FROM IT ASSETS TO BUSINESS AND ECONOMIC VALUE

This study conceptually develops a Business Value if IT (BVIT) model, conjointly and innovatively using four theoretical frameworks, the Resource-Based View(RBV) of the firm, Knowledge-Based View (KBV), Contingency theory, and the Strategic Alignment Model. The developed model proposes that IT-enabled knowledge and communication capabilities, which actually create IT-enabled economic value (EVIT), can be driven by organizational strategy and resources via their impact on IT strategy and resources. The study contributes to the extant body of knowledge by developing three new IT-driven business value constructs: Know-Tech, Com-Tech, and EVIT along with theoretical grounding and implications about empirical measurements. It is thus suggested that IT-enabled knowledge and communication capabilities mediate the effects of organizational and IT strategies and resources on EVIT, thereby illustrating the paths that lead from IT components to IT-embedded capabilities and to EVIT. The model implies that IT matters in modern knowledge-based turbulent and dynamic competitive environments by contributing to the acquisition of organizational IT-Embedded knowledge and communication capabilities that can drive sustainable economic value. The proposed model also shows the paths by which IT contributes to eventual organizational economic gains albeit indirectly through deeply embedded, inimitable, dynamic and valuable organizational knowledge and communication capabilities. This research paves the way to an empirical investigation of \u27IT-Embeddedness\u27 as recently called for by scholars

PROBLEMS REGARDING THE ASSESSMENT OF THE BOOK VALUE OF A BUSINESS IN THE KNOWLEDGE ECONOMY

Significant changes in the society starting from the end of last century, have transformed the industrial age into the new post industrial age, which could colloquially be denominated as information age. One of vital characteristics of that economy is the transition from matter management to data management. Data is, at the same time, a basis for business processes management, a means for completing business processes, as well as a product of business processes. Thus, data is simultaneously a raw material, as well as semi-finished goods and finished goods, but also a management resource and company equity. The thesis that data resources are the key to a successful business of a modern business entity is today accepted in an axiomatic manner, in theory. Therefore, a question whether the power of a business entity in contemporary circumstances of doing business should be measured by the value of its tangible assets as it was done in the industrial age should be rightfully raised, or is its value a product of its intangible assets, i.e. its organized repositories of data, information and knowledge. In the bookkeeping assessment of the economic value of a business, material assets are still the key factor, and accounting is the only activity oriented towards maintaining the material essence of a business. Such accounting is not updated, therefore it is necessary to implement new ways of bookkeeping assessment of the economic value of a business, which shall accept the value of data, information and knowledge that the business possesses

PROBLEMS REGARDING THE ASSESSMENT OF THE BOOK VALUE OF A BUSINESS IN THE KNOWLEDGE ECONOMY

Significant changes in the society starting from the end of last century, have transformed the industrial age into the new post industrial age, which could colloquially be denominated as information age. One of vital characteristics of that economy is the transition from matter management to data management. Data is, at the same time, a basis for business processes management, a means for completing business processes, as well as a product of business processes. Thus, data is simultaneously a raw material, as well as semi-finished goods and finished goods, but also a management resource and company equity. The thesis that data resources are the key to a successful business of a modern business entity is today accepted in an axiomatic manner, in theory. Therefore, a question whether the power of a business entity in contemporary circumstances of doing business should be measured by the value of its tangible assets as it was done in the industrial age should be rightfully raised, or is its value a product of its intangible assets, i.e. its organized repositories of data, information and knowledge. In the bookkeeping assessment of the economic value of a business, material assets are still the key factor, and accounting is the only activity oriented towards maintaining the material essence of a business. Such accounting is not updated, therefore it is necessary to implement new ways of bookkeeping assessment of the economic value of a business, which shall accept the value of data, information and knowledge that the business possesses

An Empirical Analysis of Inflationary Impacts on Profitability and Value of Selected Manufacturing Firms in Nigeria

The study investigated the nature of the relationship between inflation and the value of firms in the manufacturing sector of a developing economy like Nigeria. It also tried to discern the nature of the relationships between inflation and profitability (proxied by return on assets) and economic value added and return on assets. The study employed secondary data collated from the audited financial statements of the sampled firms. These were analyzed using multiple regressions and analysis of variance. Results indicate a strong negative relationship between inflation and firm value and an insignificant negative relationship between inflation and return on assets (proxy for profitability). Further, the relationship between return on assets and economic value added is insignificant. Inflation, even at low level, seriously understates the true value of the firm. The implication of the findings is deducible from the fact that accurate estimation of the real value of the firm necessitates incorporating inflation element to arrive at the value of investments in fixed assets and other long term investments. It also highlights the fact that most business failures are caused by unwise investments in fixed assets that could easily have been detected if inflation rate is incorporated to get at the real cost of investible funds. Keywords: Inflation, Return on Assets, Firm Valuation, Manufacturing Firm

An economic impact assessment of a microcredit program in Malaysia: the case of Amanah Ikhtiar Malaysia (AIM)

This study uses econometric models to evaluate the economic perlormance of clients participating in the microcredit program of Amanah Ikhtiar Malaysia (AIM). Several proxies are used for the economiSJ performance variable (dependent variables), such as level of earnings/income, ratio of spending to income and value of assets. The regressors (independent variables) used are education level, age, amount of loan, source of income, and ownership of assets. The study found that the economic perlormance of AIM participants is significantly determined by the amount of money borrowed from AIM. Other factors found to influence the respondents' economic perlormance are education level, age, gender, assets owned before joining AIM, and area of residence. Because level of education is found to contribute significantly to the economic performance of AIM participants, it is suggested that AIM should work to educate its borrowers. In particular, it should provide business training

Data envelopment analysis (DEA) and financial ratios : a pro-stakeholders’ view of performance measurement for sustainable value creation of the wind energy

Purpose: The purpose of the paper is to explore business performance in a rather sensitive sector that equally combines economic, environmental and social dimensions. The paper investigates the efficiency of wind farm companies, in a framework of pursuing more diverse stakeholders’ interests Design/Methodology/Approach: Ratios and DEA approaches are combined to measure economic efficiency among the DMUs of a sample of wind farms, using data from their financial statements. Findings: Productivity and effectiveness comprise the performance measured by the economic efficiency. We show that by choosing inputs and outputs that are closely related in forming an appropriate financial ratio, it helps to design and explain more fully the impact of a policy intervention aiming at improving economic efficiency. DEA supplements ratios to design, implement and assess a strategy of benchmarking towards bolstering performance, that favors a wider range of stakeholders. Originality/Value: The study provides an in-depth insight into using Data Envelopment Analysis and financial ratios to study economic efficiency. The approach combines economic, social and environmental dimensions (indirectly) of performance, and the composite ratio Return on Total Assets (ROTA). The analysis caters the specific features of the sector renewable energy and their diverse stakeholders.peer-reviewe

The Importance of Appraisal and Professional Association for Creative Economy Business Actors

In the era of globalization and technological advances, the development of creative economy is moving rapidly and offering much more different career for economic actors. But, this development of creative economy has some problems. The examples are the fluctuation of cash flow on the creative economy business actors and wealth authority which belong to intangible assets. Thus, it is difficult to determine the average price of a work from creative economic actors. According to the library researches, this study found the things that can solve the problem of a work standarization price for creative economy business actors. The creative economy business actors can be called as freelancer. They can make appraisal program under protection of professional association as policy maker and law protector to protect the value of a work from creative economy business actors.keywords:  Creative    Economy    Business    Actors,    Appraisal, Professional Associatio

The technology company development journey : from concept to commercialisation

It is widely recognised that Scotland has competitive advantage in key areas of science and technology within its research and company base. However, the nation performs relatively poorly in terms of numbers of active entrepreneurs, business start-ups and creation of high-growth technology businesses within knowledge intensive industries. Scotland needs to rapidly commercialise those technologies where there is both a strong market opportunity and an ambition to create or grow a company of scale. The Scottish Government's Economic Strategy (Scottish Government, 2011) highlights the role that commercialisation can play in contributing to economic growth and Scottish Enterprise (SE) has built a clear strategic commitment to commercialisation: developing and investing in a number of initiatives and programmes to support the conversion of science and technology based ideas into products or services which deliver value to a particular market. With the ambition of converting the country's wealth of research assets into economic assets, a better understanding of the mechanics and transitions by which technology based ideas are transformed into marketable goods and services across the 'concept to commercialisation' paradigm is key to improving success rates and economic benefits for Scotland. This paper sets out the key findings from primary research that gives a unique insight into the experience of 32 companies that have been supported by SE. The research evidence highlights the challenges involved in the commercialisation process and path to market for Scottish-based technology companies, whose origins may be existing technology businesses, university spin-outs or start-up companies, and is the first in-depth analysis of its kind in Scotland

Internal rents and corporate property management: a study into the use of internal rents in UK corporate organisations

Research in the late 1980s showed that in many corporate real estates users were not fully aware of the full extent of their property holdings. In many cases, not only was the value of the holdings unknown, but there was uncertainty over the actual extent of ownership within the portfolio. This resulted in a large number of corporate occupiers reviewing their property holdings during the 1990s, initially to create a definitive asset register, but also to benefit from an more efficient use of space. Good management of corporately owned property assets is of equal importance as the management of other principal resources within the company. A comprehensive asset register can be seen as the first step towards a rational property audit. For the effective, efficient and economic delivery of services, it is vital that all property holdings are utilised to the best advantage. This requires that the property provider and the property user are both fully conversant with the value of the property holding and that an asset/internal rent/charge is made accordingly. The advantages of internal rent charging are twofold. Firstly, it requires the occupying department to “contribute” an amount to the business equivalent to the open market rental value of the space that it occupies. This prevents the treating of space as a free good and, as individual profit centres, each department will then rationalise its holdings to minimise its costs. The second advantage is from a strategic viewpoint. By charging an asset rent, the holding department can identify the performance of its real estate holdings. This can then be compared to an internal or external benchmark to help determine whether the company has adopted the most efficient tenure pattern for its properties. This paper investigates the use of internal rents by UK-based corporate businesses and explains internal rents as a form of transfer pricing in the context of management and responsibility accounting. The research finds that the majority of charging organisations introduced internal rents primarily to help calculate true profits at the business unit level. However, less than 10% of the charging organisations introduced internal rents primarily to capture the return on assets within the business. There was also a sizeable element of the market who had no plans to introduce internal rents. Here, it appears that, despite academic and professional views that internal rents are beneficial in improving the efficient use of property, opinion at the business and operational level has not universally accepted this proposition

A Fresh Look At Economic Value Added: Empirical Study Of The Fortune Five-Hundred Companies

Rapid and complex changes in the economic and business environment are posing serious challenges to today’s business executives. Meeting these challenges requires effective measures for control and performance evaluation. This article focuses on the uses, benefits and limitations of economic value added (EVA) as a value creation measure. Calculation of this trendy measure is complicated because of the many adjustments needed to convert the generally accepted accounting principles (GAAP) based income to economic income. The article compares the performance of EVA user companies with non-user Fortune 500 companies for the years 1997 and 1998. It shows that users performance means profits as percentage of revenues, assets, and stockholders’ equity were higher than the means of non-users. However, the means for 1998 earnings per share (EPS), EPS change from 1997 and EPS growth for the years 1988-1998 were lower for the EVA user companies. EVA will become less popular in its use as an instrument of control and performance evaluation. Therefore, the conclusion of this research is not in support of EVA use as a measure of value creation to stockholders