What’s Happening with Intellectual Capital

Intellectual Capital (IC) a term that is still not common. Assets are usually physical or physical assets, such as land, buildings, factories, cars, machinery, etc. Assets in the company could be divided into two, namely tangible assets and intangible assets, IC was intangible assets. Not all items contained in IC can be recorded in the company's financial statements. Only some intangible asset items such as goodwill, franchise can be recorded in the company's financial statements. While many intangible asset items included in ICs cannot be valued and measured so they cannot be included in the company's financial statements. In the information age, competition between companies is already very tight. Excellence and sophistication of physical assets owned by the company is not a guarantee of company superiority. In this era, Intellectual Capital is a deciding factor in a company's excellence. It’s not enough for company to be able to make certain products or services such as cars, motorcycles, software, but they also must able to make goods or services that have advantages or differentiations in terms of price, quality, shape, technology. In other words, companies are demanded to make goods or services that have more value compared to their competitors.

According to some experts there are several definitions regarding Intellectual Capital. Brooking (1996: 12) IC is a combination of intangible assets that allows companies to carry out their functions. Edvinson (1997) identifies ICs with hidden business value. Roslander and Fincham (2007) say that IC is generally identified as the difference between market value and the book value of a company. From several definitions of IC above, Putra (2013) obtained an overview of what is Intellectual Capital as follows. The concept of IC has several characteristics: 1. IC Does not appear as an asset but provides a large opinion for the company. 2.IC is an interdepartmental asset because it involves more than one department. 3. Holistic, the benefits or influence of IC gives a holistic influence to the company not in bits and pieces. 4. Complicated, to measure understanding the value of IC IC companies owned is not simple requires a fairly complicated study. 5. The IC characteristic possessed by one company is not easy to compare with ICs in other companies.

Intellectual Capital in a sense can be interpreted as intangible assets owned by the company that makes company superior compared to other companies. In a broader sense Intellectual Capital can be interpreted as intangible assets owned by an area, district, province, even a State in its possession that makes it superior or famous compared to other countries. For example Kuta Beach in Bali, Pattaya Beach in Thailand, Pisa Tower in Italy, Statue of Liberty in America. These places are intangible assets which is owned by a province or a State. Tourists would visit a country because they are interested in the destination area they have. Another IC can also be in the form of customs and arts and culture such as those in Bali, Indian tribes in America, culture in Japan, Korea. There are many other ICs examples such as dances, music, clothing, which are unique that become an attraction on some region or country.

The role of IC really determines the advantages of a company or an area as a tourist destination. The increasing need for information about IC is not accompanied by the ease of assessing IC. The scientists do not have a consensus to determine the framework, the number of items, and the value of each item. Each scientist expresses their respective concepts and definitions. Based on the Intellectual Capital Framework from Sujan and Abeysekera (2007) IC is divided into 3 groups namely: 1. Internal Capital, 2. External Capital, 3. Human Capital, and has 25 IC items. Some experts propose different frameworks both in grouping categories and the number of IC items. So far, each IC item has been assessed with the same numbers and weights, even though IC items in each company have different weights. Many debates are still needed to achieve consensus in the form of frameworks, items, values ​​and weights.

The existence of an accurate IC measurement will help the valuation and prospects of a company. During this time the company is seen in terms of tangible assets and profits. The focus of attention on earnings without considering the IC that is owned by the company tends to make an assessment of a company to be biased.