Journal of Intellectual Capital

Intellectual capital models in Spanish public sector

Yolanda Ramrez
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Yolanda Ramrez, (2010),"Intellectual capital models in Spanish public sector", Journal of Intellectual
Capital, Vol. 11 Iss 2 pp. 248 - 264
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JIC
11,2 Intellectual capital models in
Spanish public sector
Yolanda Ramrez
248 Department of Accounting, Faculty of Economics and Business Administration,
University of Castilla-La Mancha, Albacete, Spain

Abstract
Purpose The purpose of this paper is to provide assistance to public organizations in the process of
developing their ability to identify, measure and manage their intangible assets.
Design/methodology/approach A review of the most important intellectual capital management
initiatives at Spanish public organizations is realized.
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Findings The paper shows the importance of intellectual capital approaches as instruments to face
the new challenges in public sector. The experience gained from the case studies provides a practical
help to public organizations to develop means to identify, measure and manage their intangible assets.
Practical implications The study provides a basis to understand how Spanish public organizations
are measuring and managing their intellectual capital. In this sense, the first step would be the definition
and diffusion of the organizations strategic objectives. Then, critical intangibles related to these
objectives should be identified. Afterwards, a set of indicators is defined and developed for each
intangible.
Originality/value Public managers work with intangible concepts, although there is not always a
methodology available that systematizes their identification, measurement and presentation. To deal
with this problem, it is considered fundamental to know which initiatives have been carried out in
Spain in relation to models of intellectual capital management for public organizations.
Keywords Intellectual capital, Public sector organizations, Spain
Paper type Case study

Journal of Intellectual Capital
Vol. 11 No. 2, 2010
pp. 248-264
q Emerald Group Publishing Limited
1469-1930
DOI 10.1108/14691931011039705
1. Introduction
Public administration cannot be oblivious to the changes that are taking place in the
current context of the so-called Knowledge-based economy where the wealth
generation is associated to the development and management of elements of intangible
nature. In this way, since the 1980s the management practices established for the
public sector have experienced significant changes in most countries of the OECD.
These reforms are part of a process to introduce the principles of a new management
philosophy in the public sector called new public management (Hodges and Mellet,
2002; Mouritsen and Thorbjrnsen, 2004; Carlin et al., 2005). The study and
implementation of new management practices in the public sector, originated by
external and internal demands for a better management, are the foundation of this new
vision of public administration.
Under these circumstances, public managers lay emphasis on the private sector
management styles searching for new methodologies and management tools.
In this new international paradigm, knowledge and intangible values become the
main source of competitive advantage for public entities. Therefore, intellectual capital
management has been proposed as a novel managerial approach in non-profit
organizations (Kong, 2007a, b, 2008; Kong and Prior, 2008). The modern public sector
management boasts public attention and service quality, which justifies the need to
establish a series of initiatives to include intellectual capital management as a new
 approach to helping efficiency and efficacy in the public function. Thus, intangible Spanish public
elements are becoming of great interest in public administrations. This immense
interest in the study of intangible elements is due, among other reasons, to the fact that
sector
most of their strategic objectives are intangible, as well as the key aspects or factors for
obtaining them and the services they offer.
Despite its importance, intellectual capital (IC) at public sector is scarcely dealt with
in a specific manner. Up to now, only a few public organizations have taken the 249
challenge of trying to measure, manage and report on intangible assets.
One aspect of the existing research on the issue is the generic nature of the studies
and models. For example, Kong and Prior (2008) have presented a comprehensive
framework for explaining the IC-based competitiveness of non-profit organizations.
Afterwards, Kong (2009) proposes an intellectual capital conceptual framework that
can assist non-profit managers to articulate the three IC elements (human capital,
relational capital and structural capital), facilitate learning and unlearning processes,
and ultimately maximize the contributions of intellectual capital to their organizations.
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However, more research is needed to understand the specific role of IC in public sector.
This paper shows the principal initiatives carried out in the intellectual capital
management field in the Spanish public sector. Our ultimate objective is to offer public
managers a practical view of how to identify, measure and manage the intellectual
capital of public entities. The paper is considered as a starting point and serves as a
milestone in applying intellectual capital as a strategic management conceptual
framework in public administration entities.

2. Public administration in the current socio-economic context: new public

management
Immersed in the current knowledge economy, public administration entities face
contexts that change swiftly and that require increasing doses of innovating capacity
to be able to respond to the challenge of this context dynamism.
In general terms, we can point out that the public sector has experienced great
processes of intense transformation which have been caused mainly by two factors:
(1) financial and tax burdens, and as a result, the increasing importance of an
efficient public sector management; and
(2) societys new demands to improve services (Joyce, 1999).
Facing this situation, in the last 20 years, the accounting practices established for the
public sector have experienced important changes in most countries of the OECD
(Hood, 1995) with the objective of guiding public administration towards a more
efficient model (McLaughlin et al., 2002). These reforms are part of a process to
introduce the principles of a new management philosophy in the public sector called
New public management[1] (NPM). NPM has brought about transformations in
managing schemes in public entities, whose main characteristics defined by Hood
(1995), Olsen and Peters (1996) and Hodges and Mellet (2002) include a wide variety
of changes such as deregulation, decentralization, subcontracting, substitution of input
control systems for output control systems, management by results, responsibility
assignment, and the introduction of different management techniques which are
characteristic of the private sector. The ultimate objective of these reforms is to
improve the efficacy and efficiency of public entities, surpassing bureaucratic
problems and guaranteeing transparency in entities and accounts rendering.
 JIC Thus, in this new public administration working framework, a public management
context has been identified where entities are obliged to redefine their role in the
11,2 knowledge society and consequently, redefine their function as public service agents
(Merino et al., 2003). The paradigm of NPM represents a substantial change in public
operational philosophy and it involves the implementation of concepts such as
decentralization, increase in autonomy of public managers, competition, quality
250 strategies, economy, efficiency and efficacy, citizen guidance, emphasis on private
sector management techniques and indicators of performance. This way, NPM means
going from the concept of administrating (following instructions) to managing
(obtaining results), that is, it requires the use of control techniques to verify objective
achievement in public performances.
One of the most significant reforms in the public sector was the implementation of
management tools that had been used in the business sector. However, managing the
public sector is not an easy task; its special difficulty is due, as stated by OECD (2003,
p. 7), to:
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.
public outputs being especially complex and difficult to define;
.
inputs not being easily measured, and as a consequence; and
.
it is difficult to value the public sector efficiency.
Moreover, most inputs and outputs are intangible.
The new concepts derived from NPM, especially those related to efficiency, efficacy
and saving, have contributed positively in the elaboration of a more managerial view of
governmental administration, context in which the concepts related to intellectual
capital can be included (Bossi, 2003, p. 29). In fact, as stated before, the modern public
sector management boasts public attention and service quality, which justifies taking
into consideration intellectual capital contributions (Bossi et al., 2005, p. 221). This way,
Dragonetti and Roos (1998, p. 265) point out that the possible answer to public utility
measure comes from the application of intellectual capital management. Therefore,
public administration entities are committed to establishing a series of initiatives to
incorporate intellectual capital management as a new approach allowing efficiency and
efficacy in the public function and services.
Thus, we can conclude that NPM is a perspective based on results and focused on
the use and implementation of technology to modernize administration by means of
management economy, efficiency and quality. These challenges of the NPM confirm
that we are in constant movement in the search for new tools that allow an effective
improvement of public entities performance; and intellectual capital management is
one of these tools.

3. The importance of intellectual capital in the public sector

Intellectual capital has been recognized as an important resource that organizations
need to develop to gain sustained competitive advantages (Chen, 2008; Kong and Prior,
2008; Schiuma and Lerro, 2008).
In todays knowledge economy the collective knowledge of an organization is of
utmost importance (Kong and Thomson, 2009, p. 359). Intellectual capital (IC)
represents the collective knowledge that is embedded in the personnel, organizational
routines and network relationships of an organization (Stewart, 1997; Bontis, 2002;
Kong, 2008). In other words, following the work of a number of scholars in the field, IC
 is generally taken to encompass three primary interrelated components: human capital Spanish public
(HC)[2] relational capital (RC) and structural capital (SC) (Bontis, 1998; Dzinkowski, sector
2000; Roos et al., 1997; Stewart, 1997).
In recent times the public sector illustrates the following characteristics: better
response capacity to the needs of service users, emphasis in performance and result
management, introduction of performance standards, better communication of results,
decentralization and competence delegation of financial and personal management, 251
interest in market forces and the creation of internal markets, privatization of public
companies and application of private sector management methods (EFQM, 1997, p. 7).
These characteristics entirely justify the need to draw together in an easily
understandable system all those intangible elements that are differentiating sources
of competition advantages and that generate or will generate value for the
administration, such as, focus on the citizen, social responsibility and staff
professionalism (Garca, 2001, p. 372).
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Moreover, the importance given to the application of models of intellectual capital

management in the public sector is due to the fact that intangibility is even more
present in the public administration entities than in private enterprises. First, because
public administrations tend to have multiple objectives of a non-financial nature;
second, because among productive resources such as human resources, knowledge,
capital, raw materials and machinery, public administration entities intensively use the
two first ones, which are intangible; and finally, because the final product of public
administration is a service, and this is essentially intangible (Serrano et al., 2003, p. 250).
Moreover, the public sector has always been human capital-intensive and focused on
intangible outcomes (Wall, 2005, p. 301).
In this line, Guimet (1999, p. 56) thinks that the models of intellectual capital
management can be developed more rapidly by public administration entities than by
the private sector, and points out the following reasons:
. Public administration manages, fundamentally, information and knowledge.
.
There is no financial capital in public administration, that is, it is not based on
financial profit. However, public administration is used to employ indicators of
production per capita (civil services) that to a greater or lesser extent are
intended to establish a reading of the efficacy/efficiency of the human capital of
its organizations.
.
Public administration is currently undertaking a process of reforms, integrating
more efficient management methods and more focused on the citizen. There is
political determination for this transformation to be crystallized in public
management.

Another aspect that allows the development of models of intellectual capital

management in the public sector, as oppose to the difficulty in the private sector, is that
there is no urgency to quantify intangible values since public entities are not subjected
to valuation processes and thus, it helps the practical application of intellectual capital
theories (Bossi et al., 2005, p. 232).
Considering these approaches, the vast importance of intangible elements in public
administration is currently acknowledged and their appropriate identification,
valuation and management are basic for the success of public entities, improving
decision-making and showing the quality of their management processes to the public.
 JIC The intellectual capital approach helps to facilitate learning and unlearning processes
in public administration entities since it forces public managers to re-think their mission
11,2 and their social raison detre (Kong and Thomson, 2006, p. 219). This is because
intellectual capital relates to questions about identity, such as who you are, and what you
want to be (Mouritsen et al., 2005, p. 12). In other words, intellectual capital forces public
managers to investigate what they know (know-what) and the ability to deliver what they
252 know (know-how). This is particularly important to public administration entities as the
organizations are required to constantly learn new knowledge and unlearn unwanted
knowledge under the public sector movement (Kong, 2009, p. 535).
Finally, in order to show evidence of the importance given to intangible elements by
the Spanish public administration, we will show the results of the work by Caba and
Sierra (2003, pp. 35-40). These authors have done an empirical research about the
importance given to intangible elements in local entities in the Autonomous Region of
Andaluca (Spain). The aforementioned study makes clear that, although local entities
are hardly doing anything to measure their intangible elements, most of them think
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that it would be very important to do it, especially because it would be useful for the
improvement of service quality. On the other hand, it is stated that the intangible
elements that are being measured by local entities belong to the human capital section:
personal technical knowledge and personal attitude. The intangible elements which are
the components of the structural capital are the ones showing the greatest difficulty to
be measured in the future. This is logic given the importance the use of efficiency,
efficacy and economy has been getting in resource management in public
administration in recent years.
In short, we can conclude that public managers work with intangible concepts,
although they do not always have a methodology to systematize their identification,
measurement, management and presentation. To face this problem, it is considered
essential to know what initiatives have been developed in Spain related to the creation
of models of intellectual capital management for public organizations. In our opinion,
intellectual capital allows public administration entities to pursue their objectives and
utilize their resources effectively. This paper provides useful insights for applying
intellectual capital management to practice.

4. Spanish proposals for intellectual capital models in the public sector

Taking into account the situation of the present public sector, public administrators
must manage intangible resources of public entities efficiently, which would generate a
success factor. Thus, initiatives such as the implementation of different measurement
models and intellectual capital management have become increasingly important.
In our opinion, although business experiences on intellectual capital measurement
and management can be useful to create models of public management, new models are
needed based on the specific requirements of these types of organizations. In this line,
Bossi et al. (2001) point out that it is difficult to apply intellectual capital models that
have been designed for the private business to the public sector, since the objectives of
public administration entities (improving citizen service quality and excellent
management) are different from the objectives of private businesses (maximizing
profits and creating value for the stockholder). Another problem when applying these
models directly to the public sector arises from the fact that business models calculate
intellectual capital by subtracting business market value from book value while public
administration entities do not have market value. Regarding the components of
 intellectual capital, there are also significant differences between public and private Spanish public
sectors. For instance, customer capital or external structure in the private business
is determined by customer and brand values. In the public sector, customers are the
sector
citizens and although it is a similar concept to customers, the lack of competition or
customers choice make indicators different. Moreover, in the public sector the concept
of brand is hardly ever spoken about, although we speak about image or reputation.
Human and organizational capitals also show special features in the public sector. So, 253
for example, the way of captivating employees and promoting them and the whole of
personnel management is different.
Thus, it is considered essential to develop proposals for intellectual capital models
taking into account the specific characteristics of public organizations. In this sense, in
the last decades some public organizations have been making great efforts to identify,
measure, manage and report on intellectual capital. The different models proposed for
the measuring and management of intangible elements in the public sector will
supplement the traditional control systems of public administration- legitimacy,
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financial and managerial control-, including a range of indicators of current great

importance for the success of the organization. Any model of intellectual capital
management for the public sector must reveal the importance of intangible elements in
the achievement of aims and objectives of the organization, highlight how these
intangible elements are used to improve public service quality, show their significance
in the achievement of excellent management and reflect the organizations commitment
to social and environmental improvement (Serrano et al., 2003, p. 253).
Next, we will show different proposal experiences for intellectual capital models in
the Spanish public sector. These proposals for intellectual capital models have a double
objective: to help managers in their task of valuating and increasing the activities,
achievements and efficacy of the entity (internal management); and to provide
information on the administration performance to the external users for their
decision-making (external information).

4.1 The SICAP project

The SICAP Project (Bueno et al., 2004), co-funded by the Spanish Ministry of Science
and Technology (PROFIT Programme) and European Regional Development Fund
(ERDF), has developed a general IC model specially designed for public
administrations and a technological platform to facilitate efficient management of
the public services.
Bueno et al. (2003, 2004) propose an Intellectual Capital General Model for the public
sector, which consists of adapting the Intellectus Model (CIC, 2003) to the reality of
public administrations.
The aim of this proposal is to respond to the need of the public administration to
identify, and measure those intangible resources which are potential sources of value
creation and which help to improve efficacy and efficiency in public services. This
intellectual capital measuring model will inform practitioners about the administrational
capacity to generate sustainable results and about the possibility of a constant
improvement, surpassing the short-term view of financial-accounting models.
The model structure identifies three main components of intellectual capital: public
human capital, public structural capital and public relational capital. Subsequently,
public structural capital is divided into three components, interrelated but with
 JIC different features: public organizational capital, public social capital and public
11,2 technological capital (see Figure 1):
(1) Public human capital. This capital could be defined as the knowledge useful for
the organizational mission (either of explicit or tacit nature; either of individual
or social origin) that the individuals and groups in the organization have,
besides their capabilities to generate it in the future.
254 (2) Public structural capital represents the set of knowledge and intangible assets
that are property of the organization. However, in large and complex
organizations such as public administration entities, it might be useful to
separate the role of technologies, and certain administrative and social aspects
that contribute to the legitimacy of the public function. For this reason, the
structural capital is divided into three subcomponents:
.
Public organizational capital: this capital is composed by a set of knowledge
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of explicit or implicit nature, formal or non formal, that structure and

develop the organizational activity in efficient and effective ways.
.
Public social capital is related to the value the development of its function as a
public service represents to the organization based on trust, fidelity and
ethics. Obviously, this subject legitimises its existence before citizens.
.
Public technological capital: this capital is defined as the set of intangibles of
technological nature, that is to say, derived from technical knowledge. It
comprises the activities and functions development with both an internal
process scope and an external scope related to products and services that
characterize the different operations of the organization.
(3) Public relational capital. This capital is integrated by the value of the
relationships maintained with the main agents involved in the organizational
basis processes.

Figure 1.
Components of public
intellectual capital as
proposed in the SICAP
Project
 Each of these five components of the model shows some main aspects which identify it Spanish public
and describe its basic concept characteristics. Also, each element is a set of variables sector
which can be measured and allow the interconnection between the concept of the
different intangible assets and the objective reality. Finally, indicators are established
allowing the definition and specific measurement of intellectual capital.
Being aware of the fact that indicators are specific for each public entity, Bueno et al.
(2003, 2004), present the following proposal of elements and variables (see Table I). 255
This Intellectual Capital General Model for Public Administrations was adapted to
the particular case of the Fiscal Studies Institute and the case of the Public Tax
Agency. In the works by Plaz et al. (2004) and Bueno et al. (2004) both models are
shown contextualized. In the Financial Studies Institute 14 elements were included
represented by 35 variables, explained and measured by 97 indicators, while in the case
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Components Elements Variables

Public human capital Attitudes and values Commitment feeling, motivation,

Technical knowledge
Capacities and competencies
Public organizational Culture
capital
Structure
Organizational learning
Processes
Public social capital Social cohesion
Social stability
Social connection
Public technological R&D effort
capital
Technological support
Intellectual and industrial
property
Public relational capital Providers relationships
Alliances
Media relationships
Source: Adapted from Bueno et al. (2003)
satisfaction, sociability, flexibility and
adaptability, creativity
Formal education, specialized training,
professional experience, personal
development
Learning, collaboration, communication,
leadership
Cultural homogeneity, cultural values
evolution, labour climate, service
philosophy
Design, employees structure, organizational
development
Learning spaces, organizational routines,
knowledge creation and development,
knowledge acquisition and diffusion
Internal client, external client, strategic
reflection, innovation
Service philosophy, social services and
resources, social innovation, social welfare
Transparency, ethic, citizen participation
Citizens relationships, employees
relationships
R&D expenditure, R&D employees, R&D
projects
Technology acquisition, technological
support, ICT support
Patents, licences
Providers agreements, technological
support, ad hoc services, provider flexibility
Alliances base, commitment level, alliances Table I.
returns Elements and variables of
Image, media citation public intellectual capital
proposed in the SICAP
Project
 JIC of the Organization, Planning and Institutional Relations Department of the National
Public Tax Agency 19 elements represented by 41 variables were explained and
11,2 measured by 132 indicators.

4.2 The intellectual capital model proposed by Caba and Sierra

Caba and Sierra (2001) consider the need to include a statement about intellectual
256 capital in public administration, so they propose an intellectual capital measuring
model based on the European Foundation Quality Management Model (EFQM). This
proposal integrates the different elements from the EFQM model in the three blocks
which compose intellectual capital (human capital, structural capital and relational
capital), as it considers the existence of a direct relationship between them since public
value depends on the achieved quality level:
(1) The human capital block refers to present competences as well as peoples and
working teams capability to learn and create, and along with all this, the
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professional ethics in public administration.

(2) The structural capital block reflects the know-how of the entity, it includes
information and management systems, the available technology, etc; that is, all
those elements on which the internal efficiency and efficacy of the public entity
depend.
(3) Finally, the relational capital block consists of the value created as a
consequence of the external relationships of the entity, whose key for success
will be seen by means of the impact of public performances, service access by
the different groups, citizens satisfaction for service quality, etc.
Once the blocks forming the structure of intellectual capital have been defined, the
next step would be the identification of the elements to be considered within each of
them. Elements that create present value as well as elements that create future value
have been taken into account (Euroforum, 1998). Finally, diverse indicators have been
established in order to measure intellectual capital elements, grouped into different
perspectives. Therefore, for the human capital block the indicator used is the so called
indicator of human quality which shows the personnels commitment in public
entities to value achievement. The structural capital is valued by means of economy
efficacy and efficiency. Through indicators of efficacy we can measure the
organizations capacity to improve policies and strategies, operative processes and
resource management. The indicators of economy analyse the conditions of
investment acquisitions and indicators of efficiency show the achievements obtained
with the resources used. And to measure relational capital we use indicators of
quality, environment, equity, sustainability and demand.
Figure 2 shows this proposal for measuring intellectual capital in the public sector.

4.3 The intellectual capital model proposed by Garca

Garca (2001) suggests a new statement called Intangible assets statement where its
non-financial section refers to those intangible investments that do not comply with
any requirements to be accounted as an asset. By means of non-financial indicators we
can inform on the present situation as well as the future of these intangible elements.
To create this model, Garca has taken Sveibys (1997) monitor and the Intelect
Model (Euroforum, 1998) as reference, which he has applied in the town hall of Pozuelo
 Spanish public
sector

257
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Figure 2.
The proposal for
measuring intellectual
capital in the public sector
by Caba and Sierra

de Alarcon (Madrid Spain). The model proposed for Pozuelo de Alarcon included 12
strategic objectives, which could be achieved through 15 intangible elements and 90
intangible activities, being noteworthy those related to staffs composition and
competences (human capital), to citizens help and service processes (relational capital)
and to working procedures and processes (structural capital).
This model proposal for intangible investments in the public sector will allow first,
a more detailed knowledge of such strategic investments, which is going to help
administration managers in their task of valuing and increasing activity,
achievements, efficiency and efficacy in public services; and second, it will allow
citizens the evaluation of the activities that the administration carries out in order to
improve their satisfaction and to increase their wellbeing. With this purpose, the model
wants to translate the strategy and mission of a public entity into a set of indicators
that will inform about objective achievements by intangible elements or investments.
Therefore, first a detailed analysis of the public entity is carried out defining its
strategic objectives. Then, intangible factors or resources directly related to the
objectives are identified, which are, according to the Intelect Model, grouped into three
blocks: human capital, relational capital and structural capital. A series of actions
and/or changes are established (intangible activities) for each of the intangible
elements to carry out an appropriate follow-up and control of the proposed strategic
aims. Finally, the indicators that will evaluate the activities accomplishment will be
determined.
 JIC Regarding indicators, we have chosen the indicator classification by Sveiby (1997):
11,2 .
Indicators of growth/renovation whose objective is to show the future potential of
the target element in the entity.
.
Indicators of efficiency to know the productivity of intangible assets.
.
Indicators of stability estimate the degree of asset permanence in the entity.
258 This table of indicators will include present values as well as target values, so allowing
an analysis, over the years, of the achievement degree of the companys strategic
objectives by means of the study of the differences between such values, selecting the
main actions that must be developed in the field of intellectual capital management (see
Figure 3).
The main new aspects of this model are, first, the related matters of indicators to the
dynamics of the entity that is, to its generic strategic objectives by means of concrete
acts and/or changes (intangible activities). Second, the introduction of time dimension
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by indicators so that indicators of growth/renovation are connected to the future of the

entity, while indicators of efficiency show the entitys present capability, and indicators
of stability include both dimensions since they reflect the present permanence degree of
intangible assets and their future stability.

4.4 The intellectual capital model proposed by Bossi

The model proposed by Bossi (2003) for the public sector points out five perspectives
that affect intellectual capital: the three traditional variables of intellectual capital
human resources, internal processes and external relations and two new
perspectives of great importance for public administration: transparency and
quality. The transparency in public acts has as a main objective to communicate the
citizens the essential aspects about how public resources are being administered. This
transparency allows a higher control of public management, reducing corruption and
making administration available for public service users. In turn, quality symbolizes

Figure 3.
The intangible element
measurement and
management model
proposed by Garca
 the commitment by the whole public entity to adopt practices where public services are Spanish public
controlled by means of citizens/users satisfaction (Bossi, 2003, p. 184). sector
The main novelty of this model, with regard to models applied to private initiative,
is the identification and exhibition of negative elements related to intangible element
management and which generate intellectual liability. The concept of intellectual
liability represents the space between ideal management and real management, one of
the duties a public entity must fulfill for society (Bossi, 2003, p. 212). 259
Thus, the basic principle of this model is that public entities can present positive as
well as negative intellectual capital, depending on their intangible element
management practices and policies. Therefore, in Figure 4 in each intellectual
capital perspective, we show the positive attitudes which contribute to the increase of
intellectual capital and the negative resulting in intellectual liability. Moreover, based
on the assumption that the public sector must provide quality services, Figure 4 shows
three lines representing the three levels where a public entity can be placed:
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(1) Intellectual capital intensity, represented by excellence in intangible element

management.
(2) Inertia, represented by a comfortable or mediocre situation.
(3) Intellectual capital shortage, whose ultimate consequence are public services
that do not attend the population satisfactorily.

An application of this model was carried out for the specific case of National
Audit Office (Bossi, 2003, pp. 219-259), where five perspectives were proposed with
80 intellectual capital indicators, divided into 23 intangible factors. Moreover, the aims

Figure 4.
The intellectual capital
model proposed by Bossi
 JIC to be achieved in each activity are specified for each factor and the setting can include
either a positive intellectual capital situation or an intellectual liability situation.
11,2

5. Conclusions
As a result of the public sector reform movement, public administration entities are
260 forced to change the way they manage and operate their activities. So, the reforms in
public sector management to improve performance have become an important issue for
all the countries of the OECD (OECD, 2003, p. 27). In view of the situation, public
accounting information is being directed towards the new demands arisen with the
current management philosophy, called the new public management, characterized
by the application of new management techniques and the consideration of the citizen
as a client.
In this new institutional paradigm, knowledge and intangible values become the
main source of competitive advantage for public entities. These elements, when
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managed well, are the factors for success in public entities. That is why public
managers are constantly searching for new tools for an effective improvement in the
performance of public institutions, and one of these tools is models of intellectual
capital management.
However, there is relatively little written on what adapted strategic management
methods are most appropriate for the pursuit of public activities in todays knowledge
economy. This paper argues that intellectual capital is a valid strategic management
conceptual framework for public administration entities.
Although not a lot of research has been carried out yet, the public sector seems quite
suitable for the application IC management. First, public organizations are facing
tough performance challenges. Second, the intangibility of operations and targets may
be even more evident in non-profit sector than in private companies which ultimately
aim at financial results (Kong, 2007a, b). Moreover, some of the reasons for the great
importance of intellectual capital in the public sector are as follows: most of its
strategic objectives are intangible, as so are the factors or elements to obtain it and the
services offered. The public sector is, therefore, an ideal framework for the application
of the ideas related to intellectual capital theory.
The different models proposed for the measuring and management of intangible
elements in the public sector will supplement the traditional control systems of public
administration- legitimacy, financial and managerial control, including a range of
indicators of current great importance for the success of the organization. These
models of intellectual capital measuring and management will inform about the
capability of the public administration to generate sustainable results and about the
possibility of constant improvement, surpassing the short-term view of
financial-accounting models.
With this review on the main initiatives carried out in Spain on intellectual capital
management in the public sector, this paper aims to respond to the need of public
administration entities to identify, measure and manage those intangible resources
which are potential sources of value creation. Therefore, this paper enriches the
existing theoretical and framework oriented intellectual capital literature by examining
the implementation of intellectual capital management models and their outcomes in
four case study. This provides useful insights for applying intellectual capital
management to practice.
 Intellectual capital management models will allow firstly, a more detailed Spanish public
knowledge of such strategic investments, which is going to help administration
managers in their task of valuing and increasing activity, achievements, efficiency and
sector
efficacy in public services; and secondly, these models will allow citizens the evaluation
of the activities that the administration carries out in order to improve their satisfaction
and to increase their wellbeing. With this purpose, intellectual capital management
models want to translate the strategy and mission of a public entity into a set of 261
indicators that will inform about objective achievements by intangible elements or
investments.
After this study, we can conclude that when creating an intellectual capital
management model, the first step would be to carry out a detailed analysis of the public
entity defining its strategic objectives. Then, intangible factors or resources directly
related to the objectives are identified, which are generally grouped into three blocks:
human capital, relational capital and structural capital. Finally, a set of indicators for
each intangible element will be determined. Nevertheless, it is also necessary to carry
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out periodic revisions of the model to adapt it to the possible changes that may take
place in the public entity.

6. Limitations and future research

This research has been a first step in identifying intellectual capital models in the
Spanish public administration entities. Given this study was exploratory in nature it
does not cover all the intellectual capital initiatives at the Spanish public sector. In
researches with more case studies more comparisons could be made. It would be
important to enlarge the sample by including other European proposals.
Although the research focuses on intellectual capital models (components, elements
and indicators), the lack of deep analysis about indicators clearly represents a
limitation to this research.
Given the complexity on the research topic, there is no unilateral relationship
between categories and indicators. Therefore, several indicators may provide
information on the same category while another may prove useful in assessing
several categories. Hence, in future steps some indicators would need a further
definition to make them useful for management purposes and comparable among
public organizations.
On the one hand, further research could attempt to develop an intellectual capital
framework that helps to understand the interrelationships between the three IC
components in public administration entities (capital human, relational capital and
structural capital).

Notes
1. There are numerous definitions of the new public management paradigm. For instance, see
Barzelay (1992), Osborne and Gaebler (1994), Gore (1994), Thompson and Lawrence (1999),
(OECD, 1996).
2. Several researches have examined the relationships between IC and human resource
management. For instance, Kong (2007) and Kong and Thomson (2009) point out that IC
should be conceptualized as a holistic partner to both strategic human resource management
(SHRM) and human resource management (HRM). The theoretical connections between IC,
SHRM and HRM are established through a culture where knowledge is gathered, built,
maintained and shared in an organization.
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Further reading
Lonnqvist, A., Sillanpaa, V. and Carlucci, D. (2009), Intellectual capital management in practice:
assessment of implementation and outcomes, Knowledge Management Research and
Practice, Vol. 7 No. 4, pp. 308-16.

About the author

Yolanda Ramrez is an Assistant Professor at the Faculty of Economics and Business
Administration, University of Castilla-La Mancha, Spain. She has taught in the Faculty of
Economics since 1999. She completed her doctorate in Intellectual Capital Management at the
University of Castilla-La Mancha, Spain. Her current research interests include intellectual
capital, knowledge management, non-profit management and quality management. Her research
work is focused on methods and techniques for building models of measuring and management
intellectual capital in the universities. Her work has been published in several international
academic journals including Journal of Intellectual Capital, International Journal of Learning and
Intellectual Capital, The International Journal of Knowledge, Culture and Change Management.
Yolanda Ramrez can be contacted at: Yolanda.Ramirez@uclm.es

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