Intangible Asset Gap in Global Competitiveness Mapping and Responding To The New Economy

SPRINGER BRIEFS IN BUSINESS
Eskil Ullberg
Leif Edvinsson
Carol Yeh-Yun Lin
Intangible Asset
Gap in Global
Competitiveness
Mapping and
Responding
to the New Economy
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Eskil Ullberg • Leif Edvinsson
Carol Yeh-Yun Lin
Intangible Asset Gap

in Global Competitiveness
Mapping and Responding to the
New Economy
Eskil Ullberg Leif Edvinsson
Department of Economics New Club of Paris
George Mason University Stockholm, Sweden
Fairfax, VA, USA
Carol Yeh-Yun Lin
Department of Business Administration
National Chengchi University
Taipei, Taiwan
ISSN 2191-5482 ISSN 2191-5490 (electronic)

SpringerBriefs in Business
ISBN 978-3-030-55665-5 ISBN 978-3-030-55666-2 (eBook)
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Foreword
This book is about the future. It is about the human capital that people own and
access (information, artificial intelligence, AI) which adds to capital and labour and
a more dynamic social, economic, and environmental system, that policies must
shape. The question of human capital formation points to a shift in the “production
mix”, moving from the industrial focus (of capital and labour) to intellectual capital
and trade in ideas, based on intellectual property rights, especially patents for its
connection to technology. This question has also been accentuated with the increas-
ing calls for de-globalisation following the COVID-19 crises – although the analy-
sis was done in the fall of 2017 – and requires a new approach to “mapping” of these
national and corporate intangible assets (IA), suitable to inform new theories and
policies to free up these most sustainable resources of all. The real prospect of
reduced trade in goods and services, which is the main source of wealth of most
nations today, then only emphasises the importance of IA and trade in ideas.
The book is based on a pre-study report of Sweden, the four Nordic countries and
three similar small high-education and high-tech countries and points at the need for
structural changes, in particular: mapping of national IA in new ways, getting new
ideas into the education system to respond to the new economy and coordination of
IA management across agencies and firms, as container ports increasingly are being
replaced by knowledge ports. The report was funded by Vinnova.
The pre-study begins with addressing the Intangible Asset gap in competitive-
ness for Sweden, then Norway, Finland, Denmark (Nordics) and finally Switzerland,
Singapore and Israel comparing their relative competitive positions in a number of
IA dimensions. Policy discussions in a new IA era follow. Strategic initiatives to
coordinate such policies at national and international levels to close the gap are then
outlined. The book ends with the outline of a tentative workshop to begin addressing
the issues with across-the-board stakeholders from business, university and govern-
ment, addressing the structural changes for a more dynamic economic system.
v
vi Foreword
The authors hope that this policy brief can be an inspiration for a discussion on
“the IA gap” and the workshop a way to engage a range of stakeholders, especially
for small high-tech countries facing increasing global competition.
Fairfax, VA, USA Eskil Ullberg

Stockholm, Sweden Leif Edvinsson
Taipei, Taiwan Carol Yeh-Yun Lin
Preface
This book aims to improve awareness of the value-creating capacity of intangible

assets (IA) – skills, intellectual property rights such as patents and trademarks,
brands, software, big-data sources, organisational structures and processes, and
other assets stemming from human creativity – and alert stakeholders for strategic
action. The material, based on a pre-study, already includes implications for strate-
gic initiatives by means of “options” in the form of projects designed to respond to
the challenges of, in particular, small countries’ competitiveness in a global world.
These options can be prioritised in a follow-on workshop or colloquium including,
but not limited to, METI Japan, OECD Paris, World Economic Forum, Ministry of
Enterprise and Innovation and other ministries, IP offices, and innovation agencies.
All three current top-level international policy dimensions are used to frame this
discussion: economic, social and environmental.
The understanding of the economic, social and environmental value of intangible
assets needs both taxonomy, economic understanding, institutional structure and
taxation policy as well as metrics. The pre-study offers emerging research, proto-
typing and practice insights of the last 30 years on a global scale. One such proto-
typing activity for IA is artificial intelligence (AI), making an important connection
to digitalisation and mathematics as critical future competence areas.
Digitalisation may lead to a more unequal distribution of income (see OECD
reports), which then may lead to social unrest. Without policy initiatives for equal
access to (opportunity for) digitalisation for all, political rest may lead to social
unrest. There appears to be lack of awareness also of artificial intelligence – span-
ning from political to technical processes – where some scenarios estimate that AI
may replace up to 50% of both blue-collar and white-collar work. This may shift
attention away from economic dimensions to the societal and environmental dimen-
sions as criteria for what can be considered “work”, accelerating long-term unequal
distribution through a widening intangible asset IA gap among individuals and
countries.
A main message in this pre-study is thus that the answer is not necessarily “more
resources” – a common political response relying on the same structure – but rather
about strategic decisions regarding resource allocation and the development of new
vii
viii Preface
and innovative structures and new IA resources. This is best done through an
experimental approach of institutional learning. In an era of knowledge, networks,
and circular and digital economies, there is room for many small-country initiatives
as well as the promotion of trade in ideas.
The strategic conclusion from this pre-study is a proposal of a series of initiatives
in the form of concrete projects – experiments – backed up by maps and policy
discussions covering a range of IA-related topics.
Discussion of these strategic initiatives can favourably be initiated in a workshop
(colloquium) to identify priority areas for investment and actions in order to retake
or advance small nation’s competitive position in IA.
Acknowledgements
This is an awareness book for knowledge navigation. It highlights a longitudinal

shift from Trade in Goods to Trade in Services on to Trade in Ideas. A special thanks
to Sarah Lidé who contributed to the editing of the initial pre-study report. The book
is based on a pre-study of the situation in Sweden, funded by the governmental
innovation agency, Vinnova.
ix
Executive Summary
Intangible assets (IA) and intellectual capital (IC) are not new phenomena – intan-
gibles have been strategic for companies and nations for a number of decades,
spurred by the increasing contribution that services make to GDP, in contrast with
the previous incumbent manufacturing and agricultural sectors. Some estimate that
today, at least two-thirds of company value and national wealth come from IA.
Despite IA and IC’s rising prominence in the economy, the awareness and under-
standing of how these intangibles relate to economic growth has not kept pace. IA
includes all non-physical assets of a firm or county, such as intellectual property
rights (patents and trademarks, etc.), skills, brands, software, big-data (information
on processes, human behaviour and nature), organisational structures and pro-
cesses, and other assets stemming from human creativity. IC can be seen as a subset
of IA with a capitals approach, where market (financial) capital is distinguished
from other capital created as a relative measure for firms and nations. The develop-
ment of appropriate policy measures and management tools for IA and IC, in order
to better capture and incentivise productivity gains and value creation resulting
from intangibles, appears still in their infancy, both among governments at the
national level as well as among enterprises. Most of the current discussion has been
centred on intellectual property (IP), which resides on the balance sheet as goodwill
and is one of the more explicit forms of intangibles. But IC and IA spans many more
dimensions, as this pre-study illustrates, to encompass, among others, human, pro-
cess, market and renewal capital dimensions (see Fig. 1).
A key purpose of this pre-study is therefore to increase the awareness among
policy makers, investors and business managers on the importance of leveraging
national and company IA for increased and sustainable economic growth. Both a
national and firm perspective are taken. The study of countries is a small country
comparison (the assumption is that small countries share similar challenges in a
competitive world), starting with Sweden. Then we expand to a comparison between
Nordic countries – Norway, Finland and Denmark – and finally more globally but
still small countries – Switzerland, Singapore, and Israel – when it comes to national
intellectual capital (NIC) in a relative country comparison. An international large-
country summary of company measures then follows, discussing methodological
xi
xii Executive Summary
Intellectual property Goodwill

(inventions, designs, brand
names, symbols, etc.) Intellectual Property
Human capital Intangible assets

&
Renewal capital
Intellectual
capital
Market capital
Process capital
Fig. 1 IP and goodwill are just the tip of the IC and IA iceberg
issues to capture IC at company levels. The country comparison is described in

Chap. 2 through a series of maps developed from a database of 48 indicators across
59 countries over 18 years and the firm method’s overview in Chap. 3.
From these country maps, a number of key observations emerge. For one, as of
2018, Sweden is positioned among the top five countries in the world when it comes
to NIC. While this strong showing is not to be taken lightly, it masks some underly-
ing currents that point to concerns relating to Sweden’s future competitiveness.
When looking at the level of the Nordic countries, Sweden was a NIC heavyweight
in the beginning of 2000. However, it has been recently overtaken by its Nordic
peers across a number of dimensions. For instance, despite sharing a similar account
balance in 2001, Sweden was surpassed by Denmark in this area in 2018. Similarly,
Denmark overtook Sweden in 2018 in relation to both government efficiency and
research articles, two of Sweden’s strong points, with Norway catching up as well.
Sweden seems to also be lagging behind Finland in terms of utility patents, and los-
ing ground to Norway when it comes to venture capital.
Taking a more global perspective of other small high-tech nations, Figure 2 pro-
vides insight on Sweden’s trajectory over 18 years in terms of renewal capital and
GDP per capita, in comparison with Singapore, Switzerland and Israel. Renewal
capital speaks to a nation’s capabilities in and investments towards increasing its
competitive and sustainable strength in future markets and is a key explanatory fac-
tor to a nation’s GDP per capita. As the map tellingly reveals, the trajectories of the
four countries are markedly different: Sweden, while improving in GDP, faced a
steep backtracking of (relative) renewal capital before remaining relatively stagnant
in recent years; Singapore has performed best in GDP growth with a slight corre-
sponding increase in renewal capital; Switzerland has performed the other way
around, with a strong growth in renewal capital and a modest corresponding growth
in GDP; and Israel, in the early years, shared a similar trajectory with Sweden, but
has pulled back and is now improving rapidly in renewal capital, with a slight
Executive Summary xiii
GDP per capita in USD ?
140%
120% Singapore
Switzerland 2001
100%
80%
Switzerland
Sweden
60%
40%
Israel
20%
Singapore 2001
Israel 2001 Sweden 2001
1 2 3 4 5 6 7 8
Renewal Capital ?
DATA DOUBTS
Fig. 2 Renewal capital vs GDP per capita (PPP) – trajectories for Sweden, Singapore, Israel and
Switzerland. Post 2008 crises, we don’t see much renewal capital developed
c orresponding growth in GDP. However, following the post-2008 crises we don’t

see any development of renewal capital in any of these nations. This is a sign of
concern. Could this be “complacency” in IA-development policies?
Sweden has thus come to a set of crossroads for decision-making. Should Sweden
decide to do nothing, it runs the risk of continuing to stagnant or backtrack in terms
of renewal capital, which in turn may limit its GDP performance in an increasingly
intangibles-driven world economy. If it, however, decides otherwise, then it will
need to choose if it should replicate the success and trajectory of Singapore in pur-
suing strong GDP growth in comparison to renewal capital, or if it should instead
look to Switzerland and Israel’s examples in focusing on renewal capital in conjunc-
tion with more measured GDP growth. Strategic lessons regarding resource alloca-
tion and institutional performance can thus be drawn. Sweden’s declining export
growth rates in primarily goods reflect the importance of IA see Fig. 3.
If we also compare a macroeconomic variable like exchange rates, the currency
development may be a result of renewal capital investments, in turn, creating export
income from IP. The CHF’s development post 2008 is related in part to its “reserve
currency” status post crises see Fig. 4.
Chapter 3 then shifts the focus onto how IC and IA, to date, has been applied at
the enterprise level. While there are a number of approaches to enterprise IC (posi-
tioning, navigating and managing IC), there are a handful of national and regional
level initiatives, for example the multi-stakeholder approach adopted by Japan and
the government-driven IC Statement initiative in Germany, that have furthered the
more productive use, management and reporting of enterprise intangibles. There,
however, seems to be a lack of such driving, coordinating and unifying initiatives in
Sweden in relation to IA and IC among enterprises.
xiv Executive Summary
Export Growth Sweden by IP, Goods and Services

10000
+6.6% pa L.T. Goods

+3.0% pa post-2008 (-55%)
1000
+7.5% pa Servies L.T.

+6.6% pa post-2008 (-12%)
Billion SEK
100
+9.7% pa IP. L.T.
+7.3% pa post-2008 (-25%)
10
2001
2009
2011
2023
2028
1975
1981
1983
1987
1991
1995
2005
2013
2017
2021
2025
2027
2030
1977
1979
1985
1989
1993
1997
1999
2003
2007
2015
2019
IP Goods
Graph: Services Goods post-2008 Source:
E. Ullberg IP post-2008 Services post-2008 SCB/Riksbanken
Fig. 3 Long-term and post-2008 export growth rates for Sweden in IP, goods and services
What is clear from Chaps. 2 and 3 is that the IA and IC perspective has to come
to bear much more in policy decisions to ensure enduring national competitiveness
across economic, social and environmental spheres. Current complacency in
national and business policy may be due to the lack of understanding of IA and IC –
what they are and how they impact competitiveness – and as such, investments into
key strategic initiatives would support the bridging of this knowledge gap and pro-
vide a sound basis for informed and forward-looking policy development and deci-
sion-making. Also, investment growth in general has been weak after the great
recession of 2008, impacting trade growth as investment is a major driver of trade.
The Proposed Initiatives
Some of the dimensions that should form a part of this work, as captured in Chaps.
4 and 5, include the impact of COVID-19 (and future pandemics) on trade patterns
and their shift towards trade in ideas, thus emphasising IA more than product and
services, the implications of digitalisation on IA and competitiveness, IA in relation
to the Sustainable Development Goals (SGDs), the impact and role of IA among
high-valuation start-ups popularly known as “unicorns”, and even an eye to what
emerging superpower China is doing in the field of intangibles as a harbinger of IA
and IC’s influence on future global markets and national competitiveness.
Executive Summary xv
Fig. 4 Exchange rates are typically affected by the trade balance, which may, in turn, be affected
by the renewal capital resulting in export revenues from IP
In particular, the calls for deglobalisation after COVID-19 suggest that the digital
communication infrastructure will increasingly be used, which means that the
opportunities lie in trade in ideas. This appears essential for an economy whose
GDP predominantly comes from IA. For small high-tech nations, whose wealth is
tied to the expansion of trade, this issue is likely to become a high-priority policy
issue that needs to be addressed.
Given Sweden’s and many high-tech small countries’ status as a developed econ-
omy, the strategic focus should lie in a strategic understanding of where and how to
invest a nation’s resources for future national competitiveness, that is a more tar-
geted approach to investing for the future as through the lens of IC and IA. To this
end, the list of suggested initiatives in Chap. 6, prioritised according to strategic
importance and urgency, provides a good starting point (see Fig. 5). These initia-
tives, in order to be effective and sustained in their outcomes, should be centred
around and driven by the strategic hub, a multi-helix stakeholder approach to coor-
dination with key alliances both nationally and globally. The strategic hub should in
turn be supported by the IA Observatory, a future-oriented prototyping “lab” or
think tank that generates the knowledge, research and evidence required for strate-
gic prioritisation and informed policy and decision-making.
xvi Executive Summary
Fig. 5 Report overview linked to strategic initiatives related to IC and IA
Authors’ Briefs
This section includes the three authors’ briefs focusing on the situation in the case
of Sweden. However, similar arguments can be made for many other small countries
at the crossroads between complacency and globally competitive initiatives closing
any gap in IA.
Creating High-Risk, High-Potential Ideas, by Eskil Ullberg
To develop a strategy to remedy the apparent Swedish decline in IA, new steps have
to be undertaken. This is a particularly risky and uncertain endeavour. However, risk
taking is not something Sweden is known for today. Small and rather safe steps,
based on proven concepts, often from abroad, are taken in economics, academia and
industry, with only a few outstanding examples in the digital music industry, digital
payments and digital communication which have global markets, global funding
and globally sourced management. Policies also appear to closely follow European
pre-defined paths, rather than reflecting the path-breaking that was created by inven-
tors and innovators funded by a banking industry of the last century, including
Ericsson, ABB (ASEA), Atlas-Copco, VOLVO, SKF and many others.
This pre-study thus adds to the OECD reports of 2012 and 2016, which were
sprinkled with warnings, but unlike those reports, the pre-study does not stop at the
analysis. It proposes a future-looking strategy for investment in knowledge building
projects that can inform policy capable of retaking lost initiatives. This approach is
based on a contribution to the fundamental understanding of the most productive
assets today: intangible assets.
Executive Summary xvii
Sweden’s culture of avoiding risk stands in stark contrast with, for example Israel
or Chile, who dash out funds to new high-risk, high-potential projects, with few
strings attached except “try it”, “learn from it” and “apply again”. In Israel, through
the chief scientist’s office, a decision was made that a 50% success rate was accept-
able, with the expectation these successful projects would yield a ten-fold return.
The other half of “failed” projects would in turn lead to a three-fold return, because
these scientists, inventors and entrepreneurs would have learnt important skills – for
their next try!1 Chile has a similar system where funds are used to test new things;
possibly contributing to that Chile is considered an “innovation hub”, informally
coordinating activities across many nations on the Pacific Rim.2
From an economic perspective, the Israeli and Chilean approach solves two
problems with respect to risk: trying something new and uncertain where the results
may be nil, which will tell others (a social gain) what not to do, and since you can
apply again even if you “failed” This rule (an economic institutional issue) thus
gives incentives to long-term learning of the “right stuff” needed to ultimately
deliver the ten-fold return! Similar examples of strategic use of resources and incen-
tives to learn would be critical for Sweden, and other small countries, to break out
of the “irons” and catch new winds on the global markets.3 Extra effort is need for
this purpose.
“Learning by doing” may then not be enough to improve productivity through a
creative and inventive and “disruptive” level, relying on current innovation levels
(Arrow 1962). To break out of the irons, new creative and inventive ideas are needed,
especially in markets in these ideas, or Trade in Ideas, which are simply too com-
plex to rationalise. Experimenting with new ideas are instead needed and that takes
trial and error. Many new ideas of high potential or impact must be tried to discover
if they are grains that multiply or simply weeds that suck up the funds.
A similar problem exists in Swedish academia where the confirmation of exist-
ing theories, rather than the falsification of theories,4 is prioritised.5 The current
policy leads to a focus on marginal contributions on existing material, which is
publishable and merit building. We all know that this is not how groundbreaking
insights – “blue sky” research – come about, but this risk averseness is in academia
as well. Theories must be allowed to be rejected if we are to learn something new,
and this has to have academic merit as well.
1
Ref. to personal communication with Leif Johansson, the Swedish industrialist and former Preses
at IVA, the Royal Swedish Academy of Engineering Sciences, during the seminar titled: ”Global
competitiveness and creativity”, Stockholm 22/11/2017.
2
Ref. Personal communication with Amb. Jara, former Vice DG at WTO legal and research.
3
The “trapped” condition a sailing ship finds itself in when the bow of the ship is headed into the
wind and the ship has stalled and is unable to manoeuvre.
4
Ref. Karl Popper: A theory should be scrutinized by experiments, rejecting classical induction for
empirical sciences.
5
Ref. Communication by Prof. Nils-Eric Sahlin at IVA 27/11/2017.
xviii Executive Summary
What is missing are thus incentives to learn. These require funding of high-risk,
high-potential ideas, both academic (science) and industry (technology-inventions).
The only way to learn this is by experimenting with a large number of ideas. We
need to “water the ground”, not simply do “hard prioritization”.6
We may thus not need a new rational approach to growth, but an age-old under-
standing of the high risk of ripping up the future before fruition with the rational
argument of price (value) equating to marginal cost. In the short term, when all risk
is gone, “yes” (for the sake of efficiency), but in the long-term a resounding “NO”.
Growth happens only through high risk-taking by real people, taking personal risks
with money and careers.
Creating a culture of risk-taking would be the medicine for Sweden. (Ullberg
2015, Chap. 5).
Practically, to reduce risk in order to spur investment in new ideas, I would also
propose the “creative company” (Ullberg 2012) which shifts the incentive from
more of the same to more of the new by reducing risk in inventions through zero
taxation, setting the goal on technology that can be sold, and making the incentives
to invest rationally through high capitalization.
Then a research program on risk-taking in Sweden – or any other small high-tech
country in need for the same – should be started, favouring falsification as method
and learning by trying new high-risk high-potential ideas.
eading a Weakening IA Nation or at Crossroads,

L
by Leif Edvinsson
If Sweden wants to take a lead in IA and IC, timely and comprehensive mapping of
these dimensions is of utmost importance. This pre-study has shown that while
Sweden is currently a leader in NIC, its weakening renewal capacity sends an early-
warning signal of future decline. Further, the impact of the 48 NIC indicators on
Sweden’s future outlook is far greater than most realise. For companies, current
accounting standards have yet to be universally updated with IA and IC indicators
into an integrated new map for enterprises. The taxonomy of these hidden intangible
values exists, but is not yet commonly understood and is often mixed up. In turn,
while the current hidden value of IA may be an asset, if it is not cultivated appropri-
ately it may develop into an intellectual liability for future generations.
For the past 20 years, there has been a growing number of methods and models
for IC and IA. These have however not become common practice; a new IA frame-
work for Sweden might be needed.
In this area, Sweden can build on prototyping efforts already ongoing in several
countries through strategic alliances. The so-called digital economy evolution offers
6
Leif Johansson, idem, on how his “life lessons” can be summed up: don’t prioritize too hard,
instead try different things which may work at the end of the day.
Executive Summary xix
the global ecosystem the opportunity to engage with new trade patterns, for instance
the global digital distribution of health services based on life science research out
of Sweden.
The outlook for trade on IA is most likely going to be reinforced by the emer-
gence of robotics and artificial intelligence. BMW is already in progress with
”cobots” as collaborating robots, which would be, from an IA and IC perspective,
human capital in co-creation with robotic structural capital. The key is said to be
optimising the equation between human capital and the robot as structural capital,
according to an opinion piece by consultant Sara Öhrvall in Dagens Industri (Öhrvall
2017). This may well be achieved with the Chief Robot Officer replacing or chal-
lenging the traditional HR function.
One thing is clear – business as usual would consign Sweden and even Europe to
a gradual decline, to laggards in the new global order. Sweden needs to take bold
and decisive measures to ensure it remains relevant and competitive for the future.
rom the Outside In: Perspectives from a Third Party,

F
by Carol Lin
As an Asian scholar far away from the Nordic region, I have the advantage of
observing then speaking as the so-called candid third party. However, I also have the
disadvantage of not knowing the local context and historical economic develop-
ments sufficiently, thus running the risk of making inappropriate suggestions. My
interpretation of the maps is solely based on the data I have at hand, the derived
graphs and the comparisons that I found to be meaningful for policy makers.
Sweden is definitely still at the top of the NIC world map. However, like an ath-
lete, it is difficult to remain a champion indefinitely, with newcomers constantly
aiming to surpass the incumbent. However, Switzerland is a special case and has
stayed as a champion for many years, not just in NIC but also in terms of GDP per
capita. The motor behind Switzerland’s two-pronged achievement thus becomes an
interesting area for Sweden and other high-tech small countries to explore.
In the development of this pre-study, I have had the very pleasant experience of
working together with the co-authors – Leif Edvinsson and Eskil Ullberg – who
would like to see Sweden maintain and even increase its competitiveness in the
global economy. I admire their earnest concern over the potential decline in Sweden
resulting from complacency or ignorance of competition from around the corner,
especially from certain small countries that have become strong in innovation and
R&D. I can feel their eagerness to introduce different models of IA – the source of
future competitiveness – so that readers may know how to examine, measure and
capitalise on these precious intangibles resources for future national prosperity and
well-being. I sincerely congratulate Sweden for having such devoted scholars and
practitioners, which will certainly forge the way forward for Sweden to achieve a
sustainable national well-being!
Contents
1 Introduction�� 1
Part I Maps to Tell a New Story

2 IC and Long-Term Wealth Creation at the National Level�� 13
3 IC & IA Mapping at the Global Enterprise Level�� 37
Part II Policy Discussion in a New IA Era

4 Policy Implications�� 53
5 Discussions of Further Dimensions�� 57
Part III Closing the IA Gap

6 Strategic Initiatives�� 67
7 Workshop�� 73
Part IV Emerging New Trade Structures and IA

8 The Urgency of the Topic of IA for Sweden�� 77
Appendices�� 79
References �� 95
Author Index�� 99
Subject Index�� 101
xxi
Chapter 1
Introduction
This pre-study aims to trigger a discussion of small high-tech countries’ strategies

for the future, beginning with Sweden given observed indications and resulting
implications of policy complacency in an economy relying on intangible assets (IA)
for its economic growth. The study has two main angles: a country (macro) and a
firm (micro) perspective on the use of IA. It explores what options exist–expressed
as projects–to learn about this field in-depth in order to better inform policy. Such a
strategy discussion would include the “triple-play” of economic, social and environ-
mental concerns, where the environmental concern ends up in the denominator as an
asset. Just like with mining, in the area of IA one has to constantly mine and find
new ores to stay in business. In fact, this mining has reducing returns in IA–an expo-
nentially increasing research is needed to sustain productivity–calling for new, more
experimental, structures of learning to find new ores1.
Although Sweden is the starting point in this pre-study, a comparative study of 7
small high-tech nations is discussed, including the Nordic countries–Norway,
Finland, Denmark–and European and non-European countries–Switzerland,
Singapore and Israel. Given this broad geographic scope, the study may be relevant
for other small high-tech nations as inspiration for further studies of countries and
regions.
International initiatives in IA by large firms in large countries–German, Japan,
USA–are then discussed and the value of those frameworks for firms in smaller
countries.
By creating maps to tell a new story, we hope this will stimulate a policy discus-
sion in a new IA era, closing any observed IA gap in competitiveness and overcom-
ing observed complacency in economic, social and environmental agendas. The
See for example Bloom et.al, 2020, Are ideas getting harder to find?, AER 110(4).
1
© The Editor(s) (if applicable) and The Author(s), under exclusive license to 1
Springer Nature Switzerland AG 2021
E. Ullberg et al., Intangible Asset Gap in Global Competitiveness,
SpringerBriefs in Business, https://doi.org/10.1007/978-3-030-55666-2_1
2 1 Introduction
emerging challenge to global trade, clearly accentuated by COVID-192, is

challenging small high-tech nations whose wealth is dependent on trade. This will
receive a special comment in the last section.
The goal of this pre-study has been to discuss these key questions and point at
what needs to be done in a broader scope of small and large nations, thus its scope
is targeted for a first policy brief.
1.1 Loss of policy Initiative and a New Strategy Response
In an IA-based economic system where intellectual property and intangible assets

dominate the wealth creation, one needs to be on the top of IA in the world and find
unique national specialisation, as no single country can lead in all fields today. This
discussion is thus not only about knowledge, but also about the use of knowledge as
a productive asset – personal human capital, corporate know-how, national intel-
lectual capital and intellectual property rights – for the purposes of a triple policy
agenda trying to integrated economic, social and environment issues.
The pre-study starts with the Swedish long-term competitive advantage, a multi-
generational issue, by comparing its continued development of IA with that of other
nations. This requires an understanding of the “map” of where the ores are and what
quality they possess. The incentives to mine the most profitable ores – or IA – then
rise to the surface of the policy debate.
In a global world, this is an incomplete contract3 problem: if we disclose our
findings in order to exchange and specialize under contracts where not all contin-
gencies can be specified, for practical purposes, this leaves uncertainty in the out-
come of the agreement. This uncertainty needs to be managed by someone for
increased growth to take place. According to this theory only high-risk assets would
then be suitable for governments to manage whereas all other would be privately
developed and managed. One thing is certain, however – the importance of and
demand for different types of IA changes over the decades, which in turn has long-
term implications for nations.
An example here is the telecommunications industry, prominently represented
by Ericsson in Sweden, who are among the world experts in radio technology (elec-
trical engineering), now on its fifth generation. However, the phone industry today
is dominated by smartphones, which creates the demand for software engineers, an
apparently scarce resource in Sweden due to a lack of investment in or late shift
towards this area by universities. This may, in turn, be attributed to a close connec-
tion between the incumbent industry and state universities, thus highlighting the
need to focus on understanding of the dynamics provided by for example the
2
See for example The Economist, May 16, 2020, “Has covid-19 killed globalization?”: Goodbye
globalization – the dangerous lure of self-sufficiency.
3
This theory was proposed by Oliver Hart, for which he received the Nobel Prize in Economics.
1.1 Loss of policy Initiative and a New Strategy Response 3
incomplete contract theory. Now, with the advent of 5G, the telecom industry is
betting heavily on the Internet of Things (IoT), which entails an extensive reliance
on software to enable the communication of billions of entities across factories,
transportation systems, homes and the world. IoT is further moving to integrate
with artificial intelligence (AI), where mathematics is a key area and where Sweden
has not ranked at the top for the next generation but possibly is recovering4. This
example, with its caveats, shortcomings and nuances that cannot be expressed in an
introduction, still illustrates the new challenges companies and nations face when
IA is a dominant factor.
Here, nations have pursued different strategies: In the US, human capital forma-
tion is viewed primarily as an individual financial investment, a private capital,
whereas in Germany, knowledge is seen much more broadly as a cultural obliga-
tion, resulting in vastly different strategies by governments. Both have the same
goal – to expand the triple-policy – but have resulted in very different education
systems: one appears more anchored in future creativity building on the past, while
the other is anchored in the past to build the future. Such divergent ideas to achieve
the same goal are perhaps best reconciled by Sir Winston Churchill: “A nation that
forgets its past, has no future.”
To begin to address these issues, several maps of seven small high-tech countries
fairs in the global competitiveness across several measures of IA have been created.
Starting with Sweden, then Nordic, then Switzerland, Singapore and Israel, these
maps are the basis for country comparisons in this pre-study. An emerging message
from these maps is that over the past decade, despite the public discourse that
Sweden is an “IA super power”, Sweden appears to have been falling for the last
15 years from a particularly good position across these IA measures, which may
have resulted in important loss of initiatives in policy. If there is a change in trend
from the lower levels, which can be seen since 2015, and this trend is sustained,
there is an important catch-up strategy work to be done. Similar challenges appear
to face other countries. As time-to-market is instrumental in the digital economy,
this may be a particularly alarming fact.
As this is an extremely complex problem which goes to the heart of creativity, a
first measure of static parameters is used to create the set of “maps”. They are based
on models initially developed for enterprise use in the 1990s, but subsequently
broadened to national level from early 2000s, which now provides long time series
of data from a macro perspective.
The maps captured in this pre-study reveals the IA gap of countries, in relative
measures, and exemplifies changes in position within this select number of smaller
countries.
4
See PISA studies for the last decade, where, in 2015–2016, Sweden places itself in the second
group (450–500) of math, science and reading, together with Israel. The other Nordic counties are
in the first group (>500) with Singapore (#1), Switzerland (#15). In the 2018 and 2019 study
Sweden just makes it back to the first group. This is a possible hopeful trend after 15 years of
downward slope. Source OECD 2015–2016, 2018, 2019.
4 1 Introduction
This raises the question on how possible links to the triple policy questions can
be developed through follow-on projects. These projects will attempt to fill the gap
of knowledge between IA and policy, in particular providing a better understanding
of some mechanisms through which IA created value and thus competitive advantage
for the mapped and other countries. The pre-study and follow-on projects may then
inform on a preferred road to practical and implementable strategies.
To this end we propose the development of frameworks to think about IA and
global competitiveness, including projects for further fact gathering. This can be
done through stand-alone projects; however, this can also be achieved through a
coordination of all facets via a future “laboratory”, starting with workshops based
on input from this pre-study and others.
The current pre-study thus tries to close both a gap in how we think about the
connection between national intellectual capital and corporate intellectual capital,
as well as the actual (relative) gap, beginning with Sweden’s position with other
countries in the world.
In summary, the study will outline initial findings and background material–pro-
posing a number of options for further research projects–intended to inform an
updated policy discussion, and enable the retaking of any lost policy initiatives by
improving frameworks for approaching IA as well as formulating a global IA strat-
egy for Sweden and similar small high-tech counties.
1.2 Looking at IC from Macro and Micro Vantage Points
How are IA then mapped as they touch such a broad rate of strategic issues? We will
start with the study of Swedish competitiveness in this introduction, then expand to
other small high-tech countries.
Intangible Assets, IA – skills, intellectual property rights such as patents and
trademarks, brands, software, big-data sources, organizational structures and pro-
cesses, and other stemming from human creativity – contribute more to economic
growth than other assets. Studies indicate that more than 70% of value created in
Sweden comes from national IA, sometimes referred to as national intellectual
capital (Lin and Edvinsson 2011). They outperform physical assets by 60% and
financial assets by more than 200% (Lev and Gu 2008). Trade in ideas – net royalty
payments for use of intellectual property rights (Ullberg 2012) – represent in broad
terms a whopping 20% of the Swedish trade balance5. The returns on these intan-
gible assets may be quite substantial and a tangible expression of the knowledge
economy. This concept appears to be important in better understanding, by means
of a market mechanism, the value of this relatively new economy. These dimen-
sions as well as other emerging themes such as digitalisation in society and the
5
This estimate is based on approximate balance of payment data from 2016. Source: Sveriges
Riksbank, SCB
1.2 Looking at IC from Macro and Micro Vantage Points 5
Fig. 1.1 Overall national IC, NIC percentage share of GDP 2011. (Source: Ståhle & Ståhle)
importance of intangibles for fast growing company start-ups such as “unicorns”

will be captured in a broader discussion on IA and Swedish competitiveness, out-
lined in this report from national (economic) and corporate perspectives.
A better understanding of the mix of IA at a global level, including both com-
pany and national perspectives of such resources, as well as their size, growth and
efficiency in a country’s economy, is discussed through mapping and comparing
nations in a way that is useful for national policy, companies, as well as education
on IA. It is therefore important to explore the potential contribution of such IA to
economic growth, i.e. how supply and demand of these assets affect competitive-
ness of nations. This is a matter of taxonomy and economic analysis, to capture the
role these assets increasingly play in value creation in an economic system through
firms. In other words, the aim is to increase the level of literacy in Intellectual
Capital (IC) and Intangible Assets.
From a macro perspective, National Intellectual Capital’s (NIC) impact in GDP
formation ranges from 16% to 72% of GDP (see Fig. 1.1). According the same esti-
mates, NIC’s impact on GDP annual growth varies from 0.25% to 2.15%. In
advanced economies, close to 75% of GDP growth can be traced back to NIC (based
on the period of 2001–2011).
One purpose of this pre-study is thus to increase the awareness6 among policy
makers, investors and business managers on the importance of leveraging national
6
During a joint workshop with the European Commission on “How patent markets can create
growth?”, the number one issue of concern was not any technical issue but the lack of awareness
among policy makers and smaller firms on the importance of IP for economic growth (ref. http://
report.ullberg.biz). This “result” has been known for at least a decade (ref. work by Edvinsson,
others) thus giving the report some urgency.
6 1 Introduction
and company IA – including intellectual property rights – for increased economic
growth. This is not a new issue; it has been around for at least four decades, around
the time when services overtook manufacturing and agriculture in terms of GDP
contribution, demanding new measures of the intangible assets now dominant in
production.
Today, at least two-thirds of company and national wealth can be attributed to
these “high-octane” assets from human creativity. However, the management of
intangible assets and policy for incentivizing the creation of intangible assets result-
ing in productivity gains–what and how they contribute to value creation and how
much–appears still in its infancy for most companies, economists and policy mak-
ers. Even at a level of world trade statistics, basically only goods have a good statis-
tics, many struggle with services. The system is triggered by “products crossing
borders”.
The move from an industrial to a service and IP economy was a paradigm shift
that already took place some 35 years ago (this dramatic development is captured in
Fig. 1.2, given the currently available data). Now the challenge is for both national
and company level policy and decision makers to come to a strategic understanding
of intangibles.
The proposal is based on decades of work for firms and governments in particu-
lar in the fields of intellectual capital (Edvinsson and Sullivan 1996), national intel-
lectual capital (Lin and Edvinsson 2010), and intellectual property, with the latter
focusing on patents (Ullberg 2012). The basic division of IC is based on the struc-
ture in Fig. 1.3.
The initial value scheme of IC, develop initially from a company perspective,
was later adopted to a national level with essentially the same structure (see Fig. 1.4).
A further development was done in the ELSS model. This latter model is expanded
Fig. 1.2 Trade balance in royalty and services in Sweden

1.2 Looking at IC from Macro and Micro Vantage Points 7
Intellectual Intellectual
Property Assets
Process
Innovation Capital
Capital
Organisational Relational
Capital Capital
Structural Human
Capital Capital
Intellectual Financial
Capital Capital
Market
Value
Fig. 1.3 Intellectual Capital Value Scheme. Model developed by L. Edvinsson. (See for example
Edvinsson and Sullivan 1996)
Fig. 1.4 National intellectual capital sums up corporate intellectual capital
into 48 indicators across four categories – human, market, process and renewal
capital – and is a static model which estimates these assets as capital. A dynamic
model for national IC is still to be developed and is a potential follow-on discussion
to the pre-study.
The importance of renewal capital combined with structural capital, for, among
other things ecosystem impact, is stressed by Ståhle and Ståhle (2012). Based on
2010 data of 59 countries, renewal capital explains about 37.6% of GDP per capita
(PPP). As a part of the Digital Agenda initiative, a favourable Internet broadband
8 1 Introduction
environment increases 11.4% of GDP per capita (PPP) together with renewal
capital. A lower investment risk environment increases 5.2% of GDP per capita
(PPP) together with renewal capital.
1.3 Trade in Ideas Impacts the Organisation of Markets
A parallel concept concerned with property rights is Trade in Ideas7. This covers
both the IP-based trade, like patents, but also trade secrets and other IP bundled in
products and services. A trade strategy would offer Sweden increased leverage to
human capital formation in Sweden. If we separate out IP from IA and IC, the
remaining assets –which includes human capital formation – then represents the
“generators” of tradable IP. Understanding the interaction between these generators
of IP and the IP itself is a formidable task well suited to be organized in a more
efficient labor market, education system, and international collaboration, in basi-
cally all areas where Sweden is not strong. For instance, human capital formation,
which is part of IC, goes beyond the linear processes of education, but encompasses
the accumulated knowledge and experience of each individual. We therefore need to
better understand Sweden’s competitive strengths in terms of such IC generators,
for example expertise in audio mixing, radio technologies, etc., their interaction
with the IP system, how these aspects impact the organization of various markets.
1.4 Addressing the IA Gap
What is then the IA gap for Sweden, the Nordics and other small high-tech countries
with respect to global competitors, and what are some key options to better under-
stand this dynamic problem in the light of economic, social and environmental
policy challenges?
Advancing Theory
This pre-study is about beginning to improve our framework for understanding and
approaching IC and IA. The pre-study gives a brief but strategic overview suitable
for a beginning policy discussion defining areas of further investigation useful to
improve our extant frameworks and theory. Some of the projects may therefore
focus on data collection and a range of formal models in order to advance theory. To
quote American political economist and Nobel laureate Elinor Ostrom:
“To explain the world of interactions and outcomes occurring at multiple levels, we also
have to be willing to deal with complexity instead of rejecting it. Some mathematical mod-
els are very useful for explaining outcomes in particular settings. We should continue to use
7
See www.tradeinideas.com for information on this concept and work to advance trade, statistics,
and policy development through field experiments and higher education.
1.4 Addressing the IA Gap 9
simple models where they capture enough of the core underlying structure and incentives
that they usefully predict outcomes. When the world we are trying to explain and improve,
however, is not well described by a simple model, we must continue to improve our frame-
works and theories so as to be able to understand complexity and not simply reject it.”
Characterizing IA and Identifying Research Projects

This pre-study therefore has two purposes: characterising IA, including a taxonomy,
and the impact of intangible assets comparing Sweden with other countries; and
identifying research projects and practical experiment options to better understand
the Swedish and other small high-tech countries’ IA gap for competitiveness in a
global world. The results of these proposed projects and experiments will then
inform strategy for regaining policy initiatives in the area. In summary, the study
will be identifying initiatives for research project to:
• Advance theory
• Improve frameworks
• Create a taxonomy for AI for awareness
• Propose a field experimental approach for institutional learning
• Conduct a high-level workshop/colloquium to follow-up on this study
Part I
Maps to Tell a New Story
Chapter 2
IC and Long-Term Wealth Creation
at the National Level
In the past, tangible resources may have decided over 70% of a nation’s economic
growth. Nowadays, intangible resources are becoming the larger contributor to not
only national economic growth but also national well-being, which in turn captures
non-financial factors such as health and happiness of a country’s citizens. Global
tangible resources are limited and depleting day by day, whereas intangible
resources, such as knowledge, instead accumulate over time. In February 2013, the
newspaper the Economist ran a special report on the success of Sweden, Denmark,
Norway and Finland – collectively known as “the Nordics”. These countries rank
near the top across various benchmarking reports measuring the health of a society,
from perspectives such as global competitiveness, ease of doing business, global
innovation and prosperity. The Economist was curious to understand: “Why has this
remote, thinly populated region, with its freezing winters and expanses of wilder-
ness, proved so successful?” According to the same special report, the answer lay in
a combination of honest and transparent Nordic governments, and among their citi-
zens, the ability to trust in strangers and a strong belief in individual rights. “Trust
means that high-quality people join the civil service. Citizens pay their taxes and
play by the rules. As a result, government decisions are widely accepted.” (The
Economist 2013). Furthermore, in addition to continuous structural reforms, the
Nordic countries invest in human capital and protect people from the disruptions
that are part of the capitalist system.
In essence, the Economist’s special report revealed that the Nordics’ secret rec-
ipe for success lies mainly in intangibles, including honesty, transparency, trust,
individual rights, structural reforms, and human capital. Given the increasing role
that intangibles will continue to play among global economies, will the Nordics
maintain its status as “leader of the pack”, or are there hidden complacencies that
may drive performance downwards instead? To gain insights into the Nordics’
future competitiveness as seen through the lens of intangibles, we turn our attention
in the coming sections to exploring measurements and models for national intel-
lectual capital, with specific application to Sweden.
14 2 IC and Long-Term Wealth Creation at the National Level
2.1 Models: How We Carve Out Our Contribution
National wealth, national competitiveness, and economic development are issues of

concern for national leaders, policy makers, and world organizations. As a result,
there have been various kinds of national rankings made, such as the World
Competitiveness Yearbook published by the International Institute for Management
Development (IMD) and the Global Competitiveness Report by the World Economic
Forum. The Organization for Economic Cooperation and Development (OECD)
also provides estimates on the potential future wealth of its member countries, mea-
sured with indicators relating to agriculture, education, health, energy, environment,
science and technology, which OECD proposed as being the new sources of growth
in the coming century (OECD 2011). More recently, the first edition of the Global
Knowledge Index (GKI 2017) was launched in November 2017, as a joint initiative
between the United Nations Development Programme and Mohammed bin Rashid
Al Maktoum Knowledge Foundation (UNDP and Mohammed bin Rashid Al
Maktoum Knowledge Foundation 2017). The index aims to measure the multidi-
mensional concept of knowledge and covers seven categories across 133 countries.
Such ranking enables national leaders to locate the relative position of their own
nation in the global arena, find a nation to benchmark against, and then strategize
their policies for securing national development and competitiveness.
In particular, the increasing recognition that intangibles are one of the most
important sources of prosperity and progress has prompted studies in the area. IC
models provide a useful conceptual means to generate insights around which intan-
gible resources are weak and which aspects of the resource deployment system can
be improved (Roos 2017). A comprehensive intangible intellectual capital model
that tracks intangibles mainly at enterprise level, Skandia Navigator, was introduced
(Edvinsson and Malone 1997). Following this, there have been a number of efforts
to assess IC at national level as well1.
For instance, declaring 1996 as the Year of Innovation, the Swedish government
together with Stockholm University modified the Skandia Navigator at the national
level to quantify Sweden’s critical success factors (Edvinsson 2002). Rembe (1999)
examined the components of national attraction from the viewpoint of foreign
investment in Sweden and proposed a strategic plan for the future development of
Sweden’s human capital, market capital, process capital and renewal capital. In
turn, The Danish Agency for Trade and Industry sponsored the development of
comprehensive intellectual capital indicators based on several Nordic and Danish
companies’ experiences; and the Norwegian government sponsored the develop-
ment of a competence capital model including intellectual capital (Malhotra 2003).
1
A number of IC assessments have attempted to lift this analysis to national level, such as the work
done by Lin and Edvinsson (2013) on Sweden, Denmark, the Nordics and Israel, as well as to
regions such as the Arab nations and the Pacific Islands (Bontis 2004; Bounfour 2003; Schiuma
et al. 2008; Ståhle and Bounfour 2008).
Readers can refer to Lin and Edvinsson (2011) for details on relevant efforts in assessing
national intangible assets.
2.1 Models: How We Carve Out Our Contribution 15
In the Netherlands, four accounting firms were invited to conduct a practice-oriented

study of the country’s intangible assets. Israel has sought to identify its hidden val-
ues and the key driving success factors along its 60 years of existence in different
areas such as education, patents, the number of scientists engaged in research and
development, international openness, the computer and its communication infra-
structure (E. Pasher 1999; Edna Pasher and Shachar 2007).
These examples show how various countries have developed their own means of
measuring intellectual capital for the purpose of creating and sustaining national
competitiveness (Lin and Edvinsson 2011). The merit of such measurement devel-
opment is that each country is able to determine specific indicators relevant to
national characteristics and needs. However, different national approaches to IC
measurement do not lend themselves to a common framework for cross-country
comparison. In addition, differing regional-national statistical systems as well as
levels of data quality has resulted in inconsistencies in comparison and analysis
(Klein 2000). Furthermore, most national intellectual capital measurement models
analyse existing data at the input and output level (Bounfour 2003), without exam-
ining the process and renewal capability of nations. Studies that do cover process
and renewal dimensions tend to be one-off – for a particular region such as the Arab
countries (Bontis 2004) or a particular country such as Italy and Finland (Käpylä
et al. 2012; Schiuma et al. 2008) – which does not contribute to continuity in track-
ing performance over time.
To address the aforementioned constraints, Lin and Edvinsson (2008) developed
a statistically validated 28-indicator model measuring national intellectual capital
(NIC) based on data purchased from the Switzerland-based International Institute
for Management Development (IMD), a reliable database of indicators collected
over a period of almost 30 years since IMD published its first World Competitiveness
Yearbook in 1989. The NIC model was later modified and expanded to cover 48
indicators. This revised model, called the ELSS (Edvinsson, Lin, Ståhle, Ståhle)
NIC model (Ståhle et al. 2015), removed outdated indicators (such as literacy) and
included indicators reflecting current concerns (such as gender equality and free-
dom of speech). The latest update to the NIC database, performed in 2019 with the
most current data of 2018, spans yearly data for 59 countries for the period 2001 to
2018. Figures 2.1 and 2.2 show how the 48 indicators combine input/process/output
and basic/enhancer/achievement perspectives to form a comprehensive coverage of
national intangible assets (see Fig. 1 in the appendix for detailed indicator defini-
tions). These assets include human capital, market capital, process capital, and
renewal capital, and are described as follows:
Human capital (HC) includes knowledge, wisdom, expertise, intuition, and the
ability of individuals to realise national tasks and goals. It also includes the values
encompassed within the culture and philosophy of a nation. Human capital consti-
tutes a population’s total capabilities as reflected in education, knowledge, health,
experience, motivation, intuition, entrepreneurship and expertise, and are captured
through indicators such as a highly skilled labour force, the availability of scientists
and engineers, female participation in the labour force, and health (life expectancy,
physicians). Human capital provides the resources for the development and
Fig. 2.1 NIC indicators – human and market capital. (Indicators marked with an asterisk (*) are
based on expert ratings given on a scale of 1 to 10)
Fig. 2.2 NIC indicators – process and renewal capital. (Ibid)
c ultivation of other areas of intellectual assets such as R&D and training, with the
human factor being the most important link in the process of value creation.
Market capital (MC) refers to the general assets embodied in a nation’s relation-
ship with the international market. It is the aggregate of a country’s capabilities and
successes in providing an attractive, competitive solution to the needs of its interna-
tional clients, a country’s investment and achievements in foreign relations, as well
as its exports of quality products and services (Bontis 2004). The intangible assets
here include customer or national loyalty, openness to globalisation, flexibility and
adaptability, resilience of economy, as well as the satisfaction expressed by strategic
customers and national trading partners.
2.2 Maps of Sweden, Nordics, Switzerland, Israel and Singapore 17
Process capital (PC) is the cooperation and flow of knowledge that require
s tructural intellectual assets. These include: information systems, hardware, soft-
ware, databases, laboratories, national infrastructure including transportation, infor-
mation technology skills, communications and computerization, technological
readiness and telecom services, personal computers, cellular subscribers, cyber
security, quality scientific research institutions, knowledge transfer, a legal environ-
ment for entrepreneurship, a minimum number of days to start a business, a quality
management system, and agricultural productivity. Such structural intellectual
assets sustain and increase the output of human capital.
Renewal capital (RC) refers to a nation’s capabilities in and investments towards
increasing its competitive strength in future markets, which, in turn, encourages
future growth. Renewal and development assets include investments in research and
development, patents, trademarks, start-up companies, the number of scientific pub-
lications, the number of patents registered in the US, EPO patent applications, total
expenditure on R&D, and capacity for innovation.
It should be noted that the country ranking is done in a closed system with rela-
tive scores. That is, ranking is made for a fixed number of countries only (in this
case, from a pool of 59 countries). Even if there is improvement in country A, if the
improvement of countries B and C is much more than country A, it is likely that
there would be a decrease in ranking for country A. In other words, it is a ranking
based on relative performance from one country to another. Therefore, the NIC
model reveals new rising stars which countries should watch out for in terms of their
competitiveness in the global market.
2.2 M
aps of Sweden, Nordics, Switzerland, Israel
and Singapore
How does the NIC model work in practice? This section describes how the model
explains the relationship of national intangible assets to current performance and
future trajectories in terms of global competitiveness, starting with Sweden using
the Nordics as peer countries for benchmarking then expanding the analysis to
include Switzerland, Singapore and Israel.
Figure 2.3 shows historic 18-year data for renewal capital for the four Nordic
countries, as well as its trend towards 2020. The reader might recall that renewal
capital captures a nation’s capabilities in and investments towards increasing its
competitive strength in future markets. Among the four component capitals of NIC,
renewal capital is most distinctive capital that differentiates Nordic countries from
other countries. Given Sweden’s current performance in many global benchmarking
reports, which line would the reader expect to represent Sweden vis-à-vis its
Nordic peers?
The reader may be surprised to realise that Sweden, while currently ranked top
among the Nordic countries in terms of renewal capital, is nevertheless facing a
Renewal Capital of Four Nordic countries and trend to 2020

8
7.5
6.5
5.5
4.5
4
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fig. 2.3 Renewal capital of four Nordic countries and trend to 2020
Renewal Capital and trend to 2020

8
7.5
6.5
5.5
4.5
4
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Denmark Finland Norway Sweden

Trend Denmark Trend Finland Trend Norway Trend Sweden
Fig. 2.4 Renewal capital of four Nordic countries and trend to 2020 – with countries identified
downward trajectory (see Fig. 2.4, which is the same map as Fig. 2.3 but with the
countries identified). Finland is in a similar position as Sweden. The renewal capital
of Denmark and Norway, however, is on the rise. If Sweden and Finland do not
make any interventions to address their downward trajectories, Denmark will take
over Sweden as the number one Nordic country in renewal capital by 2020, and
Norway will very likely surpass Finland in 2023.
This map thus sends a warning signal to the currently high scoring countries
Finland and Sweden. The following maps elaborate on potential remedial areas that
could mitigate or even reverse these countries’ downward forecasted performance
in renewal capital, by examining other components of NIC in further detail.
Figure 2.5 illustrates the impact that NIC has on each countries’ gross domestic
product (GDP). Here, Norway has a steady growth in the correlation it experiences
140k
120k Luxembourg
Singapore
100k
Norway 2018
80k Norway 2001 Switzerland
Sweden 2018
60k
Denmark
2018
Finland 2018
40k
20k
Denmark 2001
Finland 2001
Sweden 2001
22 24 26 28 30 32 34 36 38 40
Overall IC ? DATA DOUBTS
Fig. 2.5 National Intellectual Capital vs. GDP per capita (PPP) for four Nordic countries
between NIC (shown in the figure as “Overall IC”) and GDP (captured in the figure
as “GDP per capita (PPP)”). In other words, the correlation between Norway’s NIC
and its GDP is increasing. Although Norway still lags behind Denmark and Sweden
in absolute NIC terms, it has a higher level of GDP per capita (PPP). This begs a few
questions. If the main reason for Norway’s high level of GDP is its oil resources,
what would happen to Norway’s economic performance if those oil resources are
depleted overtime? Further, even though Sweden performs better than Norway in
terms of NIC, its GDP is lower than that of Norway’s. Given the increasing impor-
tance of intangibles in national economies, it could be worth exploring why
Sweden’s NIC correlation with GDP does not seem as high as Norway’s.
The three small countries at the right upper corner of the map are Switzerland,
Singapore and Luxembourg. They provide different points for bench learning for
Sweden given their strong performance in different areas. Switzerland has a strong
showing in both NIC and GDP, while Singapore and Luxembourg have GDPs that
are higher than those of the Nordic countries.
Figures 2.6, 2.7, and 2.8 provide further insight into the progress of each Nordic
countries’ NIC in relation to GDP over time.
Figure 2.6 juxtaposes Denmark’s NIC and GDP progress with that of Norway.
These two countries are seeing an upward trend in terms of both NIC and GDP,
similar to the upward trajectory they are experiencing with renewal capital as shown
in Fig. 2.4. Given their historic and future performance trends, Denmark and
Norway might possess a hidden recipe or implicit policy in NIC which other coun-
tries might wish to learn from.
When focusing in on Finland (Fig. 2.7), even though the country has experienced
some progress in terms of GDP, its NIC seems to have regressed slightly over the
past 18 years. Given that Sweden has shared a similar NIC profile and progression
140k
120k
Norway 2001
100k
2018
80k
2018
60k
40k
20k
Denmark 2001
22 24 26 28 30 32 34 36 38 40
Overall IC ?
DATA DOUBTS
Fig. 2.6 National Intellectual Capital vs. GDP per capita (PPP) for Denmark and Norway
140k
120k
100k
80k
60k 2018
40k
20k
Finland 2001
22 24 26 28 30 32 34 36 38 40
Fig. 2.7 National Intellectual Capital vs. GDP per capita (PPP) for Finland
with Finland in the past, it could be interesting to understand what Finland has lost
in its evolution of NIC that Sweden should try to avoid.
Figure 2.8 shows that while Sweden’s NIC and GDP have a positively correlated
relationship, they have both experienced slight progress over the past 18 years.
While Sweden performs well in absolute NIC terms comparing to most of its peers,
there is room for improvement in terms of GDP growth. As the reader might recall
from Fig. 2.6, Denmark and Norway are on an upward trajectory for both aspects,
which might lend some lessons to Sweden.
140k
120k
100k
80k
2018
60k
40k
20k
Sweden 2001
22 24 26 28 30 32 34 36 38 40
Fig. 2.8 National Intellectual Capital vs. GDP per capita (PPP) for Sweden
The following maps introduce the relationships between GDP and human capital,
market capital, process capital, and renewal capital respectively.
Figure 2.9 shows that among the four Nordic countries, human capital has lim-
ited impact on GDP, as reflected by a relatively flat linear progression. It is neverthe-
less worth noting that Norway has experienced tremendous progress in its human
capital over the past 18 years, having lagged behind its Nordic peers in 2001 but
landing first in 2018.
Figure 2.10 shows Denmark and Norway’s market capital (the countries’ assets
in relation to the international economy) has made good progress with correspond-
ing improvements in GDP over the last 18 years. Although their market capital
regressed during the global financial crisis in 2008 as one would expect, it picked up
from 2014 and onwards. In contrast, Sweden’s market capital and GDP both contin-
ued to grow during the financial crisis (as reflected in Fig. 2.11), and yet its market
capital started to regress and then picked up from 2016. The question thus arises as
to the reasons behind this difference in performance between Sweden and its peers
Denmark and Norway, and whether it points to potential hidden areas of concern for
Sweden’s competitiveness in the longer term.
Figure 2.12 shows Denmark and Norway’s process capital (the flows of knowl-
edge in the form of structural intellectual assets that contribute to the sustained or
increase in human capital output) in relation to GDP. Denmark experienced some
regression in its process capital during the financial crisis, unlike Norway. However,
Denmark’s process capital picked up after the crisis. Similarly, as Fig. 2.13 illus-
trates, while Sweden faced some regression in its process capital during the finan-
cial crisis, in general it has experienced a positive growth in both process capital and
GDP over the past 18 years. Among the three countries, Norway performed best in
terms of the progress made in its process capital.
140k
120k
100k
Norway 2018
80k
Norway 2001
Denmark 2018
60k
40k
Sweden 2018
Finland 2018
20k
Denmark 2001 Sweden 2001 Finland 2001
5 5.5 6 6.5 7 7.5 8 8.5 9

Human Capital ? DATA DOUBTS
Fig. 2.9 Human capital vs. GDP per capita (PPP) for four Nordic countries
140k
120k
Norway 2001
100k
Norway 2018
80k Denmark 2018
Finland 2018 Sweden 2018
60k
40k
20k
Denmark 2001 Finland 2001 Sweden 2001
1 2 3 4 5 6 7 8
Renewal Capital ? DATA DOUBTS
Figure 2.14 exhibits the renewal capital of the four Nordic countries in relation
to GDP. As noted earlier in Fig. 2.4, both Denmark and Norway have progressed
well in the area over the past 18 years. Norway in particular has caught up to levels
closer to the other Nordic countries since 2001, though as of 2018 it is still lags
slightly behind. However, Finland has been regressing in terms of its renewal capital
over the same period. These two examples in contrast hint to hidden insights behind
Norway’s turnaround performance, and Finland’s own loss of renewal capital.
When it comes to Sweden, Fig. 2.15 shows that its renewal capital has regressed
slightly over the last 18 years, with a slight negative correlation with GDP. This
140k
120k
100k
Norway 2001
2018
80k
2018
60k
40k
20k
Denmark 2001
3 4 5 6 7 8
Market Capital ? DATA DOUBTS
Fig. 2.10 Market capital vs. GDP per capita (PPP) for Denmark and Norway
140k
120k
100k
80k
2018
60k
40k
20k
Sweden 2001
3 4 5 6 7 8
Market Capital ? DATA DOUBTS
Fig. 2.11 Market capital vs. GDP per capita (PPP) for Sweden
regression began as early as 2002, far earlier than the 2008 financial crisis, and
Sweden has experienced the greatest decline in renewal capital among the four
Nordic countries. What would explain this regression, and what are some corre-
sponding early warning signals?
The following maps will seek to unveil this further.
140k
120k
100k Norway 2001 Norway

2018
80k
Denmark
2018
60k
40k
20k
Denmark 2001
3 4 5 6 7 8
Process Capital ? DATA DOUBTS
Fig. 2.12 Process capital vs. GDP per capita (PPP) for Denmark and Norway
140k
120k
100k
80k Sweden
2018
60k
40k
20k
Sweden 2001
3 4 5 6 7 8
Process Capital ? DATA DOUBTS
Fig. 2.13 Process capital vs. GDP per capita (PPP) for Sweden
It may first be worthwhile to consider Sweden’s renewal capital performance in

comparison with countries outside the Nordics. Figure 2.16 looks at Sweden versus
three small countries – Israel, Singapore and Switzerland – from the perspective of
renewal capital in relation to GDP. These three countries were chosen given their
performance in NIC and GDP, with Israel being a strong performer in renewal capi-
tal, Singapore in GDP, and Switzerland in both overall NIC as well as GDP, and are
interesting from Sweden’s perspective given similarities in population size. While
140k
120k
Norway 2001
100k
Norway 2018
80k Denmark 2018
60k
40k
20k
Denmark 2001 Finland 2001 Sweden 2001
1 2 3 4 5 6 7 8
Fig. 2.14 Renewal capital vs. GDP per capita (PPP) for 4 Nordic countries
140k
120k
100k
80k
2018
60k
40k
20k
Sweden 2001
1 2 3 4 5 6 7 8
Fig. 2.15 Renewal capital vs. GDP per capita (PPP) for Sweden
Singapore has the highest GDP among the four countries under comparison, its
renewal capital clearly lags behind. In contrast, Israel’s renewal capital has had
good progress, but without a corresponding growth in GDP. Switzerland in turn is
the top performer in terms of renewal capital while at the same time experiencing
growth in GDP. The different experiences of these three countries may provide les-
sons from various perspectives for Sweden in terms of factors supporting renewal
capital progression linked to GDP.
140k
120k
Singapore 2018
Switzerland 2001
100k
80k Switzerland 2018
Sweden 2018
60k
40k
Israel 2018
20k
Singapore 2001
Israel 2001 Sweden 2001
1 2 3 4 5 6 7 8
Fig. 2.16 Renewal capital vs. GDP per capita (PPP) for Sweden, Singapore, Israel and Switzerland
Renewal Capital Comparison of 3 Small countries and Sweden

9
4
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Israel Singapore Sweden Switzerland
Trend Israel Trend Singapore Trend Sweden Trend Switzerland
Fig. 2.17 Renewal capital of Sweden, Singapore, Israel and Switzerland and trend to 2020
Figure 2.17 shows the four countries’ renewal capital from a time period per-
spective. Here, among the four countries, only Sweden has experienced a downward
trend in renewal capital. Further, Sweden and Switzerland began from similar points
in 2002, but by 2018 the gap between them has widened significantly and looks set
to continue to do so. What has caused this gap between Sweden and Switzerland’s
renewal capital performance, and how can Sweden take steps to mitigate this?
Figure 2.18 then delves into Sweden’s renewal capital more deeply by visualis-
ing its individual components. 11 out of 12 indicators fall within the 6–10 scale.
12 Renewal capital indicators of Sweden

12
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Business RD Basic research RD of GDP R&D per capita IP right UP/RD expenditure
Cooperation Articles Patents(US+EPO) Entrepreneur ship DA Technology Venture capital
Fig. 2.18 12 renewal capital indicators of Sweden
The indicator “utility patent/R&D expenditure” has the lowest score among the 12
indicators, but its performance has been improving over time. “Entrepreneurship2”
has the second lowest score. Furthermore, four indicators have been on a down-
ward trend – business R&D spending, R&D US$ per capita, R&D spending as a
percentage of GDP, and scientific articles – with the last two indicators experienc-
ing the greatest decline. It may be worth noting that while the percentage of R&D
investment in Sweden may not have changed much in absolute terms, its relative
position would be affected given the significant increase in R&D spending by other
countries.
Given Norway’s significant progression in renewal capital over the years, as evi-
denced by Figs. 2.4 and 2.14, its individual renewal capital indicators are mapped
out in Fig. 2.19 to provide further insight. The top nine indicators have progressed
from a 4–8 position in 2001 to a 6–9 one in 2018, showing a general upward trend.
In particular, Norway has experienced significant improvement in terms of the
development and application of technology, corporate and university cooperation,
and scientific articles. An interesting point of note for Sweden is that while Norway’s
investment in R&D has been similar to that of Sweden’s over the past 18 years,
unlike Sweden it has experienced a corresponding increase in the number of scien-
tific articles generated.
2
The indicator “entrepreneurship” is based on expert ratings and indicators whether the entrepre-
neurship of managers is widespread in business.
12 Renewal capital indicators of Norway

10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Business RD Basic research RD of GDP R&D per capita IP right UP/RD expenditure
Cooperation Articles Patents(US+EPO) Entrepreneur ship DA Technology Venture capital
Fig. 2.19 12 renewal capital indicators of Norway
We now turn our attention towards digitalisation potential in Sweden and the
Nordics, which will become more and more important in an increasingly digitalised
society. The following three maps – Figs. 2.20, 2.21 and 2.22 – aim to capture this.
Figure 2.20, which specifically visualises the process capital indicator “comput-
ers per capita and mobile subscribers”, shows that in 2001, when computer and
mobile penetration was low, Sweden and Norway nevertheless achieved high scores
in the area, with Sweden performing better. Gradually, as other countries increased
their investments to enable citizen access to these technologies, Sweden’s and
Norway’s relative performance declined. It is worthwhile noting however that post-
financial crisis, Norway’s indicator score picked up and returned to 2001 levels as
of 2018, while Sweden failed to do so.
In relation to the process capital indicator “Internet and broadband subscrip-
tions”, Fig. 2.21 shows that while Sweden started out with a higher score than
Norway in 2001, it was surpassed by Norway in 2016. Why has Norway experi-
enced such a strong progression in these digitalisation-related process capital indi-
cators as compared to Sweden? And why Norway has a regression from 2017?
Data for “innovative capacity” became available since 2009, and while it is not
included in the current version of the NIC model, it is still interesting to observe its
development. It is derived from expert ratings on a nation’s capacity among its firms
to generate new products, processes and/or services, which is in turn important in
harnessing the potential that digitalisation brings. Figure 2.22 shows that Sweden
has the best innovative capacity among the Nordic countries in 2016, experiencing
good progress since 2009. The other three countries have also experienced an
increase in innovative capacity from 2009 to 2018.
140k
120k Norway 2001
100k
Norway 2018
80k
60k
Sweden 2018
40k
20k
Sweden 2001
1 2 3 4 5 6 7 8 9 10
Computer + Mobile ? DATA DOUBTS
Fig. 2.20 Computer + mobile indicator comparison between Sweden and Norway
140k
120k Norway 2001
100k
Norway 2018
80k
60k Sweden 2018
40k
20k
Sweden 2001
0 1 2 3 4 5 6 7 8 9 10
Internet + broadband ? DATA DOUBTS
Fig. 2.21 Internet + broadband indicator comparison between Sweden and Norway
These three maps provide a glimpse into Sweden’s competitiveness when it

comes to digitalisation – while it performed well in early years when digitalisation
was yet mature, it has lost ground in recent years as other countries respond to the
increasing importance in the area with corresponding investments. Sweden however
still has an edge when it comes to innovative capacity, which it should leverage on
and look to sustain.
140k
120k Denmark 2009
100k
Norway 2018
80k Norway 2009
Denmark 2018
60k Sweden 2018
Finland 2018
40k
20k

3 4 5 6 7 8
Innovative ? DATA DOUBTS
Fig. 2.22 Innovative capacity vs. GDP per capita (PPP) for four Nordic countries
As we have seen, in the early 2000s, the four Nordic countries generally fell
within three groups in terms of NIC performance. Finland and Sweden were the
high performers with similar NIC progress, with Denmark being in the middle, and
Norway as the laggard. As observed however, their relative positions have shifted
over the years and the picture looks quite different as of 2018.
To understand what these shifts mean for Sweden specifically, five of its indica-
tors with declining performance have been identified for deeper analysis, mapped
according to Sweden’s performance against that of its peers. Some maps exclude
Finland for visual clarity, as it shares a similar NIC progression as Sweden.
Figure 2.23 shows that while Sweden and Denmark held similar positions in
terms of current account balance3 in 2001, Sweden has nevertheless been surpassed
by Denmark as of 2018. This is despite the fact that Sweden is larger than Denmark
in terms of area and population, thus perhaps leading to the expectation that its eco-
nomic health should outperform that of Denmark.
Figure 2.24 shows that between Sweden, Denmark and Norway, Sweden had the
best government efficiency4 as at 2001. It has however been surpassed by Denmark
and Norway by 2018. Norway has the most outstanding progress in government
efficiency over the past 18 years.
3
A country’s current account balance points to the health of its economy, and is defined as the sum
of the balance of trade (good and service exports less imports), net overseas income, and net cur-
rent transfers.
4
Government efficiency indicates whether the country’s government bureaucracy hinders business
activity, and is based on expert ratings.
140k
120k
100k
80k
Denmark 2018
60k Sweden 2018
40k
20k
Denmark 2001 Sweden 2001
0 1 2 3 4 5 6 7 8 9 10
Current account balance ? DATA DOUBTS
Fig. 2.23 Current account balance vs. GDP per capita (PPP) for Sweden and Denmark
140k
120k
Norway 2001
100k
Norway 2018
80k
Sweden 2018
60k
Denmark 2018
40k
20k
1 2 3 4 5 6 7
Government efficiency ? DATA DOUBTS
Fig. 2.24 Government efficiency vs. GDP per capita (PPP) for Sweden, Norway and Denmark
Figure 2.25 shows that since 2001 Sweden has been lagging behind Finland in
terms of utility patents/R&D expenditure5, 6. This means that, for every dollar
spent on R&D, Sweden has been reaping fewer results as compared to Finland.
Furthermore, Sweden’s performance in terms of its generation of scientific arti-
cles has been gradually decreasing, as Fig. 2.26 illustrates. In contrast, Denmark has
been making tremendous improvements in the area, even surpassing Sweden as
of 2018.
Figure 2.27 shows that in terms of venture capital7, while Sweden still outranks
Norway as of 2018, Norway has been closing the gap between itself and Sweden
between 2001 and 2018, with Sweden declining in its relative performance and
Norway making great strides forward. Furthermore, the relatively flat lines shown
in the figure reflect a low correlation between venture capital investment and GDP
for both countries. In other words, for certain years, more venture capital investment
has not been accompanied with GDP growth.
2.3 C
ountry Comparison of Sweden and Small High-Tech
Countries
2.3.1 Initial Comments
Having been devoted to NIC studies since 2004, one of this pre-study’s authors,
Professor Carol Lin, has been able to build a NIC database spanning from 2001 to
2018 for 59 countries. This set of longitudinal data has enabled her to observe the
development of IA by nation and by region. Given her close connection with some
Nordic scholars, she has having been paying special attention to the NIC of the
Nordic region. Her early work on Nordic NIC, done in collaboration with another
co-author, Professor Leif Edvinsson, was in turn published in the Journal of
Intellectual Capital in 2008 and obtained the “Highly Commended Award Winner at
the Literati Network Awards for Excellence 2009”.
While updating the dataset and producing NIC country rankings yearly, Professor
Lin noticed that the ranking of Sweden and Finland was gradually declining.
Although Sweden is still in the top five, its most recent 2018 NIC ranking is one
rank below its 201–2015 years average. In particular, among the 59 countries that
form the dataset, Sweden used to rank either first or second in renewal capital.
5
Utility patents protect the structural and functional aspects of a new or improved product or sys-
tem. This indicator captures the utility patent performance of every R&D dollar spent.
6
Denmark and Norway are not shown in this map as they have not performed as well in this area,
and thus may not have as much learning points for Sweden.
7
The indicator “venture capital” is based on expert ratings on whether venture capital is readily
available for businesses.
2.3 Country Comparison of Sweden and Small High-Tech Countries 33
140k
120k
100k
80k
Sweden 2018
60k Finland 2018
40k
20k
Sweden 2001 Finland 2001
1 2 3 4 5 6 7 8 9 10
UP at RD expenditure ? DATA DOUBTS
Fig. 2.25 Utility patents/R&D expenditure vs. GDP per capita (PPP) for Sweden and Finland
140k
120k
100k
80k
Sweden 2018 Denmark 2018

60k
40k
20k
1 2 3 4 5 6 7 8 9 10
Articles ? DATA DOUBTS
Fig. 2.26 Scientific articles vs. GDP per capita (PPP) for Sweden and Denmark
140k
120k Norway 2001
100k
Norway 2018
80k
Sweden 2018
60k
40k
20k
Sweden 2001
2 3 4 5 6 7 8
Venture capital ? DATA DOUBTS
Fig. 2.27 Venture capital vs. GDP per capita (PPP) for Sweden and Norway
However, in 2018, Sweden’s renewal capital ranking declined to third place. Despite
its still relatively strong performance vis-à-vis other countries, such developments
send an early warning signal.
Winners often possess both vision and foresight, as well as the ability to act out
on their vision. The life-cycle theory teaches us that one should “beware of pla-
teaus”. The top performer, while at the peak, should already begin to start worrying
about possible decline. The maps of this study thus show potential areas of concern
that relevant parties should contemplate on in order to prevent the “peak-then-
decline” syndrome.
2.3.2 Country Comparison Discussion
When a country has achieved its economic plateau and its growth starts to slow
down, the government has to ask, “What’s next?” This pre-study has highlighted
some potential warning signs towards complacency and compromised future com-
petitiveness in Sweden. However, all is not lost. The following section lays out a
series of considerations that policy makers can use as a basis for decision making
when it comes to prioritised strategic intervention and investments.
The government should first prioritise the following areas for Sweden: economic
growth, quality of life, public health, technology advancement, and happiness
of people.
2.3 Country Comparison of Sweden and Small High-Tech Countries 35
If economic growth is Sweden’s top priority, then Singapore, with its high m arket
capital, would be a suitable country to benchmark itself against. Here, the Swedish
government could consider pushing for more exports. Its performance relating to its
current account balance (Fig. 2.23) indicates Sweden needs to pay more attention to
its export/import balance, trade policies, exchange rate, competitiveness, foreign
exchange reserves, and inflation rate.
If quality of life is prioritised first, followed by economic growth, then Sweden
can look towards Switzerland as an example. Switzerland has been a consistent high
performer with continuous progress in both NIC and GDP growth. Lessons can be
gleaned from Switzerland’s ability to retain its competitiveness despite facing
increasing global competition.
If public health and the happiness of its people have higher priority than eco-
nomic growth, then Sweden should focus on improving government efficiency and
pay more attention to the various elements of infrastructure represented within pro-
cess capital.
If technological advancement is first priority, then there should be serious inves-
tigation into the country’s decline in renewal capital, while peer countries like
Denmark and Norway are advancing in the same area. In particular, policy makers
should look into the reasons underpinning Norway’s tremendous progress, as well
as the factors driving the downward trends in business R&D and venture capital
in Sweden.
Further, Sweden should delve into the five areas of decline as identified in Sect.
2.3 Reflections and implications for Sweden. As indicated by Figs. 2.1 and 2.2,
government efficiency and venture capital are process-oriented and enhancers,
whereas current account balance, utility patents, and scientific articles are outcomes
and achievement-based. In the first instance, the process-oriented indicators “gov-
ernment efficiency” and “venture capital” are based on subjective expert ratings,
that is, experts view Sweden as having decreased competitiveness and performance
in these areas when compared with other countries. In the second instance, the three
outcome-based indicators are based on actual values which can be measured; thus,
a decline in indicator levels relates to a decrease in performance across these three
indicators relative to other nations in the given pool of 59 countries. In other words,
despite similar levels of R&D investment compared to its peers over the years,
Sweden seems to be facing a comparatively decreasing return on its investments
given the declining generation of scientific articles and utility patents.
Despite the current limitations of the NIC model, the observations garnered from
an analysis of Sweden’s NIC standing versus its peers should provide a helpful
starting point for decision-making with a view on the contribution of a nation’s IC
towards current and future competitiveness across multiple fronts.
While this report has mainly focused on comparing Sweden with other Nordic
countries and similarly sized and high-tech countries, it could be useful to conduct
comparisons between Sweden and high performing countries based on the Global
Innovation Index, high growth countries, emerging countries, and the “King-Kongs”
of high-tech (USA, Germany and China as well as Japan and South-Korea).
2.4 Limitations of the Current NIC Model
The NIC model has certain constraints. For one, it is confined to the data available
in the IMD database, which in itself has its limitations. For example, “the percent-
age of elementary school students who can code” could be a good future-oriented
indicator of human capital; however, there is currently no such data available. In
addition, existing statistics-driven data tends to report on historical performance,
such as R&D spending as a proportion of GDP. Any existing future-oriented indica-
tors, such as innovative capacity and entrepreneurship, are based on qualitative rat-
ings, which are inevitably subjective in nature.
Furthermore, analysing the results of the model is based only on the model’s
cross-country comparison data and does not reflect individual country characteris-
tics. Building country-specific features into the calculation formula runs the risk of
excluding equally important yet perhaps not as prominent features from the
perspective of each country. For instance, Norway’s vast oil resources are not
directly reflected among the indicators, and such information would be better served
as supplementary material to aid in interpreting the results.
In addition, analysis of the findings, implications and applications arising from
the NIC model should be performed with a deep understanding of the specific
nation’s context, background, and even hidden societal agendas that would have
been otherwise unnoticed by the general observer.
Chapter 3
IC & IA Mapping at the Global Enterprise
Level
Current and upcoming developments are raising the importance of IC. As observed
in the previous section, advanced nations like Sweden depend on intangibles for
more than 70% of value created. At an enterprise level, more than 80% of organisa-
tional value are represented by intangibles today, a complete reversal of the situa-
tion just forty years ago when this same value was driven instead by tangible assets.
Clearly, IC is increasingly becoming a key enabler for future prosperity.
This may thus explain why the mapping of intellectual capital (IC) and intangi-
ble assets at enterprise level has become a growing area of interest over the past
25 years. More than a decade ago, the Ministry of Economy, Trade and Industry
(METI) in Japan initiated a program on intellectual assets. Since then METI, in
efforts led by Director Taka Sumita, who is also a board member of the New Club
of Paris, has held an “Intellectual Assets” week every November, in collaboration
with Japanese enterprises, Waseda University and the Nikkei Stock Exchange. In
Germany, the Federal Ministry of Economics and Labour (German:
Bundesministerium für Wirtschaft und Arbeit) initiated a major project in 2004 for
mapping the IC and intangible assets of enterprises. This involved reporting on
intangible assets (German: Wissenskapital) via an intellectual capital statement
(German: Wissensbilanz) and was to be included as a supplement to the traditional
balance sheet. Germany’s pioneering work in the area was later on picked up by the
European Commission for dissemination to the rest of Europe.
A number of initiatives and research during the last 21 years is described by
Edvinsson (2013).
38 3 IC & IA Mapping at the Global Enterprise Level
3.1 Models List
There are a growing number of mapping methods in progress, as well as applications

in usage from thousands of enterprise cases globally. For the purposes of this report,
three major approaches are highlighted which capture different perspectives on IC
and intangible assets See Table 3.1.
3.1.1 IC Rating
The IC Rating™ method (Jacobsen et al. 2005) has Swedish origins, having been
developed in the late 1990s by Intellectual Capital Sweden AB. While the method-
ology was later on sold to Tokyo-based management consulting company ICMG
group for dissemination in Japan, China and other parts of Asia, it also spread to the
US and led to the development of an IC Rating-based methodology by Smarter
Companies, which works with companies to create integrated management systems.
This method aims to measure a company’s IC in addition to traditional balance
sheet assets, to enable the company to use its intangible assets more effectively for
value creation and increased competitiveness, which becomes particularly pertinent
in today’s knowledge-based economy.
The IC Rating™ model comprises of three main IC areas: organisational (or
internal) structural capital, which captures knowledge transfer methodologies, pro-
cesses and systems, and even organisational culture; human capital, with key value
drivers such as employee knowledge, skills, abilities, innovativeness and experi-
ence; and relational capital (or external structural capital), which comprise of a
company’s external relations with its stakeholders (see Fig. 3.1). These three areas
express themselves as the operational effectiveness of an organisation. The IC
Rating ™ model takes it one step further in providing the strategic context for a
company’s activities by considering the company’s business recipe. As Jacobsen
et al. (2005) notes, doing things right does not necessarily equate to doing the right
things. A weak business recipe would render a company’s operational effectiveness
irrelevant; a strong one provides a good foundation for the realisation of the com-
pany’s IC potential.
The model further views intangible assets from three forward-looking
perspectives, to avoid the common pitfall that traditional accounting and financial
Table 3.1 List of models

Approach Purpose Reference
IC Rating Positioning IC Sect. 3.1.1
a systematised rating of IC effectiveness, IC renewal and IC risk
Wissenskapital and Wissensbilanz Navigating IC Sect. 3.1.2
Based on systems dynamics
4 Leaf Model of IC interactivity Managing IC Sect. 3.1.3
Developed by Areopa
3.1 Models List 39
Fig. 3.1 IC Rating™
management and measurement models face in attempting to predict the future

through the lens of history. Instead, these three perspectives – IC effectiveness, IC
risk, and IC renewal – examine the current effectiveness of the organisation in its
use of intangible assets, while considering the risks challenging its effectiveness
(for instance the loss of key employees), and its efforts and capabilities to renew and
develop itself through, for instance, innovation and employee training.
While the benefits of using models such as the IC Rating™ model may vary
depending on organisational size and sector, there are some common motivations
for doing so (Jacobsen et al. 2005). These include a better understanding of a com-
pany’s non-financial assets and the role they play in the company’s value creation;
providing the organisation’s members with a shared language and terminology for
IC; better internal management of IC and intangible assets; more transparency
within the organisation on how intangible assets are used; and for external reporting
purposes in signalling the true value and future performance of the company.
Figure 3.2 provides an example of how the IC Rating™ model has been applied
in practice by ICMG1.
Smarter Companies has built on the logic of the IC Rating™ model in its own
value creation framework, which also includes what it terms as “natural capital” in
relation to sustainability management2 (see Figs. 3.3 and 3.4).
1
Source: Satoshi Funahashi at ICMG Co. Ltd., Tokyo, www.icmg.co.jp, that initially was licensee
to Intellectual Capital Sweden AB
2
Source: Mary Adams, Founder of Smarter-Companies, Boston, USA and earlier licensee to
Intellectual Capital Sweden AB
Fig. 3.2 An example of IC Rating™ as applied to an organisation by ICMG
Fig. 3.3 Smarter Companies’ value creation worksheet

3.1 Models List 41
XPX Global Value Creation Canvas
XPX Global PARTNERS fl‡ PURPOSE PROPERTY fl‡ PEOPLE fl‡ PLANET
At Jan, 2017 Relationship Capital Strategic Capital Structural Capital Human Capital Natural Capital
CUSTOMRES VALUE PROCESSES COMPETENCIES RESOURCES

PROPOSITION Chapter start-up Association mgmt XPX Global is virtual
XPX Chapters Give Chapters the Event mgmt Community so not significant
benefit of a shared Membership development user of natural
brand, network and mgmt Social media resources.
services while Web site service
maximizing local and development
control
SUPPLIERS BUSINESS MODEL DAT A/IP ADMINISTRATORS LAND
Wild Apricot Service License Owners’ Academy Donna Powell
(platform) fee based on on-line content Angie Ellis N/A
Supporting gross revenues and videos
Strategies (fin) No fees are Member profiles MANAGEMENT
Resource Inventory WebBright (web payable until a Email list Mary Adams
development) new Chapter has LinkedIn and
Stripe (paymts) sufficient cash Twitter accounts FOUNDERS
DigiCert Website Dan Guglielmo
(security) Manuals Shannon Zollo
URL’s Mike Oleksak
Brands
STAKEHOLDERS CULTURE BUILDINGS/EQPMT ADVISORS/BOARD WASTE
XPX Members Professional XPX Leadership Chapters hold in-
XPX Sponsors Collaborative N/A Collaborative person meetings
Business Learning (incl representatives which imply travel
Owners Adaptive from all Chapters) and some paper use.
Private Company
Community
Canvas used under Creative Commons Attribution Share-Alike License - Please contribute to the open tools at www.smarter-companies.com
Fig. 3.4 Smarter Companies’ value creation framework
3.1.2 Wissensbilanz and Wissenskapital
In 2004, the German Federal Ministry of Economics and Labour conducted a proj-
ect to look into the intangibles for small-medium enterprises (SMEs) (Federal
Ministry of Economics and Labour 2004). These intangibles were called
Wissenskapital, and an account of the inventory and evaluation of these intangibles
should supplement the traditional balance sheet in the form of a Wissensbilanz, that
is, an intellectual capital statement. This project, involving organisations ranging
from SMEs to associations to banks, was considered a success, with the implemen-
tation of an intellectual capital statement perceived by the organisations involved as
a positive contribution to their competitiveness and development.
Special guidelines were developed as part of this programme, providing explana-
tions to important principles and proven methods, as well as tips and practical guid-
ance to developing an intellectual statement. These guidelines reduced the efforts
needed by SMEs to implement such an intellectual statement.
To enable organisations to understand its various IC components, the project
group proposed the model described in Fig. 3.5. The project group hopes that the
model will serve to support decision-making by clarifying aspects contributing to
the organisation’s success, and as a tool for inventorying the use of IC in the
organisation.
Fig. 3.5 The intellectual capital statement model developed by the project group
A core feature of this model is the identification of intangibles – human, struc-

tural and relational capital – as influencing factors affecting the efficiency and effec-
tiveness of organisational performance and its success on the market. This is
essentially based on the systems dynamics approach developed by Professor Jay
Forrester at the Boston-based Massachusetts Institute of Technology (MIT) (see
Figs. 3.6 and 3.7). This approach highlights the interdependences of the various IC
components, as opposed to a positional approach, to make IC impact beyond tradi-
tional accounting. This also means that here, IC and intangibles may be regarded as
a flow rather than as an object.
Figure 3.8 illustrates how the German project captures the individual influencing
factors of IC and their interactions via a matrix, and Fig. 3.9 provides an example of
a simplified interdependency network for a central factor to the organisation in
question (in this case, the development of product innovations).
The German’s project’s success also attracted Japan’s METI to pursue a similar
project. This initiative by METI was performed by Taka Sumita, in collaboration
with Professor Yasi Hanado at Waseda University, for adaptation to the context of
Japan. This inspired a deepening work in the World Intellectual Capital Initiative
with a group of major accounting firms globally. (“CADIC” n.d.)
The project was then picked up by the European Commission for further dis-
semination to other countries in Europe, via the programme RICARDIS – Reporting
Intellectual Capital to Augment Research, Development and Innovation in SMEs
(European Commission - DG Research 2006), CADIC – Cross-Organisational
Assessment and Development of Intellectual Capital (‘CADIC’, n.d.), and InCaS –
Intellectual Capital Statement (ICS) for Europe (European Commission - DG
Research 2011) (see Figs. 3.10, 3.11, 3.12, and 3.13).
3.1 Models List 43
Fig. 3.6 Systems Dynamics approach to IC mapping (1)
Fig. 3.7 Systems dynamics approach to IC mapping (2)
In particular, the Europe ICS programme recommends adopting a portfolio man-

agement approach to intangibles, based on their relative performance to strategic
objectives and their potential for improvement (see Fig. 3.13).
Fig. 3.8 An excerpt from a matrix analysing the interactions of intellectual capital
Fig. 3.9 An example of an interdependency network
3.1.3 Areopa’s 4 Leaf Model
The 4 Leaf Model was developed in Areopa by Ludo Pyis and his team from as early
as the 1990s to capture the interplay between human capital (HC), structural capital
(SC), relational capital (RC) and strategic alliances or network capital (SA), identi-
fying 15 overlapping areas (see Fig. 3.14). The model is meant to help company
management develop strategies to understand and manage its various IC components.
By applying the 4 leaf approach with detailed description of about 77 various
interactivity aspects, the companies now can determine the future potential of a
3.1 Models List 45
Fig. 3.10 An European

Intellectual Capital
Statement (ICS) Guideline
co-developed by the
European Commission and
InCaS
Figure 2: ICS Procedural Model
Step 0 Step 1 Step 2 Step 3 Step 4 Step 5

Management Meeting Workshop 1 Internal work Workshop 2 Internal work
Pre- Business IC Strategy Final ICS

Arrange- Measurement Refinement &
Model Analysis document
ment Measures
Procedure: Procedure: Procedure: Procedure: Procedure: Procedure:

Analysis of the Definition of the Definition of IC Collection of Interpretation of Finalisation of ICS
initial situation System Boundaries factors (human, indicators to validate results from IC document on the
Analysis of the Definition of the structural and the IC assessment. analysis (strengths- basis of the decision
enterprise's value creating relational capital) Assignment of 2-6 and-weaknesses of IC document
“fitness level” model (created Assessment of indicators per IC analysis,impact requirements
Establishment value, main business quality, quantity factor. analysis, identification (internal/external
of project processes) and systematic of of fields of version)
management Definition of the IC factors intervention) Deriving
business strategy impact analysis IC strategy
(external business (Impact Scoring/ and measures)
environment, main Cross Impact Matrix)
strategic objectives,
business success)
Fig. 3.11 A suggested approach for developing an intellectual capital statement

Fig. 3.12 The use of a matrix to visualize the cross-influence and impact of IC factors
specific organisation’s IC. These value, taken on an aggregate basis and combined
with the cost of creation, provides a monetary value for an organisation’s overall
intangibles, and can be reported as a supplementary accounting statement.
The 4 Leaf Model provides a means of documenting all of an organisation’s
assets, which enables companies to grow, transform and drive shareholder value.
Now companies and investors can benefit from a superior risk-return in investment
due diligence simply by measuring and exploiting IC assets.
However, an IC valuation system without a corresponding IC accounting system
is insufficient. Auditors need to assess IC balance sheets, as well as have access to
an IC auditing methodology that is approved by international accounting standards
(IAS) and international financial reporting standards (IFRS). To address this, Areopa
has developed an IFRS/IAS38 certified IC accounting and applied knowledge man-
agement implementation system, based on more than 40,000 man days of R&D and
active participation in several high-level European Commission expert groups
(European Commission - DG for Research and Innovation 2014), thus closing the
loop on IC calculation, accounting and auditing.
3.2 Mapping though Case Application 47
Fig. 3.13 A portfolio management approach to IC
3.2 Mapping though Case Application
One approach for a deeper understanding of IA and IC in relation to enterprises is

to apply simplistic metrics. In the taxonomy and cascading model shown in
Fig. 3.15, a preliminary calculation has been applied for the internet-based company
STRUCTURAL CAPITAL
is the value of whatever remains
in a firm after the human, customer, SC Highly
and strategic aliance capital have
SC HUMAN CAPITAL Structured
is the total value of knowledge, skills, SC-HC
left the firm. It depends on how
netwoks, and experiences held and
well the firm has managed to capture
deployed by the individual SC-HC-SA
the knowledge.
employees in a firm.
SC-HC SC-HC-SA-CC
HC
SC-HC-CC
STRATEGIC ALLIANCE SC-SA
CAPITAL HC- SC- SC- HC-
CUSTOMER CAPITAL
is the added value of the SA SC-HC- CC SC-SA-CC
HC-SA HC-CC is the value of the firm’s
strategic alliance to the firm SA-CC customer relationship.
and the firm’s customers. SC-CC
HC-SA-
CC HC
SC- SC-
SA CC HC-SA
SA SC-SA-CC CC
HC-SA-CC
HC-CC
SA-CC
SA
SA-CC
CC Low
Structured
Fig. 3.14 Areopa’s 4 Leaf Model
The Hidden Values IC TAXONOMY
UNIC IC Value Scheme TM
Intellectual Intellectual
Property Assets new?
Process
Innovation Capital
Capital new?
Relational
Organisational
Capital Capital 140 million users, x%
93% Structural
Capital
Human
Capital
2200 empl or 3 billion, 3%
Intellectual Financial
97% or 145 billion sek Capital Capital 5 billion or 3%
Market
150 billion sek Value
Fig. 3.15 IC as applied to Spotify using simplistic metrics as reported in 2017: 150b SEK (16b
USD). Market value on NYSE in 2020 reported towards 50 billion USD
Spotify. Spotify seeks listing at NYSE, not NASDAQ since problems with Facebook
IPO. The risks appear too high a NASDAQ even though a “dual listing” was offered
for NY and Stockholm (Dagens Industri 2017-11-20). It highlights that, of the total
market capital appreciation value assigned to the company, often only a minor part
is included in the balance sheet as adjusted equity; the major value resides instead
in the company’s IC and IA, and of that, only a fraction is visible. Part of this enter-
prise IC includes human capital, but a more critical portion comes from structural
capital, or more specifically relational capital, the latter in particular linked to
3.4 Limitations of Current Models and Gaps for Further Action 49
e xisting as well as prospective customers, users and partners. In essence, this high-
lights that, while the most dynamic value comes from human capital, the most
important and sustainable value comes from structural capital, with the latter often
at work 24 hours a day!
3.3 The Impetus of IC Mapping for Enterprises
A growing frustration with traditional accounting approaches and their growing

irrelevance in communicating new value dimensions of the emerging economy has
resulted in extensive global research as well as the prototyping of new approaches,
some of which has been described in this pre-study. One of the early books on the
subjects was even given the title Relevance Lost – The Rise and Fall of Management
Accounting (Johnson and Kaplan 1991).
A major barrier to progress in this area might be a lack of relevant enterprise data
on a micro level, which has in turn resulted in distorted maps of the economy of
nations at a macro level. Therefore, prototyping work is needed to generate deeper
insights as well as refined methods, many of which are reported in the Journal of
Intellectual Capital. Furthermore, raising public awareness and understanding of the
role and impact of intangibles might result in the emergences of various quests to
discovering the core of value creation in the economy and society of today and of
the future. Some of these efforts include Softnomics, the circular economy, the
knowledge economy, Wissensbilanz, and the neighbourhood economy.
3.4 L
imitations of Current Models and Gaps for Further
Action
Despite extensive research and efforts in the field of IA and IC for enterprises, there
continue to be gaps linked to a lack of real awareness, understanding and integration
of these concepts across all levels of the economy and society. These gaps exist in
public perception, in statistics, in accounting, in management, in labour market
regulations, in pricing models, in educational and vocational training programs, in
media understanding and reporting as well as in political entrepreneurship.
The current model of management accounting and its relevance was reviewed by
Professors Johnson & Kaplan from as early as the late 1980s, as documented in the
aforementioned book Relevance Lost (Johnson and Kaplan 1991). However, they
also recognised emerging research in the area, with one of them penning a sequel
called Relevance Regained (Johnson 1992). At the same time, Professor Baruch Lev
began looking into the importance and value of innovation and R&D, with his con-
tributions captured in Unseen Wealth, a report published by the Washington-based
think tank Brookings Institution (Blair and Wallman 2000).
The World Intellectual Capital initiative (www.wici-global.com) provides a
comprehensive view of IC corporate reporting, and combining this with Integrated
Reporting initiatives (IIR) address some of the accounting gap. Much more is how-
ever needed to reveal the hidden wealth of societies and improve learning as well as
policy dialogue. Just consider Greece and the debate around its debts, where the
discussions have thus far excluded intangible historical value dimensions. The same
might be relevant for many nations, which is why the work on NIC is important to
present more solid navigational maps for future generations. A recent study by
European Centre for Policy Reform and Entrepreneurship is revealing – for instance,
it observes that high-income countries with good macroeconomic policies that also
invest heavily in intangible capital tend to do well in the knowledge economy (or as
the report calls it, “brain business”) and are likely to continue to do so (Sanandaji
and Fölster 2017).
To help Sweden and other similar countries regain lost ground as a leading soci-
ety in the new IA economy, a number of initiatives and research are required. Some
suggestions are laid out below, with a more extensive list available in Chap. 6.
At a micro level, improved research and prototyping practices are needed to cap-
ture and describe, from an IC and IA perspective, the value as well as opportunity
costs that technological developments such as the Internet of Things and artificial
intelligence bring.
These prototyping and research efforts might further take the form of action
research of IA value creation, to inspire more prototyping and reveal new value pat-
terns. Such prototyping has been done in Germany, Japan and Brazil and some EU
countries. This can be further deepened through, for example, the offering of IA
cheques to SMEs to spur awareness and understanding of enterprise IA and IC for
productivity gains and value creation.
To further quicken awareness of intangibles across all levels of society, an essen-
tial starting point is training journalists on how to view societal and economic devel-
opments through the lens of IC and IA. The same can be said of political leadership,
to enable decision makers to shape a supportive societal infrastructure for IA and IC
on all levels.
Part II
Policy Discussion in a New IA Era
Chapter 4
Policy Implications
The policy implications give an overview of areas of interest. They have the same
focus as the analysis: starting with Sweden, then Nordics and finally Switzerland,
Israel and Singapore, but are likely relevant for small high-tech countries in general
beyond these in the pilot-study.
The lessons from above presentation of IA, IC and NIC mapping at the enterprise
level indicate that current national and business policy in Sweden needs to change
in order to further develop intangible assets for economic growth, in order for the
country to at least be on par with other Nordic and small country nations. Given that
policies appear not to have changed overall during the last decade, the problem is
likely that Sweden has rested on its laurels and possibly developed a level of com-
placency. New or reformed/renewed/repaired policies appear to be needed in order
for resources to be appropriately redirected toward investments in IA, thereby
enabling Sweden to catch up with “competing” nations and strengthen its relative
position in the light of global competition. The impression by the authors is that
only very basic levels of awareness regarding IA exists.
This calls for awareness building on even the most fundamental IA understand-
ing. Since the “responsibility” of IA is spread out among agencies and also vary
among companies, as first step would be to work toward a coordinated, national
approach. Such an approach begins with a better coordinating and dialogue between
government and industry. Then initiatives taken by governments and industry alike
are needed. Policies can then likely only be done by experimenting with different
incentives that may encourage investments growth in IA, which in turn would aid
competitiveness in a global market. A program proposal is presented in the last sec-
tion, Chap. 6, see Table 6.1.
Today’s global policy discussions tend to revolve around three themes – eco-
nomic, social and environmental concerns – all aiming towards sustained and inclu-
sive development while meeting the needs of humanity. In popular terms, this can
be said to reflect “profit, people and planet”. Profits are needed to create sufficient
returns to cover risk and new investments; effects should benefit all people; better
54 4 Policy Implications
stewardship of limited resources on the planet is required, for instance increasing

productivity through the better “re-use”, not only use, allocation of natural resources.
Re-allocation of natural resources demands knew knowledge, processes, technol-
ogy, etc. and must be integrated in any policy today. However, such integrated poli-
cies appear not to exist yet. A state-driven approach is clearly not enough, a better
dialogue is needed between government and industry. We therefore need to find
way, by experimenting, to integrate a more efficient use of resources, which demands
new investments in human capital and IA.
In the past millennium, economic policy has focused on wealth creation. In turn,
social policy, since the 1500s, ushered in to large extent the Reformation in Europe
and subsequent renaissance for the betterment of the broader public, aimed towards
providing education opportunities for all. The Reformation notably brought public
education to women and children1. Today, 9 out of 10 children receive basic educa-
tion. The UN Economic and Social Council, established in the UN charter in 1945
and representing approximately 70% of the UN’s work, can be seen as a reflection
of nations’ desires to integrate the two policies in a coherent way.
Environmental policy – realising the limitations of the planet from an economic
and social perspective at the level of international policy – has arisen as a concern
only within the past half century (the environmental movement got a flying start by
the “Earthrise” photo2 of Apollo 8’s trip around the moon during Christmas in 1968
while the crew was reading from Genesis 13). However, the successful integration of
these three policy areas is still an open question and intensely debated by in particu-
lar the world’s largest pollutants and economies such as China, India, the USA and
parts of Europe.
IA has always played a key role in all three areas, but it is only in the last few
decades that IA has taken on a dominant role in wealth creation and in global coop-
erative efforts; more knowledge is needed to address common problems, and new
innovations and technologies are needed to use limited environmental resources
more effectively. This is a collaborative effort and therefore specialisation is required
1
Incidentally this fact was noted by both the Archbishop of the Swedish Church (former state
church) Anjte Jackelén and the Prime Minster of Sweden, Stefan Löfven, during the 500th anniver-
sary of the Reformation on 31 October 2017.
2
“It’s the picture that was credited with starting the environmental movement,” wrote author
Jeffrey Kluger, referencing the Earthrise photo in a 2013 article for Time magazine.
3
Interestingly, Genesis Chap. 1 also speaks about man’s responsibility of being a good “steward”
of the Earth, so the men and women of old had some sense of this concept at least since the begin-
ning of civilization. Prior to civilization, infanticide was commonplace the norm to reduce demand
of limited natural supply of food (North 1982). All this changed drastically with the first (agricul-
tural) and second (industrial) economic revolution as private property rights on land changed
incentives (North, idem) and, one could argue, technology (Ullberg 2015) (first patent system
established in 1474 in Venice), increasing returns on and investments in food, energy and other
technology, challenging Malthus pessimistic outlook of human betterment. Also, quoting Elon
Musk as he literally reaches for the stars, well Mars, to be precise: “Humanity would essentially be
a ‘steward of life’ as we know is” follows the same line of thinking as men and women of old
(Frankel 2015).
4 Policy Implications 55
which puts a challenge to Sweden’s and other small countries’ focus in all these
areas, increasingly in concert with not just Europe, but the world.
To exemplify the long-term value of IA, one can look to the forests of southern
Poland as a case in point4. For centuries, these forests were maintained impeccably,
and cutting down a tree carried a death penalty. Why were these forests taken care
of with such zeal? One key reason appears to have been the realisation by local lead-
ers that the forests acted as a “sponge” for heavy rain in the mountains and served
to slow down flash floods from the Wisła river, thus sparing the agricultural land, the
main economic activity, and heavily populated plains that lay downstream. However,
when Communism came along, the new leaders saw the forests as an underutilised
resource and cut down the trees, supposedly for the (short-term) value of timber,
creating a flash flood time-bomb in the making. In 1970 the flash flood came to pass,
and without the forest “sponge” to slow down the rain, disaster hit. The Polish
example reveals a triple-pronged policy in action where economic (agricultural
land), social (education of foresters and people in law) and environmental (forest)
policies were established in law by the monarchy of old and unfortunately subse-
quent lost by a change to a materialist government. There are many such cases in
history, albeit localised. Globalisation has brought this to the fore with cross-border
impacts, thus requiring the need for global policy coordination today.
These examples indicate that perhaps it is more a “repair” or “reformulation” of
what we have already learnt in the past that is needed, as opposed to any brand-new
policy. The increasing level of IA appears to need some direction towards these
classical problems. The successful development and implementation of policy on all
three fronts will therefore require an increased understanding of and reliance on IA
and how the national policy works together with the corporate policy.
This pre-study thus proposes a number of options for research and experiments,
resulting in a more substantive base of IA knowledge and discussion. These results
could become components of such a new IA framework, for discussion and initia-
tives and rapid prototyping for a new strategy for small high-tech countries.
4
This case was presented by a Belgian professor of finance, during a PROGRES colloquium by the
Geneva Association 2000 in Hamburg, Germany.
Chapter 5
Discussions of Further Dimensions
This section will discuss a number of further dimensions of interest to bridge the IA
competitiveness gap for Sweden, and other small high-tech countries, from eco-
nomic, social and environmental perspectives.
5.1 Development and Digitalisation
The coordination of intangibles is not limited to localised geographies but should be

considered global in nature given today’s digitalised world. It can be seen as an
informal network of collaboration between actors on basis of history, culture, etc.
These informal collaborations, within and in between countries, indicate a first step
towards new institutional development and learning. It will likely be followed by
more regulatory arrangements which may then constitute the new economic, social
and environmental system. In a sense, these could perhaps be seen as poly-centric
organization or markets, which is a form of voluntary cooperation between sover-
eign government agencies and firms. It can result in more efficient outcomes than
centralized government administrations and is an alternative to fully organized mar-
kets with property rights. An example here can be MOOC (Massive Open Online
Courses) where universities cooperate on specific classes.
The multiplier effect of digitalisation in knowledge sharing far outstrips that of
the printing press and the Gutenberg revolution. However, the challenge is in using
the vast supply of digitalised information in learning institutions for increased pro-
ductivity in education. This goal of productivity that has yet eluded even MOOC
players such as Udacity, Coursera, edX and others. Although progress has been
made, it appears that it is quite difficult to go beyond rather technical subject mat-
ters. However, a recent research study involving a survey of MOOC course com-
pleters – comprising about 5% of all who sign up for MOOCs (Ho et al. 2014) – showed
that 72% reported career benefits and 61% reported educational benefits, with
58 5 Discussions of Further Dimensions
p eople from developing countries more frequently reporting benefits from taking
MOOCs (Zhenghao et al. 2015). See Figs. 5.1 and 5.2.
Business processes appears even more affected by digitalisation than education
processes, with a corresponding IA shift to design and maintenance. The global free
flow of information means that some nations will develop mechanisms to turn such
information flows, a kind of intangible, into better productive use. Business pro-
cesses is clearly one way to achieve this; industry 4.0 (see Fig. 5.3) and artificial
intelligence are also alternatives. Understanding the effects of IA and their produc-
tive use in the digitalised economy is therefore one of the proposed projects.
Fig. 5.1 The Educational Benefits of MOOCS (Zhenghao et al. 2015)
As reported by those who stated career benefits as their primary reason for completing a MOOC.
CAREER BENEFITS TANGIBLE

Any 33%
Found a new job 26
Started my own business 9
Received a pay increase 3
Received a promotion 3
INTANGIBLE
Any 85%
Enhanced skills for current job 62
Improved candidacy for a new job 43
Changed to a new career 19
Other 9
SOURCE COURSERA SURVEY DATA © HBR.ORG
Fig. 5.2 The career benefits of MOOCs (Zhenghao et al. 2015)

5.2 SDGs and Beyond 59
Fig. 5.3 The fourth Industrial Revolution (Lejeune 2017)
5.2 SDGs and Beyond
The challenges of integrating the economic, social and environmental concerns in

the aforementioned triple-pronged policy approach remains an outstanding issue of
concern. An attempt to create coherent goals covering most of these issues has been
the 17 Sustainable Development Goals (SDGs), launched in 2015 (see Fig. 5.4).
These were developed as a follow-up to the 8 Millennium Development Goals
(2005–2015) inspired by Professor Jeffrey Sachs, which had galvanised unprece-
dented efforts to meet the needs of the world’s poor. The SGDs serve as goal posts
to measure progress in human betterment with both targets and indicators, but are
essentially social and environmental political goals.
Importantly, the SDGs do not include an explicit goal related to intellectual prop-
erty or capital, despite these intangible assets being of critical importance in the
global economy today, with the potential to improve the conditions of many coun-
tries suffering from poverty, social misery and environmental catastrophes. The
eighth goal, decent work and economic growth, aims to achieve an ambitious 7%
gross national income (GNI) growth rate for less developed countries (sub-goal
8.1), higher productivity through technology upgrading and innovation (sub-goal
8.2) and promote development-oriented policies that support creativity and innova-
tion and encourage micro, small and medium enterprises (MSMEs) (sub-goal 8.3),
with the last being measured as “the proportion of informal non-agriculture employ-
ment, by sex.” Nowhere does there appear to be an explicit mention of the intellec-
tual property or capital, which are critically important in economic development.
The proposal is therefore to develop a follow-on project investigating the link
between the SDGs and intangible assets.
Fig. 5.4 The 2015 Sustainable Development Goals
5.3 Viewing Unicorns Through the Lenses of Intangibles
Israel is well known as The Start-up Nation1 of the world, moving from being known
for oranges to world-leading high-tech in less than 40 years. A recent concept of fast
growing companies are the unicorns, which are start-ups valued at US$1 billion or
more (see Fig. 5.5).
In this area China is clearly making a splash, catching up with the rest of the
world at breath taking speeds, through implicit IA policy. For example, China
reached one million patent applications in 2016 and its universities have been rising
up the ranks of various benchmarking reports, as guided by the recognized Shanghai
index. As part of its long-run strategy, the country’s focus has always been on being
“the intellectual leader of the world”2, incidentally creating the first patents system
in 1985, 20 years before the private land right system of 2006. While the US is still
the front runner in terms of global intellectual leadership, it is no longer alone in the
race, with a much more multi-lateral world economy being established. As explored
earlier, today’s digitalised economy means that IA is playing an increasing role in
enabling nations to stay competitive on the world stage. Developing the taxonomy
and measures of IA for these unicorns is therefore a proposed project.
See “The Start-Up Nation” (Senor and Singer 2011)

1
Private communication with a Chinese WTO negotiator around 1999.

2
5.4 Sustainable NIC (SNIC) 61
Fig. 5.5 The unicorns of the world as of 2017. (Source: WEF)
5.4 Sustainable NIC (SNIC)
In 2014, when two of us authors, Professor Leif Edvinsson and Professor Carol Lin,
met in a workshop in Malmö, Sweden, we talked about the possibility of a totally
different economic landscape driven by the advancement of information and com-
munication technologies (ICT). At that time, smartphones had already become pop-
ular, yet the Internet of Things was not well known. We envisioned the power of
networking, connectivity, and contactivity and together we drew a new map captur-
ing NIC 3.0 or sustainable NIC (SNIC) (see Fig. 5.6). Our rationale was that, within
ten years, prevailing issues of concern would look quite different. That is, some
popular indicators would become less important (e.g. years of education), while
other issues would surface (e.g. future energy supply, cyber security). As a result, a
44-indicator SNIC model has been developed and validated. We used a set of com-
mon terminologies to describe the simple concept that education, public structures,
health, and regeneration capacity would become the four pillars of a healthy nation
in the future. Firstly, education is the backbone of societal development. Rather than
focusing on years of education and pupil-teacher ratios, we regard scientific educa-
tion, management education, and language skills as being more important once a
society has advanced to a certain level. In turn, good public structures, such as
future energy supply and legal and regulatory frameworks, facilitate societal devel-
opment. Public health is an enhancer of national development and well-being;
health infrastructure, pension funding and the like are therefore important. Finally,
regeneration capacity, such as knowledge transfer and innovation capabilities, keeps
the society viable and sustainable. Nevertheless, these four pillars need to be
Fig. 5.6 An early iteration of SNIC
connected in order to maximise their respective functions. The dotted circle of

connectivity and contactivity (CNC) is therefore the vital link that binds the four
pillars together.
Although the SNIC model has been in place for some time, it has not yet been
published and used in practice as the building of a new database requires resources.
We however believe the SNIC model will act as a good supplement of the NIC
model. While the current NIC model covers a comprehensive scope of national
intangible assets and serves as a basic national health check, the SNIC model can
guide national leaders to act today with the future in mind, much like an intellectual
vitamin taken today to strengthen a nation’s future readiness.
5.5 China’s View on IA, IC and IPR
China will overtake the US to be the world’s largest economy by 2030, forecasts
PwC ( 2017). But this shift has not passed unnoticed by US or Europe. It may thus
be instructive to observe the recent thrusts made by the Chinese government in rela-
tion to its intangible assets. Also, the recent “wake-up call” that the US is trumpet-
ing out throughout the world and Europe follows will likely result in a push-back on
Chinese expansions. Of particular concern appears to be issues that are IPR related.
In 2016, it made the change to include R&D expenditure in its GDP calculations,
bring it in alignment with the general methodology adopted by other developed
5.6 Emerging Standards from the ISO 63
countries like the US, Canada and Australia, for measuring economic activity. This
comes at a time where China’s R&D spending has been experiencing rapid growth,
from 0.57% of GDP in 1996 to 2.08 percent in 2014. (‘China adjusts method of
calculating GDP’ 2016).
In recent years, China has also been placing increased focus on enabling public
entrepreneurship and mass innovation, which it believes will contribute towards
narrowing the country’s gap and overcoming social inequality by, for instance,
enabling rural migrant workers to start their own businesses and hence promote
urbanisation in previously rural areas. (‘Innovation and entrepreneurship brings
economic vitality’ 2015).
In early 2017, the State Council launched a national plan relating to the protec-
tion and application of IPRs, with the aim of improving its legal environment for
intellectual property and strengthening its management of IPRs (‘China releases
plan on IPR protection, application’ 2017). The plan puts forth a set of concrete
targets: by 2020, the country should achieve 12 patents per 10,000 persons, a total
of 2.2 million registered works, and a 80% degree of satisfaction among the public
in relation to the country’s protection of intellectual property.
Later that the same year, the State Council released a set of guidelines aimed at
further strengthening the implementation of its innovation-driven development
strategy by speeding up efforts to commercialise scientific achievements (‘China to
further strengthen innovation-driven development’ 2017). This includes enhancing
knowledge relating to IPRs and the marketing of intangible assets such as patents,
as well as providing proper guidance for maker spaces and better incentive mea-
sures for the attraction and retention of local and foreign talent. The digital economy
as well as advanced manufacturing and emerging industries have been specifically
highlighted as sectors of interest.
5.6 Emerging Standards from the ISO
The international Organization for Standards, ISO is a global membership organiza-

tion, working close to WTO-World Trade Organization, as well as OECD and other
global organizations. See www.iso.org
Two major milestones regarding ISO were launched 2018 as well as 2019. One
is on Knowledge Management, the other on Innovation Management System. It can
be seen as an effort to routinize the process of handling internal processes and the
systems for the critical Organizational Capital (OC). OC is also the multiplier for
the other components of Intellectual Capital, i.e. Human Capital and Relational
Capital.
ISO 30401 is a standard for Knowledge Management, to support how organiza-
tions develop and use knowledge management system. Very much a system for
Intangibles framed and turned into tangibles. ISO30401:2018.
Fig. 5.7 ISO 56002:2019 overview. (Source RI.SE)
ISO 56000 is a group of Innovation Management approaches on standard p rocess

design for Innovation Management. It might be seen as a guidance to challenge the
established approached as well as handle uncertainty and risk more effectively. ISO
56002:2019 (Fig. 5.7).
Part III
Closing the IA Gap
Chapter 6
Strategic Initiatives
These conclusions focus essentially on Sweden. A similar program of strategic

initiative must be developed for each nation, preferably in a workshop format.
However, several of the proposed initiatives for Sweden are of international scope
and are therefore likely useful for other small high-tech nations. Even the national
initiatives may be useful as most modern countries are organized in a similar
hierarchical-functional way and have similar problems, in particularly in coordina-
tion among agencies of new cross-the-board issues with no natural institutional
home, or “champion”, like IA.
A key strategic conclusion is that incentives to learn are needed to counter
observed complacency in both business and academia.
This pre-study provides concerted signals that Sweden is losing its position
among the IA elite whereas the public narrative is still that of an “IA super power”.
Sweden appears to be “resting on its laurels” but has all the resources to retake its
position by a new, or renewed, policy initiative. This challenges the communication
and awareness of what strategy and initiatives need to be undertaken both at a
national and enterprise levels to remedy such loss of position, and in particular,
which actor would be best placed to drive and coordinate IA efforts in Sweden.
Today, IP, IC and IA issues appear scattered across many agencies with large gaps
in coordination.
A key conclusion is that risk of failure (in business), loss of careers (in academia)
and pensions (for all but the most financially independent) may hinder all-important
learning by experimenting with new things, which projects to further invest in, etc.
Instead, low-risk decisions are made on the margin, guaranteeing, in the short-run:
business, career and pensions. As the rest of the world is getting highly educated and
strive for influence and a better life, incentives to learn are needed to counter
observed trends of complacency, and contribute further to global IA. This is a key
strategic conclusion and some of the proposals aim at addressing this apparent defi-
ciency in incentive by aiming at reducing risk of failure, career and wealth instead
making them–the failures, falsification and philanthropy–part of a learning the new.
68 6 Strategic Initiatives
Based on the pre-study results and discussions in Chaps. 1, 2, 3 and 4 we propose

to develop a strategy to close the IA gap consisting of initiatives at the national and
enterprise level along different tracks:
• Coordination of IA-related initiatives to ensure traction and buy-in among vari-
ous stakeholders;
• Awareness building initiatives to increase the level of understanding and aware-
ness relating to IP, IC and IA; and
• Initiatives which expand our understanding of IP, IC and IA by exploring new
and relevant areas for research.
Incentives to learn would include competitions in learning, access by industry
and extended philanthropic funding from new ventures like ICT and AI.
These initiatives aim at better informing a policy discussion, while building a
global team to engage with IA.
Table 6.1 provides an overview of the proposed initiatives and our assessment of
their level of strategic importance and urgency, linked to different levels of engage-
ment across the general public, the national government, and among enterprises.
6.1 Coordination Initiatives
6.1.1 Strategic Hub
A strategic hub for IA initiatives could serve as a coordination mechanism and act
as a “start engine” to begin acting on the suggested initiatives. We propose the pro-
totyping of such a strategic hub during 2018 in order not to lose momentum as
describe in the above sources. This hub can be based inside Sweden or outside
Sweden with roots in a broader EU context or global context, and play a central role
in important strategic alliances with various national and international actors across
the spectrum of relevant stakeholders (government, industry including SMEs and
entrepreneurs, academia, not-for-profit enterprises, etc), for instance, exploring an
alliance with WEF to hold a new Davos meeting in Stockholm with discussions
centred around IP, IC and IA.
The development of the strategic hub can be kicked off with interactive work-
shops and webinars on IC and IA, with relevant actors such as Vinnova and PRV.
6.1.2 IA Contract
An IA contract for leveraging hidden IA of Sweden is discussed. This could include

an obligation to patent protect and license research by universities funded by gov-
ernment. Think of this project as a “social contract” for IA, cutting across economic,
social and environmental concerns, really creating incentives to learn!
6.1 Coordination Initiatives 69
Table 6.1 Strategic initiatives to bridge the IA gap and their importance and urgency
General public National government Enterprises

6.1.1 Strategic hub or lab
(beginning with workshops, webinars, etc)
Coordination
6.1.1 WEF Alliance

6.1.1 IA Alliances
6.1.2 IA Contract
6.1.3 IA Investment
Fund
6.2.1 IA Week (+ universities)

6.2.2 IA Ranking
Awareness
building
6.2.3 IA Cheques
6.2.4 IA Oscars
6.2.5 IC & IA Lexicon on Wikipedia
6.2.6 IA on Youtube
6.3.1 IA Observatory
6.3.2 Corporate IA data-
base
Expanding our
understanding
6.3.3 IA, Digitalisation and Competitiveness

6.3.4 Trade in Ideas
6.3.5 SNIC
6.3.6 Bridging ELSS to economic models
6.3.7 Developing
MOOC curriculum
Legend:
Colours denote ranking of strategic initiatives according to level of importance and urgency
High
Middle
Low
6.1.3 IA Investment Fund
An investment fund based on “IA rating” of companies and countries (bond mar-
ket). A Venture Fund with Aeropa is proposed.
6.2 Awareness Building Initiatives
6.2.1 IA Week
A similar initiative to the Japanese “IA -week”, a Pentahelix initiative held in during
last 13 years, is proposed as an annual awareness building activity across govern-
ment agencies, businesses, in OECD style format of key notes and discussions,
round tables and social events over at least 2 days.
6.2.2 IA Ranking
At some point an international ranking will be needed. This likely requires an

International conference. Compare Shanghai index, which is based in the rules of
ranking academic contributions by publication, research efforts, staffing. Such rank-
ings should contribute to knowledge ranking like Global Knowledge Index (GKI)
initiative by UNDP in cooperation with (i.e. funded by?) MBR Foundation.
6.2.3 IA Cheques
A key proposal, based on a solid economic understanding, are incentives to take

risks in business and academia and private. This proposal is a about organizing such
no-strings-attached grants but for IA, based on the Israeli and Chilean experience
with high-potential ideas in science and technology. This requires a substantial
increase in the scientific competence of the agency/institutions handing out such
“IA cheques”. Action research of IA value creation, to inspire more prototyping and
reveal new value patterns by usage of e.g. IA checks applied to SME.
6.2.4 IA Oscars
Shape an Annual award for societal contribution in a global competitive arena: An

“Oscar” in IA, potentially funded by PRV, Vinnova and private actors. Purpose:
work with “hidden inventions”, reward people who make a difference.
6.3 Initiatives which Expand our Understanding 71
6.2.5 IP, IC & IA Lexicon on Wikipedia
A smaller, but quite important initiative in awareness building is to develop a

“reference” lexicon on IP, ICA and IA. Such awareness building will clarify the
meaning of these component and also allow for a broad participation of research-
ers from all over the world to contribute towards a common goal of awareness.
6.2.6 IA on Youtube
In order to popularize and increase awareness, Youtube recording of Swedish IA

initiatives, in particular including this pre-study material. The format of Podcast
interviews could also be used for knowledge share.
6.3 Initiatives which Expand our Understanding
6.3.1 IA Observatory
This is the key strategic initiative where the beginnings of the knowledge generating
arm of a strategic hub, in form of an IA Observatory-Lab for research & prototyp-
ing, would be initiated. This initiative needs would start with the built-up global
team and leveraging extant relations with international bodies and others.
6.3.2 Corporate IA Database
A Database of corporate SME IA assets would be created to better inform policy.
6.3.3 IA, Digitalisation and Competitiveness
A very major issue today is the implications of digitalization on economic, social

and environmental policy. This is a multifaceted study with many parts. As digitali-
sation has profound implications on competitiveness through its implication on IA.
6.3.4 Trade in Ideas and Incentives to Learn
If we separate IP from IC and IA this opens a market for the IA to which private
property rights can be assigned. A way to think about this is then as asset markets.
These markets have been studied to some length for patented technology, based on
the proposed concept of Trade in Ideas (Ullberg 2012). Similar dynamism can be
expected for other IP, copyrights, etc. A project is therefore proposed to further
investigate the institutional performance and behavioural properties of such markets.
This project thus ties into the trade surplus in Sweden of IPR. It would begin to
evaluate, at a national and company level the returns on these assets, the position of
Sweden compared to other small nations and identify suitable partners for Sweden
in such development.
6.3.4.1 Managing Risk in Policy Agenda through Incentives to Learn
Creating incentives to learn would be a major policy issue and based on better man-
aging the risks in the economic system of learning “the right stuff”, motivated by the
demand side: economy/business, society and environment.
6.3.5 Sustainable NIC (SNIC)
This project would upgrade current NIC models, maps with new statistics to cap-
tures some more sustainable aspects. This proposal relates to including business
relations as parameter, suggesting that sustainability can only be achieved by mar-
kets, emphasizing low transaction costs.
6.3.6 Bridging ELSS to Economic Models
Current literature in IA has developed quite independently from the economic lit-
erature, as it has its root in accounting for off-balance sheet business assets. A sys-
tematic literature review to better connect ELSS model with the economic literature
is proposed. Hypothesis formulation of economic nature, based on new models, can
then be tested and presentation of the data in pedagogical forms.
6.3.7 Developing MOOC Curriculum
Using the tools of digitalization, a new curriculum for Massive Open Online Courses
(MOOC) would be developed as education in IA. This likely requires freed- up
university initiatives. Credits for such classes provide incentives to learn.
Chapter 7
Workshop
Workshops (or colloquiums) are proposed to address the policy challenges of small
countries, starting with Sweden, the Nordics and other small high-tech countries.
The workshops are proposed on two themes: policy initiatives and industry ini-
tiatives. The first has an emphasis on what policy could do to create the incentives
through institutional and taxation policies, and the second what key industrial own-
ers could do to initiate private initiatives through an investment fund.
7.1 Policy Workshop
The policy workshop follows the strategic themes outlined in Chap. 6 Strategic
initiatives, on creating a strategic hub or lab at the national level for coordination of
the IA issues across government agencies and existing industry cooperation. Such a
laboratory would then allow for strategic initiatives to carry out prototyping and
experimenting with an integrated IA approach for a possible coordinated competi-
tive agenda that integrates economic, social and ecological aspects.
The proposal is to create such a laboratory as an outcome of a strategic policy
workshop or colloquium with representatives of government, industry and academia.
Both these initiatives aim at organizing the work – coordinating today’s disparate
field of actors at various levels of awareness– to close any IA gap for global com-
petitiveness as the economic system moves from capital and labour to intellectual
capital and human ideas.
74 7 Workshop
7.2 Industry Workshop
The industry workshop follows thematic investments and relies on the creation of an
institutional investor or an investment fund. There are many models for this, for
example the Danish Investment Fund. However, the purpose would be to create
awareness of IA and existing tools to measure IA starting with what has been out-
lined in this book, then create a strategic agenda, where to invest for competitive-
ness of the industry or industries.
This initiative allows thus to create a very market-driven approach but with a
national strategic agenda in mind, where participants primarily from industry but
also from policy making are present together with academia.
A key point discussed with industry is a general need for better cooperation with
policy makers.
Such a lab would then be market driven, and the real economic, social and envi-
ronmental demands would drive the strategic policy discussion, both for business
policy, research policy and government policy. Importantly, such a workshop would
have an international focus and representation as small-countries wealth relies to the
most part from export oriented economic policy. These issues then quickly become
global but the laboratory would be able to be a coordinating laboratory for worthy
initiatives.
Part IV
Emerging New Trade Structures and IA
Chapter 8
The Urgency of the Topic of IA for Sweden
The most recent challenge of trade does not come from economics, geopolitics or
the environment but nature itself. The COVID-19 virus has shown how incredibly
vulnerable the economic system has become, relying on “just-in-time”, weak inter-
national institutions that do not enforce international rules, like WTO. It lays bare
the weakness of these institutions, some only 20 years old. A reform is needed. This
makes the creation of options necessary meaning regional trade or even intra
country-trade. Just-in-time protocols showed that most “fat” was taken out of sup-
ply chains and some redundancy is needed. Calls for de-globalization rises with the
prospect of lesser global specialization and thereby growth.
All these factors impact head-on countries depending on an export-oriented
strategy since long, including Sweden. Free-trade solutions, including more effi-
cient regional and international rules are needed, which take into account such natu-
ral disasters, geopolitics and economics. In a sense the triple-policy agenda got
another sister: global pandemics and other international natural disasters.
Anticipation and outlook, based on post-2000 growth rates, is that services
exports will pass goods exports in 2039 and IP export in 2039 will be at the level of
goods in 1999. Immediate attention must be the services export. The most strategic
issue is IP see Fig. 8.1.
These issues will require a strategic policy from Sweden, in turn shifting the
investment towards intellectual capital and human ideas.
To do this, more ideas must have a chance to survive until they arrive at the pol-
icy table. Awareness of these issues are needed, and national initiatives are needed
post-COVID-19 to not only assess the “new” risks but manage them in a slow-
moving international free-trade system.
This calls for yet another workshop or colloquium to retake the political and
economic initiative together with the new future pandemic concerns.
78 8 The Urgency of the Topic of IA for Sweden
Fig. 8.1 Anticipation of trade 2039. Services will pass goods. IP will be at good’s level 1999
Appendices
Taxonomy/Glossary of IA & IC Terms
Digitalising and Digital Assets

Digitalising, i.e. the digital packaging of knowledge into, for example, knowledge
recipes, is a core intangible when seen through the lens of IA and IC. Digitalising
make it possible to share and manage knowledge, and might act as a multiplier or
springboard for human capital.
Future Center
A Future Center, at its core, acts as a prototyping space for an organisation’s struc-
tural capital (SC) to support and multiply the potential and development of its
human capital (HC). Its dynamics can be captured in the formula SCxHC>1.
The first Future Center, the “Skandia Future Centre”, was founded in 1996 by
Leif Edvinsson when he was the IC Director for Skandia (‘The Pioneer - Skandia
Future Center’, 2015). Since then, the concept has been implemented in many loca-
tions around the world with success. For example, the Dutch government started
five Future Centers for the public sector as units under its various ministries, with
the largest one being the LEF future centre under the Dutch Ministry of Infrastructure
and the Environment (Rijkswaterstaat, n.d.). One of the Netherlands’ largest banks,
ABN Amro Bank, also developed an initiative capturing the Future Center concept
in 2007 called Dialogues House that aims to serve as an inspiring meeting place
plus service innovation laboratory (‘Dialogues House’, n.d.). In June 2017, France’s
President Macron inaugurated the new Station F in Paris, said to be the largest
startup campus in the world (‘Station F’, n.d.), with next one, Camp.fr, to be inau-
gurated in Aix-en-Provence in autumn 2017 (‘thecamp’, n.d.). The Future Center
Alliance connects Future Centers and similar dedicated innovation environments,
spanning from Europe to Asia (‘futurecenteralliance’, n.d.). Recently, the Future
Center Alliance in Japan has developed this concept further into Wiseplace (‘Future
SpringerBriefs in Business, https://doi.org/10.1007/978-3-030-55666-2
80 Appendices
Center | Asia Pacific Intellectual Capital Centre’, n.d.), an ecosystem of Future

Centers, Innovation Centers, and Living Labs, for the purpose of developing soci-
etal renewal initiatives.
The Future Center concept has now been experienced by thousands of people
around the world, and can be seen as a platform for prototyping and promoting IA
and IC, with potential future iterations to come (Edvinsson, 2017). Future Center
3.0 has been described by Leif Edvinsson as a platform for connectivity and contac-
tivity – a type of relational capital, a thoughtware, a wise place, and a testbed for
societal innovation, illustrated with a simple formula: 1 + 1 = 11.
Gapminder
Gapminder, named under the inspiration of the phrase “Mind the Gap”, is a soft-
ware program that visualises the dynamic statistics of national IC, and was devel-
oped by the late Professor Hans Rosling.
Human Capital
Human capital includes knowledge, wisdom, expertise, intuition, and the ability of
individuals to realize national tasks and goals. This focal area also includes the val-
ues encompassed within the culture and philosophy of the nation. Human capital
constitutes a population’s total capabilities as reflected in education, knowledge,
health, experience, motivation, intuition, entrepreneurship and expertise; in addi-
tion, a highly skilled labour force, the availability of scientists and engineers, a
female labour force, and health (life expectancy, physicians) are also good indicators.
IA
IA is short for intangible assets. See “intangible assets” for a detailed description.
IC
IC is short for intellectual capital. See “intellectual capital” for a detailed description.
IC Liabilities
Intellectual capital is more appropriately derived as a net figure (subtracting intel-
lectual liabilities from intellectual assets) rather than a mere summation of the orga-
nization’s identified intellectual assets. For example, when a company fails to
convert its human capital into future sales, it may suffer loss of reputation due to its
inability to convert its human capital investment. That is, there will be a reduction
(or impairment) in customer capital and organizational performance.
IC Navigator
The Skandia Navigator management and reporting model aims to provide a bal-
anced, overall management perspective of the company’s intellectual as well as
financial capital. The ratios and indicators of intellectual capital are arranged
according to four areas of focus: Customer Focus, Human Focus, Process Focus,
and Renewal & Development Focus.
IC Rating
The IC Rating model contains three distinct parts: the vision/mission and business
idea, the business strategy, and the surrounding business conditions. Please refer to
Fig. 3.1 for the IC rating model.
Appendices 81
IC Risk
Intellectual capital, like other assets, runs the risk of being wrongly utilized or
stolen. To prevent such incidents from happening, a patented IC risk system, filed
by John Blasko, was successfully approved in December 2002. The system has,
firstly, a database with patent and patent application information as is typically
found in patent docketing systems. The system has a second database for storing
information related to risk elements associated with the acquisition of inventions,
the prosecution, maintenance and enforcement of patents, and the practicing of
inventions. The elements of risk may be weighted. The system graphically displays
the weighted risk information such that the user has a visual indicator of the relative
risks associated with a patent asset or a patent prosecution transaction.
IC Value Scheme
A cascade model which illustrates the building blocks that together form the foun-
dation of the company’s intellectual capital and its relation to market value.
Intellectual capital is broken down into human and structural capital, which is fur-
ther broken down into customer and organizational capital. This is then classified as
process and innovation capital.
Innovation Capital
Innovation capital relates to the renewal strength of a company, expressed as intel-
lectual property, i.e., protected commercial rights and other intangible assets and
values, such as knowledge recipes and business secrets.
Intangibles
Intangibles are not made of physical substance, hard to be assessed, felt, measured
or moved; incapable of being perceived by the sense of touch, as incorporeal or
immaterial things; impalpable; not definite or clear to the mind, hard to value; exist-
ing only in connection with something else.
Examples of intangibles include: self-confidence, responsibility, goodwill of
a business
Intangible Assets (IA) and Intellectual Capital (IC)
Intangible assets is a general term covering anything non-physical, such as patents,
trademarks, copyrights and business methodologies, goodwill and brand
recognition.
Intellectual capital is a special term that, in this report, covers, at enterprise level,
human capital, structural capital, and social capital; and at national level, human
capital, market capital, process capital, and renewal capital.
Intangible Assets (IA) and Tangible Assets
Tangible assets include land, vehicles, equipment, inventory, stocks, bonds and cash.
Intangible assets, unlike tangible assets, are assets that are not physical in nature.
Examples of intangible assets include: Corporate intellectual property (e.g., pat-
ents, trademarks, copyrights), business methodologies, goodwill and brand recogni-
tion. performance events, licensing agreements, service contracts, computer
software, blueprints, manuscripts, joint ventures, medical records, permits, and trade
secrets.
82 Appendices
Indefinite intangible assets can exist indefinitely, for example the brand name of
a company, which would be valid as long as the company exists; definite intangible
assets have a limited and defined lifespan, for example patents with expiry dates.
Related Wikipedia entry: https://en.wikipedia.org/wiki/Intangible_asset
Intellectual Assets
An intellectual asset is an investment in, for example, brands, design, technology or
creative works. The laws that protect the value of such assets are known collectively
as intellectual property. In short these are legally protected intangibles. As an asset
it is from accounting viewpoint possible to own it and include it in the balance sheet.
Examples of intellectual assets include: company names, domain names, logos,
names of clubs or restaurants and newspaper mastheads.
Intellectual Assets Initiative in Japan (WICI)
Japan launched WICI – World Intellectual Capital/Assets Initiative in 2007, advo-
cating the concept from financial reporting, business reporting and integrated
reporting and created key performance indicators (KPIs) for IAbM (intellectual
assets based management). Since then, annual WICI symposium was held at year
end in Japan, inviting experts from all over the world. As of 2014, WICI with its
global partners have developed the KPIs for the following industries: Electronic
components, Pharmaceutical, High Technology, Automotive-automobile,
Telecommunications, Mining, Fashion & Luxury, Electricity, and Oil & Gas. In
2013, WICI-IIRC (International Integrated Reporting Committee) partnership
was formed.
Intellectual Capital (IC)
Intellectual capital (IC) is the intangible value of a business, of which intellectual
property (IP) is but one component. It covers the organisation’s people (human capi-
tal), the value inherent in its relationships (relational capital), and everything that is
left when the employees go home (structural capital). The term is used in academia
in an attempt to account for the value of intangible assets not listed explicitly on a
company’s balance sheets. Intellectual capital is often considered a hidden asset. It
might broadly be defined as the collection of all informational resources a company
has at its disposal that can be used to drive profits, gain new customers, create new
products, or otherwise improve the business. As technology and process improve-
ments become more of a differentiating factor within modern enterprising, intel-
lectual capital is likely to become an even stronger force in the marketplace.
There have been several efforts to describe IC further, such as:
• Invisibles;
• Intangibles;
• Roots for the fruits (see Fig. 1);
• Future earnings potential; and
• Derived insights of head value.
On a national level, intellectual capital refers to national intellectual capi-
tal (NIC), consisting of human capital, market capital, process capital and renewal
capital.
Appendices 83
Relational future
& Culture
Flow present
past
Assets
IC = Derived insights about hidden VALUE for Future Earnings Capabilities
Fig. 1 “Roots for the fruits” perspective to IC
Examples of IC include:
At organizational level: employee knowledge, business systems and any proprietary
information that may provide the company with a multiplier effect and competi-
tive advantage.
At national level: human development index, image of country, government effi-
ciency and agility, and entrepreneurship.
Related Wikipedia entry: https://en.wikipedia.org/wiki/Intellectual_capital
Intellectual Property
Intellectual property (IP) is property, such as an idea, invention, or process, that
derives from the work of the mind, intellect, and original creative thought, such
as patents, copyright material, and trademarks. The IP system aims to foster an
environment in which creativity and innovation can flourish.
Examples of intellectual property include: inventions, literary and artistic works,
designs, symbols, names and images used in commerce
Related Wikipedia entry: https://en.wikipedia.org/wiki/Intellectual_property
Intellectual Property Rights
The definition of intellectual property (IP) rights are based on the Trade-
Related Aspects of Intellectual Property Rights (TRIPS) agreement. IP rights are
given to the “true and first” inventor, or creator, of the work of art. This “art” has
expanded from patents in 1474 to now seven different rights in TRIPS, each cover-
ing a different creative area. Their purpose is to encourage sharing of private infor-
mation and honoring the inventor or creator by giving exclusive, transferrable and
84 Appendices
licensable rights, thus creating both a social and economic exchange in human idea

s (Ullberg, 2012). They replaced royal privileges or guilds for an open system of
private ownership of rights.
The seven rights under the TRIPS agreement are:
• Copyright and related rights (i.e. the rights of performers, producers of sound
recordings and broadcasting organizations);
• Trademarks including service marks;
• Geographical indications including appellations of origin;
• Industrial designs;
• Patents including the protection of new varieties of plants; the layout-designs of
integrated circuits; and
• Undisclosed information including trade secrets and test data
(‘WTO | intellectual property (TRIPS) - what are intellectual property
rights?’, n.d.)
Patents protects a solution to a technical problem, either used in a product or a
process. It creates a market in patented technology and strong incentives to both
invest in further research and development and exchange – license – in complex
collaborations. For example an car contains about 3000 patents and a smartphone
about 20,000 or more, so one can say that what you really are buying is a bundle of
patents!
Copyrights protected in law protect a work of art such as books, music, painting,
sculpture, computer programs, films, etc. They are generally valid for 70 years but
some rights are indefinite (like Mickey Mouse in the USA). The rights can be used
for “fair use”, such as in documentaries, so they are not absolute.
Trademarks protect a name essentially used in branding of products and services,
countries, etc. These are the most used and currently likely the most valuable.
For example, IBM, Google, etc.
Industrial design allows for the protection of a certain physical design of a prod-
ucts or creative work. For example, some Italian designed cars are not only are fast
but have an elegant look to them.
Geographical indication is the newest type of IP right and originally intended to
protect French Wines, but are now used more broadly for coffee (Ethiopian Coffee)
and other products or services connected to the unique geographic location, thus can
protect a certain trade.
The layout-design of integrated circuits protects in a sense both the product and
the process in chip manufacturing.
Undisclosed information is in a sense the alternative to IP rights and protects trade
secrets and test data. This comes into play with, for instance, the copying of a secret
formula (for example Coca-Cola’s formula), which would disclose too much beyond
what can be excluded, or the premature disclosure of the health effects
of potential pharmaceutical drugs, which may require a decade of testing before
they are approved. The “quality” of a product is protected in this way.
Appendices 85
Knowledge Café
A metaphor alluding to the fact that knowledge workers might not work at the office
but at an open, inviting environment, like a café. It is a knowledge recipe for the
workplace of tomorrow for knowledge workers.
Leadership for IC
IC leadership is the bridge between human capital, organizational capital and cus-
tomer capital. It creates congruence and multiplicative effects between strategies,
structures, systems and cultures in the business environment, market and operating
environment in which an organization works, and can be described using a leader-
ship index.
Market Capital
Market capital refers to the general assets embodied in the nation’s relationship with
the international market. It is the aggregate of a country’s capabilities and successes
in providing an attractive, competitive solution to the needs of its international cli-
ents, a country’s investment and achievements in foreign relations, coupled with its
exports of quality products and services.
Navigation Intelligence
Navigation intelligence relates to the capability to navigate intellectual as well as
financial capital based on an external perspective. It is the focused capability to
solve emerging issues where an enterprise has a mandate.
NIC
National intellectual capital (NIC) is comprised of the knowledge, wisdom, capabil-
ity, and expertise that provides a country with a competitive advantage over other
countries and determines its potential for future growth. The NIC model, compris-
ing human capital, market capital, process capital and renewal capital was first
developed by Professors Carol Y.Y. Lin and Leif Edvinsson (2011) and later refined
to NIC ELSS (Lin, Edvinsson, Ståhle, Ståhle) model (Ståhle, Ståhle, & Lin, 2015).
Related Wikipedia entry: https://en.wikipedia.org/wiki/National_Intangible
_Capital
Organizational Capital
Organisational capital relates to systematized and packaged competence, plus sys-
tems for leveraging the company’s innovative strength and value-creating organiza-
tional capability. It consists of process capital, culture and innovation capital.
Related Wikipedia entry: https://en.wikipedia.org/wiki/Organizational_capital
Process Capital
Process capital is the cooperation and flow of knowledge that require structural
intellectual assets, such as information systems, hardware, software, databases,
laboratories, and national infrastructure, including transportation, information tech-
nology skills, communications and computerization, technological readiness and
telecom services, personal computers, cellular subscribers, cyber security, quality
86 Appendices
scientific research institutions, knowledge transfer, a legal environment for

entrepreneurship, a minimum number of days to start a business, a quality manage-
ment system, and agricultural productivity.
Related Wikipedia entry: https://en.wikipedia.org/wiki/Process_capital
Renewal Capital
Renewal capital refers to a nation’s capabilities and real investments made in an
effort to increase its competitive strength in future markets, which, in turn, encour-
ages future growth. Renewal and development assets include investments in research
and development, patents, trademarks, start-up companies, the number of scientific
publications, the number of patents registered in the US, EPO patent applications,
total expenditure on R&D, and capacity for innovation.
Skandia Future Center
Skandia Future Center (SFC) is an organizational laboratory for prototyping orga-
nizations and work methods of tomorrow. It acts as a prototyping workspace for
channeling, organizing and stimulating power of innovation. See “Future Center”.
Structural Capital
Structural capital is the value of what is left in an organisation when the employ-
ees – the human capital – have gone home. It includes databases, customer lists,
manuals, trademarks and organizational structures.
Related Wikipedia entry: https://en.wikipedia.org/wiki/Structural_capital
Utility Patent
A utility patent is a patent that covers the creation of a new or improved – and use-
ful – product, process or machine. Also known as a “patent for invention,” it prohib-
its other individuals or companies from making, using or selling the invention
without authorization.
Related Wikipedia entry: https://en.wikipedia.org/wiki/Utility_(patent)
Wissenskapital
Wissenskapital, which is German for knowledge capital or intangibles, is the
German concept for IA and IC, and implicitly captures the connotation of knowl-
edge flow. When applied to the balance sheet it is referred to as Wissensbilanz, i.e.
an intellectual capital statement.
Refer to Sect. 3.1 for a detailed description of Wissenskapital and Wissensbilanz.
NIC Methodology
The modified and expanded 48-indicator ELSS NIC (named NIC for brevity) model
was finalized through two rounds of Delphi method, rated by 16 experts who are
NIC researchers. To further assure the validity of the selected variables in measuring
the four constructs (human capital, market capital, process capital, and renewal
capital), statistical analyses were utilized to test the measurement model. Data
Appendices 87
a nalyses showed that all the variables are significant at α = 0.05, which means the
selected variables are valid indicators to represent the four component capitals and
support the validity of this measurement model. Using the variables listed in Figs.
2.1 and 2.2, we collected data for the maximum number of 59 countries from the
IMD database. The data analyzed for this report, describes 59 countries over a
period of 18 years, from 2001 to 2018.
In this study, there are two different types of data: data with an absolute value,
such as “patents per capita,” and data with a qualitative rating based on a scale of 1
to 10, such as “image of country.” Although subjective, qualitative rating on the
degree or magnitude of certain variables is unavoidable, as evaluating intangible
assets cannot be fully represented by merely adding up absolute numbers. For a
meaningful integration of the quantitative score and qualitative rating, the ratio of
the absolute value relative to the highest value of each quantitative variable was
calculated and multiplied by 10 to transform the number into a 1-to-10 score. The
data transformation procedures have been repeated for all numerical indicators of
human capital, market capital, process capital, and renewal capital. The NIC data-
base is on Excel. The Excel system automatically adjusts for missing values by not
including them in the calculation of average indicator values.
In terms of NIC indicators, a veteran intangible asset scholar, Roos (2017) posed
the following three questions for relevant researchers:
• “Is the chosen set of indicators complete?”
• “Are the indicators distinct from each other so that no double counting takes
place?”
• “Is construct validity in place for the indicators chosen as relates to the construct
that is to be captured?”
To answer Roos’ first question, while no scholar or institution dares to say their
model is 100% complete, we are confident that NIC model can be considered rela-
tively complete. For example, IMD’s World Competitiveness Report is based on
more than 340 indicators, while in contrast WEF’s Global Competitiveness Report
is based on around 110 indicators, yet the latter report still has its value. When a
simple model can catch a majority of the essence it intended to capture, it is consid-
ered valuable. With a modest number of indicators – 48 – NIC does not require a
fleet of researchers to update the data every year for reporting and trend analysis, yet
it captures the core essence of national intangible assets. Further, the NIC country
ranking has been consistent with people’s expectations on top performers, with
Switzerland and Nordic countries on the top 10 list.
For Roos’ second question, NIC model covers human capital, market capital,
process capital, and renewal capital. These capitals are distinct from yet related to
one another. Human capital is the base of a nation which market capital, process
capital, and renewal capital build upon. In turn, process capital is the infrastructure
of a nation that facilitates market capital and renewal capital. The R&D and innova-
tion expressed in renewal capital help enhance market capital and process capital.
Indeed, dimensions of some other national intellectual capital models are similarly
88 Appendices
not distinct from each other. For example, one study used social capital, structural
capital, human capital and relational capital to represent national intellectual capital
(Mačerinskienė, Mačerinskas, & Aleknavičiūtė, 2016), where by definition rela-
tional capital is part of social capital. As a result, such models measuring NIC would
capture these interactions and thereby do not have distinct dimensions.
For Roos’ third question, the construct validity of NIC has been statistically vali-
dated before it was put to use. To further validate NIC model, two national level
intangible assets ranking comparisons were made. Country ranking correlation
between NIC and SPI (Social Progress Index, by Michael Porter) of the overlapped
56 countries for the most recent 3 years is .81; country ranking correlation between
NIC and GII (Global Innovation Index, by Cornell and INSEAD universities) of the
overlapped 57 countries for the most recent 3 years is .90.
Figure 2 provides detailed definitions to the NIC indicators.
Fig. 2 NIC Indicator definitions for human, market, process and renewal capital
Appendices 89
alaxy of Some IC and IA Actors and Bench Learning

G
Alliances
This section lists a number of key IC and IA actors that maps the global galaxy of
IA. see Fig. 3.
Aalto University, Helsinki, Finland This is one of the few universities in the
Nordic Countries with a special chair for intellectual capital, Professor Pirjo Stahle.
Aalto University was founded in 2010 from the merger of Helsinki University of
Technology, the Helsinki School of Economics and the University of Art and Design
Helsinki. The aim of the institution was to create a new innovative university com-
bining science and technology, business and economics, design and art, and its
name is a tribute to the life and work of Finnish architect Alvar Aalto.
For further details: http://www.aalto.fi
Areopa Areopa is a pioneering intangibles and IC consulting firm based in
Belgium. It has been working globally over the past few decades on the subject of
IC and IA Management.
For further details: http://www.areopa.com/
Brookings Institution, Washington, USA This is a non-profit public policy organi-
zation based in Washington, DC. It published a report called “Unseen Wealth” in
2000, which is a report by the Brookings Task Force on Intangibles.
Fig. 3 Some global IC & IA actors

90 Appendices
For further details: https://www.brookings.edu/book/unseen-wealth/

Bundes-ministerium für Wirtschaft und Arbeit In Germany, the Federal Ministry
of Economics and Labour (German: Bundes-ministerium für Wirtschaft und Arbeit)
initiated a major project in 2004 for mapping the IC and intangible assets of enter-
prises. This involved reporting on intangible assets (German: Wissenskapital) via an
intellectual capital statement (German: Wissensbilanz) and was to be included as a
supplement to the traditional balance sheet. This project involved both SMEs as
well as larger enterprises and spanned nationwide. As a result of this project, a list
of special guidelines relating to the reporting of intangible assets was published.
For further details: http://www.bmwi.de/Navigation/EN/Home/home.html
http://www.akwissensbilanz.org/Toolbox/BMWI_Wissenbrosch05.pdf
CADIC As an extension of InCaS, CADIC (short for “Cross Organizational
Assessment and Development of Intellectual Capital”) was launched.
For further details: www.cadic-europe.org
Center for Intellectual Property (CIP), Gothenburg, Sweden The Center for
Intellectual Property (CIP) is an interdisciplinary development center focused on
knowledge-based business founded in 2000 through a collaboration of academia
and industry. It is currently jointly governed by Chalmers University of Technology,
University of Gothenburg, and Norwegian University of Science and Technology.
For further details: http://cip.gu.se/
Chengchi University, Taiwan One of Taiwan’s most prestigious higher education
institutions, the National Chengchi University is regarded as one of the Asia’s most
important centres for humanities and social sciences. It has been pioneering research
on the subject of IC and the national IC database, the latter developed by Professor
Carol Y. Lin.
For further details: http://www.nccu.edu.tw/?locale=en
Committee of the Regions (CoR) The European Committee of the Regions (CoR)
is an EU advisory body composed of locally and regionally elected representatives
coming from all 28 Member States. It focuses on developments impacting regions
and cities, including the IC of regions.
For further details: http://www.cor.europa.eu/
Copenhagen Business School (CBS), Copenhagen, Denmark The institution was
an early and prominent pioneer on IC accounting together with Ministry of
Economics in Denmark.
European Federation of Financial Analysts Societies (EFFAS) EFFAS is a Pan-

European grouping of the National Societies of Financial Analysts. They have a
special committee on Intellectual Capital.
For further details: http://effas.net/
Appendices 91
Fraunhofer Institute, Berlin, Germany This institute is the base of a pioneering

research team on Wissenskapital (German for intangible assets), and developed
concepts which they exported to countries in Asia as well as Brazil.
For further details: https://www.fraunhofer.de/en.html
IAM IAM is a business media platform focusing specifically on IP. It views intel-
lectual property as a business asset and tool, rather than simply as a legal right.
For further details: http://www.iam-media.com/
IAS 38 International Accounting Standard (IAS) 38 emerged as a result of the IC
community’s work in addressing the intangible value dimensions in the accounting
system. IAS 38 outlines the accounting requirements for intangible assets, which
are identifiable non-monetary assets without physical substance.
For further details: http://www.ifrs.org/issued-standards/list-of-standards/
ias-38-intangible-assets/
ICM Group, California, USA Through Pat Sullivan and with the help of Leif
Edvinsson, the company initiated an exchange on experiences and extracting value
from IA and IPR among practitioners within IP rights in California.
For more information, contact psullivan@icmgroup.com.
ICMG ICMG is a pioneering consulting firm based in Japan, provides intellectual
capital management services for companies in Japan and internationally.
For further details: http://icmg.co.jp/en/
InCaS One of the major European Commission programmes emerging as an out-
come of the RICARDIS programme was the development of Intellectual Capital
Statements, i.e. InCaS, which was based on what was done in Germany (see
Wissenskapital and Wissensbilanz). This was subsequently disseminated to several
EU countries.
For further details: http://www.psych.lse.ac.uk/incas/
Intellectual Capital Accreditation Association (ICAA) ICAA is an international,
non-profit association founded in Portugal in 2010. It brings together IC researchers
in Portugal and from the Spanish-speaking community.
For further details: https://icaa.pt/en
International Integrated Reporting Council (IIRC) The IIRC is a global coalition
includes regulators, investors, companies, standard setters, and the accounting
profession.
For further details: https://integratedreporting.org/the-iirc-2/
Journal of Intellectual Capital The journal is a pioneering peer-reviewed interna-
tional publication dedicated to the exchange of the latest research and best practice
information on IC. It is a journal under Emerald Publishing and has been online
92 Appendices
since 2000. It was recently accepted by Clarivate Analytics into the Social Science
Citation Index (SSCI), which means that the journal will receive an impact factor
when the new metrics are released in June 2018.
For further details: http://www.emeraldinsight.com/journal/jic
KMA KMA is a comprehensive service provider network in knowledge manage-
ment, aimed at gathering leading Austrian experience. It was established by Andreas
Brandner and is supported by Austrian IA pioneers such as Professor Guenter Koch,
who is the former leader of Seibersdorf Research Institute and co-founder of New
Club of Paris.
For further details: http://www.km-a.net/english/k4dev/
Macquarie University, Sydney, Australia The university hosts pioneering IA and
IC researchers such as James Guthrie, John Dumay and Johan Roos.
For further details: www.mq.edu.au
Ministry of Economy, Trade and Industry (METI), Japan METI began their
work on intangibles, or soft economics, with a special institute called Softnomics
Center. For the last 15 years, METI has arranged the “Intellectual Assets” week as
a pentahelix stakeholder event involving industry, academy, Nikkei stock exchange
et al. to address the issues of intangibles and intellectual asset management (IAM)
in relation to Japan. Taka Sumita is a key pioneer for this initiative, inspired by the
developments in Germany relating to IA
For further details: http://www.meti.go.jp/policyintellectual_assets/pdf/
Japan%20METI.pdf
NIC 40 This is the world’s first database for the prototyping of national IC for 40
countries over 15 years is based on 48 indicators. The database was developed at
Chengchi University in Taiwan, by Carol Lin and Leif Edvinsson.
For further details: www.nic40.org
New Club of Paris This forum was founded to support the agenda setting on
knowledge economy for cabinets of various nations.
For further details: http://www.new-club-of-paris.org
NYU Stern School of Business, New York, USA The institution attracted the pio-
neering researcher professor Baruch Lev, from University of California, Berkeley,
to continue his IA research with them.
Organisation for Economic Co-operation and Development (OECD) For the last
30 years, OECD has been addressing the issue of intangibles and intellectual capi-
tal, by conducting international research and arranging conferences around these
themes. A leading team of pioneers from OECD include Alistair Nolan and
Dominique Guellec.
Appendices 93
For further details: https://www.oecd.org/sti/inno/46349020.pdf

https://www.oecd.org/sti/inno/40637101.pdf
https://www.oecd.org/daf/ca/Intangible%20Assets.pdf
RICARDIS The report “RICARDIS: Reporting Intellectual Capital to Augment
Research, Development and Innovation in SMEs” was published in June 2006 on
the role of intellectual capital reporting in the research field, and is an outcome of
the work of an expert group set up by the European Commission which comprised
of specialists from across Europe.
For further details: http://ec.europa.eu/invest-in-research/pdf/download_
en/2006-2977_web1.pdf
Université Paris-Sud, Paris, France The university has been pioneering IC and IA
issues for more than a decade. It hosts an annual global summit on these issues, and
has an European Chair on IC Management, led by Professor Ahmed Bounfour, who
is also the Executive Chairman of the New Club of Paris.
Waseda University, Tokyo, Japan The university, through Professor Hanado, was
one of the initiators, together with METI, for the work on intellectual asset manage-
ment (IAM)
World Bank The global institution has initiated much knowledge management and
IA-related reporting through, among others, Carl Dahlman and Nicolas Gorjestani.
World Intellectual Capital Initiative (WICI) WICI, the world’s business reporting
network, is a private/public sector collaboration, initiated by the big accounting
firms, aimed at improving capital allocation through better corporate reporting
information.
For further details: http://www.wici-global.com/
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Ståhle, P., Ståhle, S., & Lin, C. Y. Y. (2015). Intangibles and national economic wealth – A new
perspective on how they are linked. Journal of Intellectual Capital, 16(1), 20–57. https://doi.
org/10.1108/JIC-02-2014-0017.
The Economist. (2013, February 2). The secret of their success: The Nordic countries are probably the
best-governed in the world. The Economist. Retrieved from: https://www.economist.com/news/
special-report/21570835-nordic-countries-are-probably-best-governed-world-secret-their
The Pioneer - Skandia Future Center. (2015, June 10). Retrieved 8 November 2017, from: http://
www.futurecenteralliance.com/single-post/2015/06/10/The-Pioneer-Skandia-Future-Center
Ullberg, E. (2012). Trade in ideas: Performance and behavioral properties of markets in patents.
New York: Springer.
Ullberg, E. (Ed.). (2015). New perspectives on internationalization and competitiveness. Cham:
Springer. Retrieved from: http://link.springer.com/10.1007/978-3-319-11979-3.
UNDP, & Mohammed bin Rashid Al Maktoum Knowledge Foundation. (2017). Global Knowledge
Index 2017: Executive Report. Retrieved from: http://knowledge4all.com/uploads/files/
KI2017/Summary_en.pdf
Zhenghao, C., Alcorn, B., Christensen, G., Eriksson, N., Koller, D., & Emanuel, E. J. (2015,
September 22). Who’s Benefiting from MOOCs, and Why. Retrieved 14 November 2017, from:
https://hbr.org/2015/09/whos-benefiting-from-moocs-and-why
Author Index
A H
Alcorn, B., 58 Hanado, Y., 42
Aleknavičiūtė, R., 88 Hart, O., 2
Arrow, J.K., xvii Ho, A., 57
Hofman‐Bang, P., 38, 39
B
Blair, M.M., 49 J
Bloom, N., 1 Jacobsen, K., 38, 39
Bontis, N., 14–16 Johansson, L., xvii, xviii
Bounfour, A., 14, 15, 93 Johnson, H.T., 49
C K
Carlucci, D., 14, 15 Kaplan, R.S., 49
Christensen, G., 58 Käpylä, J., 15
Chuang, I., 57 Klein, P.A., 15
Churchill, W. Sir, 3 Kluger, J., 54
Koller, D., 58
Kujansivu, P., 15
E
Edvinsson, L., xviii–xix, 4–7, 14, 15, 32, 37,
61, 79, 80, 85, 91, 92 L
Emanuel, E.J., 58 Lejeune, J., 59
Eriksson, N., 58 Lerro, A., 14, 15
Lev, B., 4, 49, 92
Lin, C.Y.-Y., xix, 4, 6, 14, 15, 32, 61, 85, 90,
F 92
Fölster, S., 50 Lönnqvist, A., 15
Forrester, J., 42
Frankel, L., 54
M
Mačerinskas, J., 88
G Mačerinskienė, I., 88
Gu, F., 4 Malhotra, Y., 14
100 Author Index
Malone, M.S., 14 S
Mullaney, T., 57 Sachs, J., 59
Musk, E., 54 Sahlin, N.-E., xvii
Sanandaji, N., 50
Schiuma, G., 14, 15
N Seaton, D., 57
Nesterko, S., 57 Senor, D., 60
Nordby, R., 38, 39 Shachar, S., 15
North, D.C., 54 Singer, S., 60
Ståhle, P., 5, 7, 14, 15, 85
Ståhle, S., 7, 15, 85
O Sullivan, P., 6, 7, 91
Öhrvall, S., xix
Ostrom, E., 8
U
Ullberg, E., xix, 54, 72
P
Pasher, E., 15
Popper, K., xvii W
Waldo, J., 57
Wallman, S.M.H., 49
R
Reich, J., 57
Rembe, A., 14 Z
Roos, G., 14, 87, 88, 92 Zhenghao, C., 58
Subject Index
B H
Benchmarking, 13, 17, 60 Human capital (HC), 2, 3, 8, 13–15, 17, 21,
36, 38, 44, 48, 79–82, 85–87
C
Capability, 15, 85 I
China, xiv, 35, 38, 54, 60, 62–63 Improvement, vii, xvii, 8, 9, 17, 20, 27, 43, 50,
Competitiveness, vii, xii, xiv, xv, xvii, xix, 59, 82
3–5, 9, 13–15, 17, 21, 29, 34, 35, India, 54
38, 41, 53, 57, 71 Infrastructure, 15, 17, 35, 50, 61, 85, 87
Contribution, xi, xvi, 5, 6, 14–17, 35, 41, 70 Innovative capacity, 30
Intangible assets (IA), vii, viii, xi–xvi, xviii,
xix, 1–6, 8–9, 14–17, 32, 37–51,
D 53–55, 57–60, 62–63, 65, 67–72,
Decline, xvi, xviii, xix, 23, 27, 34, 35 79–82, 86–93
Digitalisation, vii, xiv, 4, 28, 29, 57–59, 71 Intellectual assets, 16, 17, 21, 37, 80,
82, 85
Intellectual capital (IC), xi–xv, xviii, 4–8,
E 13–50, 62–63, 67, 68, 71, 72,
Economics, vii, xi, xiv, xvii, xix, 1, 4–6, 8, 13, 79–83, 85, 86, 89–93
14, 19, 30, 34, 35, 37, 41, 50, national intellectual capital, xi, xii, xviii,
53–55, 57, 59, 61, 63, 72, 84, 89, 90 xix, 2, 4–6, 13, 15–20, 24, 28, 30,
Edvinsson, Lin, Ståhle, Ståhle (ELSS), 6, 15, 32, 35, 36, 50, 53, 61–62, 82,
72, 85, 86 86–89, 92
Entrepreneurship, 15, 17, 27, 36, 49, 63, 80, Intellectual property (IP), vii, xi, xii, 2, 4–6, 8,
83, 86 59, 63, 72, 81–84, 91
Europe, xix, 37, 42, 43, 54, 55, 79, 93 intellectual property rights, 62–64, 72,
83, 91
Israel, 14, 15, 24, 26, 60
F
Financial capital, 80, 85
M
Market capital, 14–16, 21, 35, 48, 81, 82,
G 85–87
Government efficiency, 30, 31 Measurement, 15, 39, 86
102 Subject Index
N S
National wellbeing, 13 Singapore, xii, xiii, 19, 24, 26, 35
Nordic countries, xii, xix, 13, 14, 17–19, Social, vii, xiv, xvii, 1, 8, 53–55, 57, 59, 63,
21–25, 28, 30, 32, 35, 53, 87, 89 81, 84, 88, 90
Structural capital (SC), 7, 38, 44, 48, 79,
81, 88
O Sustainable, xiv, 39, 59–62, 72
Organisational capital, 85 Switzerland, xii, xiii, xix, 15, 19, 24, 26,
35, 87
P
Patents, vii, xi, xii, 4, 6, 8, 15, 17, 32, 33, 35, T
60, 63, 81–84, 86, 87 Trade balance, 4
Performance, xiii, 13, 15, 17–19, 21, 22, 24, Trade in Ideas, viii, xvii, 8, 72
26–28, 30, 32, 34–36, 39, 42, 43,
72, 80–82
Policy, vii, viii, xi, xiv–xvi, xix, 1–5, 8, 9, 14, U
19, 34, 35, 50, 53–55, 59, 60, 68, 89 Unicorns, xiv, 5, 60, 61
Process capital, 14, 15, 21, 28, 35, 81, 82, USA, 39, 54, 84, 89, 91, 92
85–87
Progress, 14, 19–21, 25, 28, 30, 35, 38, 49,
57, 59 V
Value creation, xi, 5, 6, 16, 38, 39, 41, 49,
50, 70
R Venture capital, 34
Reform, 50
Regression, 21, 23
Renewal capital, xii, xiii, 17, 18, 25, 26, 86

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SPRINGER BRIEFS IN BUSINESS

More information about this series at http://www.springer.com/series/8860

Intangible Asset Gap

ISSN 2191-5482 ISSN 2191-5490 (electronic)

Fairfax, VA, USA Eskil Ullberg

This book aims to improve awareness of the value-creating capacity of intangible

This is an awareness book for knowledge navigation. It highlights a longitudinal

Intellectual property Goodwill

Human capital Intangible assets

issues to capture IC at company levels. The country comparison is described in

GDP per capita in USD ?

c­ orresponding growth in GDP. However, following the post-2008 crises we don’t

Export Growth Sweden by IP, Goods and Services

+6.6% pa L.T. Goods

+7.5% pa Servies L.T.

The Proposed Initiatives

Fig. 5 Report overview linked to strategic initiatives related to IC and IA

Creating High-Risk, High-Potential Ideas, by Eskil Ullberg

 eading a Weakening IA Nation or at Crossroads,

 rom the Outside In: Perspectives from a Third Party,

Part I Maps to Tell a New Story

Part II Policy Discussion in a New IA Era

Part III Closing the IA Gap

Part IV Emerging New Trade Structures and IA

This pre-study aims to trigger a discussion of small high-tech countries’ strategies

emerging challenge to global trade, clearly accentuated by COVID-192, is

1.1 Loss of policy Initiative and a New Strategy Response

In an IA-based economic system where intellectual property and intangible assets

1.2 Looking at IC from Macro and Micro Vantage Points

importance of intangibles for fast growing company start-ups such as “unicorns”

Fig. 1.2 Trade balance in royalty and services in Sweden

Fig. 1.4 National intellectual capital sums up corporate intellectual capital

1.3 Trade in Ideas Impacts the Organisation of Markets

1.4 Addressing the IA Gap

Characterizing IA and Identifying Research Projects

2.1 Models: How We Carve Out Our Contribution

National wealth, national competitiveness, and economic development are issues of

In the Netherlands, four accounting firms were invited to conduct a practice-­oriented

Fig. 2.2 NIC indicators – process and renewal capital. (Ibid)

Renewal Capital of Four Nordic countries and trend to 2020

Renewal Capital and trend to 2020

Denmark Finland Norway Sweden

GDP per capita in USD ?

GDP per capita in USD ?

GDP per capita in USD ?

GDP per capita in USD ?

GDP per capita in USD ?

Denmark 2001 Sweden 2001 Finland 2001

5 5.5 6 6.5 7 7.5 8 8.5 9

GDP per capita in USD ?

Denmark 2001 Finland 2001 Sweden 2001

GDP per capita in USD ?

GDP per capita in USD ?

GDP per capita in USD ?

100k Norway 2001 Norway

GDP per capita in USD ?

It may first be worthwhile to consider Sweden’s renewal capital performance in

GDP per capita in USD ?

Denmark 2001 Finland 2001 Sweden 2001

GDP per capita in USD ?

GDP per capita in USD ?

80k Switzerland 2018

Renewal Capital Comparison of 3 Small countries and Sweden

Fairfax, VA, USA Eskil Ullberg

c orresponding growth in GDP. However, following the post-2008 crises we don’t

The Proposed Initiatives

Creating High-Risk, High-Potential Ideas, by Eskil Ullberg

eading a Weakening IA Nation or at Crossroads,

rom the Outside In: Perspectives from a Third Party,

Part I Maps to Tell a New Story

Part IV Emerging New Trade Structures and IA

1.1 Loss of policy Initiative and a New Strategy Response

1.2 Looking at IC from Macro and Micro Vantage Points

1.3 Trade in Ideas Impacts the Organisation of Markets

1.4 Addressing the IA Gap

2.1 Models: How We Carve Out Our Contribution

In the Netherlands, four accounting firms were invited to conduct a practice-oriented

2.3.1 Initial Comments

2.3.2 Country Comparison Discussion

2.4 Limitations of the Current NIC Model

3.1 Models List

There are a growing number of mapping methods in progress, as well as applications

3.1.1 IC Rating

3.1.2 Wissensbilanz and Wissenskapital

3.1.3 Areopa’s 4 Leaf Model

3.2 Mapping though Case Application

3.3 The Impetus of IC Mapping for Enterprises

5.1 Development and Digitalisation

5.2 SDGs and Beyond