Implications of Intellectual Capital for New Public Management
Presented at The Eighth International Research Symposium on Public Management (IRSPM VIII), Budapest University of Economics and Public Administration, 31 March - 2 April 2004, Budapest, Hungary
24 Pages Posted: 17 Mar 2009
Date Written: March 31, 2004
Abstract
This paper discusses the implications of intellectual capital (IC) for public institutions. The source of the discussion derives from a research project undertaken in a major Australian non-profit organization between 2001-2002. The project undertook a stakeholder analysis to identify the elements of professional work deemed to build value and contribute to the performance of the Australian Red Cross Blood Service (ARCBS). The Red Cross is arguably the largest non-profit organization in the world, and the ARCBS is its blood service arm throughout Australia. Phenomena such as 'organisational wealth' derive from the use of the term by Sveiby (1997) to encompass both tangible and intangible contributors to an organisation's value.
Intellectual capital (IC) is often represented as the 'intangible wealth' of an organization, comprised of human, social and relational. So there are dimensions of both personal and inter-personal value in organizations. In the private sector, it is the quality of service or the quality of technology that makes the difference between the value of the company on the balance sheet and the value perceived in the market place. What comprises the difference is the way this human and interpersonal value is manifested: through innovation, dynamism, skill and competency. These are intangible value-creators in business.
Reforms in the public sector has generated greater flexibility in organizational form, in partnerships between actors, broader appreciation of stakeholders, and facilitated greater entrepreneurial activity. This is seen in utilities, through government services such as health, education or welfare, in the regulatory frameworks established by government in the 'new public management' mold. In many ways, the facilitation of service-provision by different contractors requires a shift in professional managerial thought. Hospitals and schools and services continue to provide value in what is done. Just like a private firm, the "market" perception of the value offered may vary from the recorded value of assets in accounting procedures. As IC brings a renewed appreciation of value to professional 3 services within the private sector, it also can shift the appreciation of value in public institutions.
Keywords: intellectual capital, public institutions, intangible wealth
JEL Classification: M4, M40, M41, M42, M49
Suggested Citation: Suggested Citation
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