Why does it matter to Global Governance and National Policy Makers ?

Dr Carol Y.-Y. Lin - Pr Leif Edvinsson  

They see each other as Map Makers ! The usual tools for traveling the ‘World in Globalisation Time’ are certainly outdated. After years of collecting and questioning data, they’re now ready to bring new knowledge to serve towards anticipating crises and developing strategies. Dr Carol Y.-Y. Lin and Pr Leif Edvinsson take the questions from The Global Journal.  

Professor Leif Edvinsson and yourself have been pioneering the theory and practice of Intellectual Property for years. Do you feel you have reached a critical point in terms of recognition of the IC’s importance?  

Dr Lin: The benchmark of intellectual capital research is Pr Edvinsson’s book published in 1997. Over the past decade, not enough attention has been paid to this very important intangible asset –intellectual capital– as most of the countries were still busy with the concept of money investment, production, land, properties, and facilities. With the increasing recognition of the value of innovation, intellectual property, human capital and the hard slash of the 2008-2009 global fi nancial crises, we observed growing concern over the importance of IC. In 2010, we have presented several papers showing that Iceland had “capital availability” problems starting from 2000, and the fi nancial problems of the PIGS (Portugal, Ireland, Greece, and Spain) countries are also clearly indicated in our data set. We hope the trend revealed from our data can help further promote the importance of IC. Pr Edvinsson: National Intellectual Capital, our new book, is a summary of the impressive database, developed by Dr. Carol Lin, with many meaningful interpretations and knowledge leadership reflections. It is an emerging map of the importance of intangibles and intellectual capital for the wealth of nations. So far, 40 countries have been monitored with 29 indicators over 14 years. Just remember the importance of mapmakers for navigation, some 400 years ago... So far it has been an IC pioneering evolution over some 20 years, with many achievements, mostly at company level. For example, www.eff as.com, www.worldici. com, www.incas-europe-org, and the regular IC week in Japan, concerning metrics as well as IC management. We are going from simple metrics to more dynamic and complex system dynamic metrics for IC management. At the same time more and more investments in society are in intangibles such as education, IT, R&D, and networking. Consequently we need to adjust the mapping for societal leadership. The book is quite an achievement since the very fi rst prototype I initiated in 1996 in Sweden... But even more essential is to promote a deeper understanding of IC to avoid the failures of economies in Portugal, Greece and others. So the critical point of understanding is still to come, as I see it. The dominant logic is still the fi nancial capital governance. How to read and understand the driving components or roots for the fi nancial outcome and the deeper societal impact, over time? This might be part of the new sustainable ecological wealth logic...

What would be the next step of recognition? And how would you measure that recognition?  

Pr Edvinsson: IC ranking is a starting point, a kind of attention issue. The process of improving, renewing is the critical dimension. It can also be called Societal Innovation, in which Finland is right now very pioneering and a prime mover. Dr Lin: The next recognition will be from policy makers and decision makers in the world organizations, such as OECD. This “NIC40” model has been wellreceived by the intellectual capital researchers. Our academic paper “Lin, Y.-Y. & Edvinsson, L. (2008) National Intellectual Capital: Comparison of the Nordic Countries, Journal of Intellectual Capital, 9(4), 525-545” was a “Highly Commended” Award Winner at the Literati Network Awards for Excellence 2009. Pr Edvinsson and I are very happy that more and more government officers and practitioners are approaching us for more information either in conferences or through emails. When key decision makers take our research findings into consideration before making decisions (such as resource allocation) to maximize the benefits for the greatest number of people, our efforts pay off.  

What are the advantages of such a tool (the IC ranking or IC criteria) for a country or a corporation?  

Dr Lin: As Pr Edvinsson and I mentioned in the Open Innovation Yearbook to be published by the European Commission, one of the advantages of such a tool is the navigation. As all navigation is about position, direction and speed we can now start to see patterns of intellectual capital development. This research is an invitation to ask more deepening, powerful questions about the societal dimensions and renewal of Intellectual Capital of Nations, to benefit the future wealth and well-being of its citizens. It is also about learning from the past to prepare for the future. Specifically, it shows early signs of trouble in some European countries almost ten years ago. It also offers some insights from the co-development of some Asian countries. Pr Edvinsson: The advantage of IC leadership is a reduced loss of IC value. Just look at Greece, Portugal, Ireland… The opportunity cost is so visible in the projections of the IC scatterplot , unfortunately already starting to deteriorate 12 years ago. The opportunity cost responsibility is very high on society leadership and the next generation of citizens.  

Is the IC ranking useful for Global Governance? And why? How can we use it?  

Dr Lin: Our book provides very rich information in terms of internal comparison and external comparison. Since we focus on the “40 countries” (the maximum amount of data availability), it forms a closed eco-system internally. That is, the ranking change is within the boundary of these 40 countries. For instance, Finland ranks number #1 in IC using the 14 years (1995-2008) average score; yet, it was pushed down to #6 using a more recent 2005-2008 average score, very likely because some emerging countries such as China and India were progressing rapidly. With various types of ranking changes, decision makers can look into which capital (human capital, market capital, process capital, renewal capital, and financial capital) resulted in the unexpected change and plan for coping measures. For external comparison, we provide 16 different rankings or scores of various indicators published by various world organizations, including % of education expenditure against GDP, student PISA performance, e-readiness, and global competitiveness. By putting our IC ranking in the same table as those 16 indicators, we open other avenues for readers to gain further insights. For instance, it is quite easy to detect that some countries with a higher percentage of national education investment did not get better PISA scores compared to the countries with lower education investment, which sends a clear message that the return on education investment needs to be carefully re-examined. In chapters 16 & 17, we provide some suggestions about how to interpret and use both the explicit and hidden information from our data set.  

What will your next challenges in the field of research be?  

Dr Lin: Pr Edvinsson and I have great confidence in the continuation of IC research at the national level, with our IC model validated and recognized. The challenge is how to work out a valid model for city level IC comparison, as city competition may be the future trend with the coming of global economy without borders. Although many researchers have published various city IC models, most of them are still somewhat country specific. A recognized and valid city IC model that may apply to cities across national borders is in demand.  

Do you see a strong interest in the topic? Could you elaborate on that?  

Dr Lin: My personal observation is “Yes”, I see a stronger interest for this topic. In the past two years, I have received more and more requests from international researchers for my IC indicators and papers. I believe Pr Edvinsson also has a similar experience. Pr Edvinsson: Yes, a growing interest among both students, and societal leaders... Therefore there are many research initiatives going on in Asia, for example in Japan, by METI, as well as in China, but also BMWA in Germany, the London School of Economics, Aalto Innovation University in Helsinki, with a special development program on Societal Innovation, Paris Sud in France with a special PhD program and also, set by Pr A. Bounfour, a high-level cross-disciplinary annual IC event with the World Bank in Paris, such as the recent IC 6. The next, IC will be held in May 2011 in Paris. Dr Lin: Over the years, most of my PhD students have been devoted to this fi eld of research. Currently, I am the project leader of the IC research in Taiwan sponsored by Taiwan National Science Council and the coordinator of Taiwan Intellectual Capital Research Center (TICRC) based in my university. From 2006 to 2010, I published a total of eight IC related referred journal papers and 14 conference proceedings, some co-authored with my students and research partners. With the increasingly active IC researchers in Taiwan, before Christmas I actually sent an invitation to those researchers for a March 2011 meeting to discuss the potential synergy of this research community.  

In 2011, where will you travel?  

Pr Edvinsson: Some of the next events related to IC will take place in New York in January, Norway in January too, Malaysia & France in February, Hong Kong in March. I should also have gone to Zurich in late Jan, but postponed...Geneva is not far from Zurich. We should meet there. Dr Lin: I’ll be at IC 7, during the annual meeting of the “New Club of Paris” in Paris late May 2011, where a majority of the key people in the IC field will be present. I also plan to attend the “Knowledge Cities Summit” to be held in Israel in November 2011, in order to learn more for our future model of IC for cities.