum. Finally, there is no central report about the 'nine grid' measure.

For internal reporting on structural capital there are 40 to 50 different systems in use. Therefore, the organization is using a Global Reporting Tool, to develop standardized reports that can be used globally. Using this system, many reports can be generated, for instance forecasts, budgets, planning, accounts and people. Besides the reports in the Global Reporting Tool, there are a number of local reports.
For the planning department, part of structural capital, the forecast report is mentioned to be the most important report. This report is about the relationship between productive and non-productive hours, and it reports on which activities the non-productive hours were spent. This is an important report, because non-productive hours are an important cost item in accountants organizations.

Finally, there are two internal reports on relational capital. The first takes place in the Business Development department and is about the activities that took place in the previous period.

'Well, inside BD I know it. They report on a monthly basis, and as a pursuit leader I have not much to do with that, but in the BD organization it is done, they feedback with their manager monthly about 'what have you done in the last month'. And there are just reports filled in about that.' (Respondent 4, SC)

In these feedback reports, the indicators that are mentioned in the previous section, for instance client meetings, are included.
The second internal report in the area of relational capital can be found in the ASQ process. At an individual conversation level, an interview report is made. This report is the basis for the feedback to the involved engagement partner. Because the conversations are confidential, it is difficult to report on a broader basis about the ASQ interviews.

Three trends are visible in the reports. First, it is realized that it is not enough to only measure certain aspects of the (performance of the) organization. In the past, the measurement of certain processes and the insights these measurements gave were satisfactory, but nowadays at BFA they try to link the measurements with the objectives of the organization and the impact the measurements have on the organization. So, in fact the measurements are rather the basis for initiating actions to improve the organization. This is also visible in the reports, which are characterized as more transparent then a few years ago.

'What you see more often, is that we tell more actually, we explain more. (') And in that way you see a trend that as organization you are writing down that there are incidents too, whether it is about learning or something else, to show that you do something with that information. That used to be less common in the past. (') The learning capacity of the organization, to be really transparent about that.' (Respondent 5, HC)

Part of this dynamic is caused by new legislation, which requires organizations as BFA to be more transparent about certain issues, especially in the area of intellectual capital.

'The transparency report is only mandatory since four or five years. Before that it was just an ordinary annual report, which was particular free format. And those are still here too. But besides that you are legally obliged to report about a number of issues. And especially the issues you mentioned. So, how have we dealt with the quality in the people, but also in the systems.' (Respondent 1, HC)

Second, the reports are used more locally then before. Where in the past most of the decision were made in the headquarter of the organization, more and more internal reports are communicated to the local offices nowadays, because it is recognized that they have the best knowledge about the local environment and employees to make the best choices. However, this change requires another mindset in the organization, and therefore a culture change is visible in the organization.

Finally, it is recognized that the measures per se have not changed that much, but the indicators are more quantified than in the past.
'More is being measured. Well, [someone] used to say 'to measure is to know'. So, I can imagine that it is important to measure certain issues. And of course, for a large organization, I know it is important to measure. But whether the indicators themselves have really changed' I doubt that.' (Respondent 4, RC)

Now it is clear which reports are used in BFA, it is interesting to observe for which purposes the reports are used. Two purposes for the reports are visible, namely a signification purpose and a legitimation purpose. First, in the signification purpose, the reports are used to communicate inside the organization, and therefore the reports are used as interpretive schemes. This can used to communicate the vision and direction of the organization, which is important because the actions in the departments have to be aligned with the chosen direction.

'Yeah, [the reports] are actually a framework from which is acted in the organization. When [management] thinks 'we find this important', then for instance the Learning department will move in that direction. So per se, from the quality policy memorandum [nota kwaliteitsbeleid] it is said 'okay, we are turning right here'. That means then that the translation is made in Learning, and in the people et cetera' The translation is then made further by the different departments. This also holds for the Knowledge department.' (Respondent 1, HC)

But the most important purpose of the reports is to be able to improve the organization on many aspects. This is seen in all elements of IC. In general, the reports are used to monitor realized results and contrast these results with the expected results. When there is a variance between the realized and expected results, actions have to be initiated to improve the organization. The reports are used to communicate about this process and therefore contributes to the learning capability of the organization. However, the fact that there is a variance between realized and expected results does not mean per se that the organization is doing something wrong. The external environment could play a role as well. Therefore, it is crucial to analyze the cause underlying the variance.

'Actions can be taken based on the reports, but this is not necessarily the case. Which action is taken based on the reports depends on the factual analysis of the numbers that are included in the report. We try to look for the cause why a KPI has changed. Often, this cause is already included in the report.' (Respondent 2, SC)

Many examples of this 'improvement process' were given in the interviews. For instance, in the human capital area it is used to communicate about gaps in knowledge, which are the basis for new development programs. Or information is distributed to the local learning leaders about the development of individual employees which is not according to plan. These local learning leaders then have to do something with the information and are expected to initiate certain actions to improve the development of the involved individuals.
Another example can be found in the area of structural capital, in the forecast reports in specific.

'The reason for the use of the forecast report is to monitor whether we achieve the budgeted productivity. (') The reports are used for redirecting, but also to be able to ask questions when a trend is visible (for instance when there are too many people or there is too much vacancy).' (Respondent 7, SC)

Finally, also in the area of relational capital, the reports are used to keep improving the organization. Obviously, the reports from the ASQ interviews are used for improving the service provision by BFA, by directly asking the clients about the possibilities to improve. But also in this area, the improvement trend is broader than that.

'Look, when there is a consistent picture in the reports about something that is not working, by nobody and no contract, that will eventually lead to an adjustment of certain processes. So the feedback, the reports or how you want to call it, when they point at a certain issue, eventually something has to happen with that information. I mean, you can design objectives, but when those objectives are not realizable, then at a certain point in time you will have to adjust them.' (Respondent 4, RC)

The second purpose for which the reports are used, is a legitimation purpose. When asked for the purposes of the reports, one of the respondents argued that the internal reports are mainly used for supporting management decision making and the external reports are used for legitimizing to society. Therefore, especially the external reports, i.e. the annual report and the transparency report, are used to show that BFA is acting according to the norms of external parties.

'The transparency report has a legal basis. It fits the current times to show what we are doing as an accountants organization and to be really transparent about it. That is what the transparency report is about. How much do we invest in quality.' (Respondent 5, HC)

However, some of the internal reports are be used for legitimation as well. The license acquiring department is a good example of this. Because they do not sell their services directly to the clients, they have to show why their department is important for the organization. Therefore, they try to show the impact of their department through the reports. Another internal legitimation purpose can be found in the evaluation of employees. When an employee is not able to meet the objectives that are set at the beginning of the period, he will be asked for an explanation. Moreover, this will show through in his compensation or promotion possibilities.

'It is absolutely used for legitimation. And then you see how impressionable it is. When you have to have a certain number of women on senior manager level, but you just do not have them, then you could say 'yeah guys, I just do not have them, so I have no influence on it'. (') I think inside [BFA] there is kind of a 'apply or comply' rule, so meet the objectives or explain why you cannot meet them.' (Respondent 6, HC)

The Global Reporting Tool is an important device for the purpose of legitimizing, because it enables the organization to generate standardized reports. The legitimation itself can be based on the KPI's that are included in the reports, but it could also be relatively simple, for instance by only looking at the number of hours spend below expected hours.

Finally, the domination structure around the reports will be discussed. When looking at the consultation structures, it appears that many of the structures used to discuss the measures and indicators are also used to discuss the reports. However, there are a number of interesting facilities that are created to discuss and generate the reports.
There is not a central entity that is concerned with generating the reports from beginning to end. The departments that have the information for the external reports (i.e. annual report and transparency report) have to compose the information they want to communicate themselves. However, there is a coordinator, who engages in collecting all the necessary information.

'There is kind of a global format, and there can be Dutch add-ons to that. And for each of the elements, the involving department is concerned with composing the information. And there is kind of a general, well, call it a coordinator, or whatever, who has the rewarding role to collect it all to be able to report in time.' (Respondent 1, HC)

Furthermore, the reports are normally discussed with all the stakeholders that have an interest in the information that is in the report. The contents of (parts of) the reports are discussed with the departments who have to do something with the information.

'[The reports] are clearly presented to all stakeholders. So when we for instance, ('), have the report for EMEIA, then that report is not carried out so much inside the knowledge organization, but we are going to discuss the report within EMEIA with leaders of the Markets organization, the leaders of Independence, possibly with local or national leaders. And then the report, or parts of the reports that are relevant to them, is discussed. So eventually it is always the same group, but it is not that you are busy in your own pillar.' (Respondent 3, HC)

The structure of this consultation is described as formal, because there are fixed moments in which this consultation has to take place. After each quarter of the year, it is expected from the EMEIA (Europe area) leader that he comes by at the most important stakeholders. However, the content of the consultation is not formal. There are no fixed agenda items and it is not necessary to formulate strict actions based on the reports.

Finally, it is recognized again that in BFA there is an open culture where almost everybody can have influence on the actions being taken. Examples of this are described above. However, in the planning process an important power structure can be recognized. In this process, the managers have the freedom to propose a certain engagement team structure that fit their needs. However, the central Planning department will always have the right to overrule the proposition of the engagement managers when the proposed engagement team does not meet the requirements that are outlined in the pyramid model and there is not a good explanation for the variance.

5.4. Recapitulation
In this section the findings of the case study (i.e. the interviews) are presented. First is looked at how the case study organization identified IC in their organization. Although many of the respondents were familiar with the concept of IC, it appears that the organization is not consciously identifying their IC, despite the fact that it seems important for the organization. When asking about the meaning of IC for the respondents, many of them pointed to the human capital part of IC, while they did not mention anything about the other elements. Further, after the different elements of IC were explained, there was not much consensus about which element was of most importance for the organization. Finally, the respondents argued that the relationship between the different elements is crucial as well.
Second, the measurements on IC were observed. For each of the elements of IC some measurements were described by the respondents. These measures range from the evaluation of employees' performance, talent identifying, use of licenses, KPI's around processes, productive versus non-productive hours, engagement team composition, number of contacts with clients, evaluation by clients, et cetera. Furthermore, structuration theory was used to make sense of the purposes for which these measures were used. It appears that the measures were used mainly for signification purposes and legitimation purposes. In the signification purpose, it is used to make sense of the business environment, both internal and external, and to initiate actions based on the measures to be able to improve the organization. The legitimation purpose can be both internal and external. An internal legitimation purpose is for instance when a department of BFA shows their importance by reflecting their impact on the organization. An external legitimation purpose is the accountability of the organization towards external parties. Finally, the measurements also play a role in the domination structure. The case study organization has an open structure in which discussion between lower level employees and management is stimulated, for instance to improve the organization. The measurements can contribute to this fact.
Third, it is looked at how BFA reports externally and internally on IC. For external reporting, the annual report and the (mandatory) transparency report are used. Both of these external reports contain some information on IC, but do not have a separate department for the reporting on IC. For internal reporting, a number of reports are used to report on different topics around IC. Examples of internal reports are the quality policy memorandum, use of licenses and databases, information on the PMDP process, ASQ interview report, and an internal sheet that contains many KPI's in the area of human capital. Again, the purposes of the reports are mainly a signification and a legitimation purpose. The signification purpose is to communicate inside the organization and to be able to improve the organization in many ways. The internal reports are the main medium for this purpose. Second, the legitimation purpose is mainly aimed at the external parties, and therefore, the external reports are the medium for this purpose. However, the legitimation purpose also has an internal working, and therefore, some of the internal reports carry this purpose as well. Finally, when looking at the domination structure around the reports, it can be concluded that this is comparable to the domination structure around the measurements. '
6. Conclusions
6.1. Reflections on findings
6.1.1. Identifying Intellectual Capital
In the case study organization, there was no consensus about a definition of IC. Although a definition has been given in chapter 2 of this thesis, it is not surprising that a definition of IC cannot be found in the organization, because in the literature there is no clear definition of the concept as well. However, when an organization wants to measure and report on their IC, it is expected that it will be better able to do this when a clear definition of the concept is defined in the organization.
The different elements of IC that are found in the literature can be found in the organization as well. For instance, the human capital element can be found in the departments for Learning and Talent Management, the structural capital element can be found in the departments for Finance and Planning, and the relational capital element can be found in the department for Business Development and in the function of the directors and managers. However, these elements are not identified and structured by the organization as it is in the literature. In the organization, the focus is mainly on the human capital element, the knowledge and experience of employees in specific.
Interestingly, while the different categories in IC are not identified as such, the relationship between the elements is seen as important. This is in accordance with the literature (for instance Cuganesan, 2005; Murthy and Mouritsen, 2011; Sydler et al., 2014).
Finally, although techniques are described in the literature that can be useful for identifying and categorizing IC (i.e. concept mapping), there are no such techniques found in the case study organization. This may be the explanation why there is no consensus about the definition of the concept.

6.1.2. Measuring Intellectual Capital
To be able to discuss the measurements on IC, in table 6 the measurement of the case study organization are summarized. Clearly most measurements on IC are aimed at human capital, which is not surprising since in the identification of IC the human capital element was found to be of most importance for the organization, according to the respondents.

As can be deducted from the list of measurements and from chapter five, the case study organization does not only use financial (or traditional) measurements to measure its IC. According to the literature on the subject, measuring IC with financial measures is not useful. So, it can be considered a good thing that the organization is looking for non-financial measures. However, just like in the literature, the organization finds it hard to measure such intangible issues as IC. Many of the respondents argued that the organization has a hard time finding measures that have value for the organization. While the literature on measurements of IC gives many techniques that could be used in the area, the case study shows that the organization is not using one of these techniques. In fact, the organization is not using a specific measurement method at all. The measurements show little relation with one another and are only loosely coupled. This might be caused by the way how the measurements are developed. The respondents argued that many ideas for new measurements originate at lower levels of the organization. When management then thinks the new measure is a good idea, this measurement will be developed further and eventually be adopted by the organization. This way of working makes it impossible to create a coherent and integral system of measures. Uziene (2010) proposes a model that could be used to design a systematic and purposeful IC measurement process. Based on a situation analysis and target development, measurement methods can be selected (see page 17 for full process). Clearly, this process has not been followed in the case study organization.
The case study organization uses a wide range of types of measurements. When looking at the categorization of Andriessen (2004), i.e. financial valuation, value measurement, value assessment and measurement, only financial valuation has not been used by the organization. The reason for this is that the organization is not able to measure the IC in monetary terms according to the respondents. So, while in the literature it is stated that proxies for IC in monetary terms are a useful way to measure IC, this is not used at the case study organization. When looking at value measurement, the 'nine grid' and the competency measure are examples. These measures make use of non-monetary criteria and translate these criteria into observable phenomena. The measures make it possible to make potential talents visible in the organization. Value assessment can be seen in the PDMP (performance measurement) process, where part of the performance of the employee is determined by the assessment of the employee's counselor. Finally, measurement is present in the manager assessment. There are no criteria that determine what is a good manager, but in several tests, the employee can get a score on a metric scale, which makes his behavior visible.
The case study organization uses a balance sheet approach rather than a profit and loss approach. The measurements described by the respondents give a snapshot of the IC in the organization at a certain point in time. There are no measures that focus on changes and transformation in IC or on flows between different elements of IC. According to the literature, it would be better to combine the two approaches.
Uziene (2010) stated that different measurements are necessary for internal and external purposes. It is stated to be useful to base measurements for internal purposes on the strategy of the organization, to be able to monitor the progress on this strategy. Partly, this is the case in the case study organization. Some respondents argued that since there is a new CEO and the vision of the organization changed, the measurements were changed as well. However, for the external reporting purpose, measurements should be chosen based on a clear format and joint interpretation of the measures. It is not clear whether this is the case in the organization. None of the respondents mentioned that these characteristics were important in the choice for the measurements.
In the literature, three ways to develop indicators are mentioned, namely based on strategy, based on the IC categories, and based on flows between the IC categories. In the case study organization, only the first way has been found. Above it is described that when the vision and direction of the organization changed, the measurements changed along with it.
One of the solutions for the many difficulties to deal with measuring IC is prioritizing the indicators (Han and Han, 2004). Analytic hierarchy process is developed to be able to rank the importance of the indicators, which makes measurement of IC more easy. However, at the organization of the case study, no such process was found. This perhaps explains why the organization has difficulties in creating a comprehensive system of measurements on IC.
Furthermore, in the discussion on the literature around the subject, a number of indicators have been included in tables 4 ' 6. Some of the measures in the literature are present in the case study organization as well. For human capital these are the extent of employees' skills, commitment to organizational goals (called engagement in the case study), extent of employees' knowledge, training days per employee, and non-financial incentives for employees (promotion possibilities based on PMDP process). For structural capital these are an open and positive climate, importance of (inter)national brand, and the number of scientific databases (for instance the databases that contain information about exchange rate information, tax regulations in different countries, specific developments in certain sectors, et cetera.), although this is put under human capital in the case study. For relational capital this is customers' satisfaction, which is being measured in the ASQ interviews.

6.1.3. Reporting on Intellectual Capital
According to the literature a distinction can be made between internal and external reporting on IC. In the case study, both types of reporting are found. In table 7 a summary is given of the reports on IC that are found in the case study. However, it should be recognized that reports that are categorized under external reports can be used for internal purposes as well and vice versa. It is obvious that the organization is not using an IC statement like it is described in the literature. In fact, it does not have a separate, comprehensive report about their IC as a whole. Some elements of IC just come back in some of the reports, because the organization wants, or has to, show what they are doing with their IC. A good example of this are the training and development programs. The conclusion therefore is that there is not a comprehensive system of reporting on IC.

In the literature, characteristics that determine the extent of (internal) reporting on IC are described. It appears logical that the organization is not reporting much about IC, because the organization has a cost minimization strategy. Because the organization's product is a service, it is important to keep the costs of the service as low as possible. A good example of this is the planning process, in which the employees are deployed as efficiently as possible. However, the organization has a good customer service, which is revealed by the processes around the ASQ program, in which the customer satisfaction is tested. In the literature it is stated that organizations with more customer service are found to have more internal IC information available in their organization. The case study organization does not seem to comply with this finding.
Just like with the measures, the case study organization uses a balance sheet approach. The reports give a snapshot of the organization at the time the report is published or communicated. In the literature it is stated that organizations often use an IC statement to report on their IC, because it provides a way to create shareholder value without viewing the organization as a certain value in dollars (as in the financial accounting and finance view). Therefore, the IC statement would provide a more dynamic view. Although this method has not been used in the case study organization, the reports of the case study organization have a dynamic element as well. For instance, in the transparency report the processes around hiring new employees and about training and development are described shortly. Furthermore, it is described in the literature that an IC statement consists of indicators, stories and sketches. Most of the reports of the case study organization only contain the scores on the KPI's. However, some of them contain a part of storytelling as well. This is for instance the case in the report about the use of licenses and databases in which success stories are described, because they show the impact of the department on the organization. Sketches have not been found to be available in both the internal and external reports. Finally, Mouritsen et al. (2001b) argue that although the IC report is a supplement to the annual report, it is both used by internal and external users. Interestingly, although an IC report has not been used in the case study, the mentioned characteristic has been found to be present. In specific, the transparency report is argued to be used by both internal and external users.

6.1.4. Reasons for Identifying, Measuring and Reporting on Intellectual Capital
For discussing the purposes of the measurements and reports on IC, structuration theory can be a useful framework. In relation with this framework, three purposes have been found to be important. First, the signification purpose is about making sense of the business environment and communication inside the organization. The most important reason for this is to be able to improve the organization. Therefore, the measurements and reports are used as a device that increases the learning capabilities of the organization. Second, the legitimation purpose is about accountability and responsibility, both inside and outside the organization. It is about the accountability of individual employees or departments towards the organization or of the organization as a whole towards society. Third, the domination structure is about the distribution of resources (i.e. power) in the organization. In the case study organization, a flat and open structure has been found. In accordance with structuration theory, it is found that lower level employees have a certain amount of power, just like the higher level managers. Both of these employees and managers can have influence on the actions that have to be taken in the organization. The measurements enable the organization to maintain this culture of interaction.
In the literature, some internal and external reasons for identifying, measuring and reporting on IC are described. Mouritsen et al. (2001b) for instance named three reasons. Only one of those reasons is found in the case study organization, particularly avoiding mistakes from happening again. The measurements and reporting on IC are used as interpretive schemes in the signification structure. This means that they are used to found out where mistakes happened (for instance with an ASQ interview) and initiate actions to avoid these mistakes from happening again. This all contributes to improving the organization, and it is part of the learning capabilities of the organization. Purposes that are found less present in the case study organization are: avoiding to find the same solution twice (re-inventing the wheel) and a contribution to a more effective style of operations.
Marr et al. (2003) name some other reasons. Two of those reasons have found to be present in the case study organization. First, measuring IC for compensation purposes is visible in the PMDP process of the case study organization. In that process, employees are evaluated on their progress in education and training programs and the score on those topics is part of a total score, which has an effect on the promotion possibilities or salary of the employee. Second, there is a regulatory pressure to measure and report on IC. A good example is the transparency report that is mandatory since five years. More and more legislation is developed which requires organizations to be more transparent and open about their business operations. One of the reasons that is not apparent in the organization are a contribution to the formulation of the strategy. In fact, in the case study the opposite has been found; the indicators are adjusted to the strategy. Further, it is stated that measuring IC can help to develop performance indicators. In the case study organization, IC indicators are used in the performance measurement, but it is not clear that measuring IC effectively contributed to finding new performance indicators. Moreover, measuring IC could be helpful in calculating goodwill for acquisitions and mergers. This purpose has not been mentioned by the respondents.
Finally, Mouritsen et al. (2001a) mention one internal reason and one external reason for reporting on IC. First, the external purpose is to attract the attention of external parties, by showing how well the organization is doing with for instance the development of their personnel. For instance, in the reports of the case study organization, the organization tries to show that it provides its employees the opportunity to develop themselves, by enabling them to follow additional education programs and trainings. This could have an influence on potential employees who are looking for a new job. Another example is the fact that the case study organization is providing information on the diversity of its personnel. When this is found to be important by potential clients, this could have an influence on the acquirement of new clients. Second, the internal purpose is the development, sharing and retaining of knowledge. These three internal purposes can be found in the case study organization. The reports on IC contribute to the development of knowledge, because it gives employees of the organization insight in how the organization is doing. It makes clear in which areas the organization is doing well, and in which areas development could be possible. When this is clear to the employees, they could come up with ideas for improvement, which is a form of developing knowledge. At the same time, the reports enables the organization to distribute this knowledge. An example of this are the anecdotes of success stories in the area of the acquirement of licenses. Moreover, the reporting on IC contributes to the retaining of knowledge as well. When knowledge is distributed in the organization, this knowledge will be known by more employees then without the distribution. This makes it less problematic when employees that developed the knowledge leave the organization. However, the reports can also prevent high potentials from leaving the organization, because it shows them that they have the change to always keep improving themselves. Moreover, because in the reports information is available about extra programs for high potentials and about the PMDP process, it shows them that they will be rewarded when they have a good performance. So, both of the reasons by Mouritsen et al. (2001a) are acknowledged in the case study organization.
6.2. Concluding Remarks
It is found that many of the respondents are familiar with the concept of IC, but there is not a general description about the contents of that concept and the categories that can be distinguished. The focus is on human capital. Despite the absence of such a definition of IC and its categories, parts of IC are measured in the organization. However, the system of measures is not comprehensive and the measures show little consistency and coherence. Moreover, internal and external reports are generated in which is communicated about IC with parties inside and outside the organization. But a separate report to communicate about IC and the flows between the categories of IC is not available in the organization. Moreover, the reports show little consistency and relation to one another, just like the measurements.
The findings of the case study on which is reported in this thesis are in accordance with the findings of Roslender and Fincham (2004) who did an exploratory field study in six UK knowledge based companies. They found that not many respondents were familiar with the term IC, and those who knew it, did not know the meaning of IC. This finding is found again in this thesis partly, because most of the respondents did know the concept of IC, but none of them could give a comprehensive meaning of it. Further, Roslender and Fincham (2004) found that the term knowledge management (KM) was more well known by the respondents than IC, and was used interchangeably with the term IC. Although this is not explicitly found in the case study of this thesis, it is found that much of the measures and reports were focused on managing the knowledge in the organization rather than the IC as a whole. Moreover, just like Roslender and Fincham (2004), it was found that although the respondents did not know the full meaning of the concept IC, they were interested in the concept and its meaning.
Another finding that is in accordance with the research of Roslender and Fincham (2004) is the fact that much of the efforts to measure and report on IC aim at the human capital element. Many of the organizations in the research, also the one in this thesis, use the measurements and reports for the purpose to effectively allocate the resources of the organization. Therefore, the planning process is important. However, although the respondents did not know the concept of IC and the different elements that are included in IC, the respondents in both the study by Roslender and Fincham (2004) and the study in this thesis, were interested by all dimensions of it.
Furthermore, it was found in both studies that there was not a systematical adoption of IC and related ideas or practices. Therefore, there was not a real IC or KM strategy. This was for instance visible in the measurements on IC. In the organization where measurements were developed for IC, these measures were not part of a bigger picture. In both studies, it is argued that the development of new measures occurred mostly bottom-up; employees on lower levels of the organization got ideas for new measures and these measures were designed further by higher management. Sometimes this led to new measures that were useful for the organization. However, the measures can be characterized rather 'ad hoc' then fitting in a certain system of measures.
Moreover, when looking at the reporting on IC in both studies, it is shown that the organization that reports on IC uses a balance sheet approach. Roslender and Fincham (2004) further argue that the internal balanced scorecard reports were not used effectively in the organization, but in the study of this thesis it is shown that the internal reports that exist on the subject, were used for signification and legitimation purposes. Improving the quality of reporting on IC, both internally and externally, can be considered difficult, because both studies show that the respondents have little knowledge about alternative reporting methods for IC, such as for instance the Skandia Navigator or the Intangible Assets Monitor.

The conclusion of this thesis therefore is that until now IC is not rooted in the operation and management of (knowledge-based) organizations, and that not much has changed in the last ten years. Since multiple studies (also Wall, 2002; and Wall et al., 2002) show that organizations have difficulties in adopting and using the concept of IC and the measurement and reporting on that subject, more research is needed. The suggestion is that this research focuses on two aspects around the subject. First, it could be investigated how the concept of IC could be made more suitable for use by organizations in practice. And second, research could focus on organizations that successfully adopted the concept of IC and related ideas, and that are measuring and reporting on IC effectively. These 'best practices' could give more information on how to make ideas around IC more suitable for organizations in practice.

Finally, there are some limitations to the research in this thesis. First, semi-structured interviews have been used. These interviews leave space open for interpretation both by the interviewee and the interviewer. Moreover, because the research focuses on only one knowledge-based organization in the Netherlands, it is recommended that more studies of this type will be executed to see to what extent the findings of this study appear in other (Dutch) organization as well.

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Appendix 1: Intellectual Capital Measurement Techniques
First, Skandia is acknowledged to be the first company to measure its IC. Leif Edvinsson was the driving force behind Skandia's initiatives, and he developed a model named Navigator. This model had five factors, namely financial, customer, process, renewal and development and human capital, for which 91 new IC measures and 73 traditional measures were used (Bontis, 2001). The focus of this model was on human and structural capital, which in this model also contained customer capital. The market value of the organization was estimated by financial and non-financial measures. These measures were often combined, to create ratio's, which reported on two factors. This led to 21 indices that report on two elements, IC value and IC efficiency. These two concepts together determine organizational IC. The developers of the model believe that this system is applicable to both profit- as non-profit organizations. This model has stimulated other organizations to think about their IC. Especially the recognition of customer capital was impressive. The Navigator model does not use dollar amounts to value its IC, instead it uses proxy measures to look at the trend of the assumed value added. Criticism on this model focusses on the fact that the meaning of the measures was different for every organization, so a firm-specific understanding of IC was important. Moreover, the model uses a balance sheet approach, whereby it is only capable of giving a 'snapshot' of one point in time. Finally, structural capital included computers, which is according to some researchers not a source of IC, because people have to put the information in computers (Bontis, 2001).
Second, the IC-Index tries to incorporate all individual factors into one measure (Roos et al., 1997). This is recognized as a typical characteristic of second generation practices. The advantage is that organization have to understand the prioritization and relationships in their measures, because the organization has to give weightings to several measures. According to Roos et al. (1997), this decision should be based on the organization's strategy. Bontis et al. (1999) describe that an IC system could be established, by joining two sets of variables, namely one set that determines the value-creating path of the organization, and one set of key performance indicators. Disadvantage of the IC-index is that it is highly context specific, because every organization has to establish its own priorities. Moreover, Roos et al. (1997) argue that the result of the IC-index are ordinal numbers, because proxy measures are used. Further, the measure of IC depends on value judgments, for instance in the choice of priorities of the measures. This makes the IC-Index a subjective measure. The advantage is that it makes IC discussable in organizations, and it can show the trend in IC, which could be a signal for the underlying drivers of future performance (Bontis et al., 1999). Moreover, it can show the effects of a certain strategy on the 'stock of IC' in the organization.
Third, Brooking (1996) introduced the Technology Broker. In her view, IC consists of market assets, human-centered asses, intellectual property assets, and infrastructure assets. Based on questionnaires around these topics, this model comes to an IC indicator. The assumption is that the IC indicator is determined by the goals of the organization and the situation in the market at that moment in time. Therefore, valuations based on the Technology Broker are context- and time-specific. After the indicator is determined, three methods can be used to calculate the dollar value of IC: cost, market, or income approach. This translation into dollar amounts is also the main problem of the model. The values in all three methods are not easily determinable. An improvement of the method would be to use Likert-type scales, which ensures that the questionnaires can be answered by multiple users in the organization. This would provide better results. Finally, the model is seen by many as subjective.
Fourth, Sveiby (1997) argues that money should not be used as a proxy for human effort. He presents a conceptual framework, based on three types of IC: external structure, internal structure, and individual competence. This model is called the Intangible Asset Monitor. Sveiby states that the problem does not lie in measuring IC, but in interpreting the outcomes of the measurements in relation with business performance. The traditional accounting framework should be replaced by a knowledge perspective, in which financial and non-financial measures should be used together. The goal of this model is to provide information for management control. Therefore, a crucial step is to assess whether the information is used for external reporting or internal measurement. The model consists of three measurement indicators, namely growth and renewal, efficiency and stability (Bontis, 2001). In fact, the Intangible Asset Monitor is a simple reflection of key performance measures. A second crucial step in this model is to assess what belongs to the group of individual competence. According to Sveiby (1997), only professionals inside the firm belong to this group. Criticism on this model is that the connection between non-financial indicators and financial outcomes is not the same for all organizations. Not all organization will generate the full benefits of their IC. Therefore, financial outcomes cannot be easily extracted from the non-financial indicators (Bontis, 2001).
Fifth, the market value added (MVA) of an organization is assumed to be the value of the organization's current and future activities, expected by the market (Bontis, 2001), and therefore can be a useful summary of the performance of an organization. However, the problem with MVA is that it includes historic activities. Economic value added (EVA) could be a more useful device, because it only looks at new projects. Bontis argues that this measure can be used as a 'surrogate measure for the stock of intellectual capital if it can be assumed that effective management of knowledge assets increases EVA' (2001, p. 55). The problem with the use of EVA is that it implies that no other measures for IC are used, while it is itself a measure of many factors. Moreover, managers do not get insight in which IC factors are adding value to the organization. Furthermore, it relies on historical costs, EVA is not proved to be a good predictor of stock value, and it has a shareholder perspective. Therefore, Bontis (2001) concludes that EVA probably is not a good measure for IC.
Finally, Dow Chemical used patents as a proxy for IC. Their model consisted of a sex-step process in which the intellectual assets are defined, assessed, classified, evaluated, invested, and assembled. At Dow Chemical the adoption of this model went hand in hand with a change in the culture. A review of the maintenance of patents was a crucial factor in this process. For each project in the R&D department, the impact on the IC was evaluated, to see if the project brought valuable IC to the organization. At Dow Chemical, they started to report on the patents, because these were easily visible in the organization. The IC report, based on this process, was added to the annual report. This model was adjusted by Hall et al. (1999), who suggested to not only look at the patents of an organization, but to the amount of citations of the patents. They found that firms with patents that were often cited, had higher market valuations. Therefore, they argued that the citation of patents were a better measure of IC, and the Citations-Weighted Patents model was born.

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