Intangible Assets for Systemic Changein Social Entrepreneurship

Intangible Assets for Systemic Change
in Social Entrepreneurship
2022.7.14
The University of Nagano / Game Changer Institute
Yutaka Tanabe
Copyright © 2022 the University of Nagano / Game Changer Institute. All rights reserved.
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the 15th International ISTR Conference
Montreal, Canada
Thu, July 14, 8:30 to 10:00am, John Molson
School of Business, 3.445
(Hybrid Paper Session)
Nonprofit Finance & Intangible Assets

Actually, we humans can see only 5% in the universe.
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https://physics.ucr.edu/image/dark-matter-dark-energy-pie-chart
Over 90% of
things are
invisible.

Table of contents
1. Problem/Purpose
2. Methodology
3. Conclusion
<Note for this essay>
This essay was presented at the conference of JANPORA in June 2022 to get more
feedback.
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1. Problem/Purpose
• The purpose of this essay is to introduce the relationship between
intangible assets and systemic change as a qualitative study.
• Research Question: What are the definitions of intangible assets and
systemic change? Do intangible assets contribute to systemic change? If
yes, why, and how?
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Quick examples of
Intangible Assets;
“Brand”
Montreal

1. Problem/Purpose
• International Accounting Standards (IAS) defines “An intangible asset is an
identifiable, non-monetary asset, without physical substance”.
• Haskel et al. (2017) define intangible assets as patent, copyright, design,
intellectual property rights (IPR), trademark, training, branding, etc.
• Training improves human resources which are the most valuable asset in
organizations (Chareonsuk et al. 2010).
• Mindset is shared through training (Zeeb 2020).
• Mindset creates culture (Romero 2017).
• Organizational culture is an intangible asset (Chareonsuk et al. 2008).
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1. Problem/Purpose
• The value of intangible assets is amplified
and visualized by information technology
quickly (Haskel et al. 2017).
• Intangible assets, as Haskel et al. (2017)
explain, now play a huge role in the world
economy which is experiencing a
fundamental shift.
• For example, the market value of Microsoft,
a technology giant firm, was $250 bn in
2006. However, the traditional asset (e.g.
plants and equipment) were only $3 bn, 4%
of Microsoft’s assets and 1% of its market
value in 2006.
• “Capitalism without capital” is emerging and
spreading globally. Intangible assets in the
S&P 500 account for $21.03 trillion in 2018
and 90% of the total assets in 2020.
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Intangible assets
are now giant in the
world economy.
https://www.oceantomo.com/intangible-asset-market-value-study/

1. Problem/Purpose
• Why have intangible assets expanded so much and rapidly?
The four characteristics of intangible assets are responsible -
(1) sunk cost, (2) spillover, (3) scalable, and (4) synergy.
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1. Problem/Purpose
the four characteristics of intangible assets (Haskel et al. 2017)
(1) Sunk cost
• “Because the [intangible] assets are
often context-specific, it is hard for
markets to emerge to trade them,
unlike a house. With no market, you
have to find another way to value the
asset, which is hard to do.”
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1. Problem/Purpose
(2) Spillover
• “[It] is relatively easy for other
businesses to take advantage of
intangible investments they don’t
themselves make.”
• “The classic example is R&D: copying
other people’s ideas is relatively easy,
unless the law prevents it by means of
patents or copyrights.”
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1. Problem/Purpose
(3) Scalable
• “Consider Coke: the Coca Cola Company,
based in Atlanta, Georgia, is responsible
for only a limited number of the things
that happen to produce a liter of Coke. Its
most valuable assets are intangible:
brands, licensing agreements, and the
recipe for how to make the syrup that
makes Coke taste like Coke.”
• “A scalable asset, like Uber’s software or
Starbucks’s brand, can be scaled across
a very large number of locations.”
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1. Problem/Purpose
(4) Synergy
• “The synergies between IT and
intangibles work on a couple of levels.
First of all, computer hardware has a
direct, and in a sense trivial, synergy with
one type of intangible: software. That’s
the point of software. To put it another
way, computers are physical devices that
become useful and valuable when you fill
them with useful, intangible information.”
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1. Problem/Purpose
• Radonić et al (2020) propose ROIA (Return on intangible
assets) as an evaluation metric.
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Intangible Assets
1,097.7
Net Income 138.4
Example)
12.61%
FY19 of GoDaddy Inc.
(Radonić et al, 2020)

1. Problem/Purpose
• The concept of systemic change is based on systems thinking
(Senge et al. 2007, Meadows 2008).
• Senge et al. (2007) argue “True systemic change means enacting
new ways of thinking, creating new formal structures and, ultimately,
transforming relationships”.
• Social systems are complex, so do social problems (Westley et al.
2009). Social problems arise from flaws in social systems. Therefore,
it is safe to say that a social problem is a systemic problem (e.g.
systemic racism).
• Systemic change is achieved when the flaws in the social system are
fixed through legal reform, behavioral change, and/or cultural
change.
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1. Problem/Purpose
• Buonomo et al. (2020) review intangible assets in nonprofit
organizations and argue that intellectual assets are important in
NPO management.
• Castilla-Polo et al. (2020) state that intangible assets play an
important role in cooperatives aiming for sustainable
development.
• However, these discussions do not go beyond how intangible
assets contribute to systemic change.
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2. Methodology
A Framework for Intangible Assets and Systemic Change
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Systemic Change
Intangible
Assets
Experience
Sharing
Followership
(1) Sunk Cost,
(2) Spillover,
(3) Scalable, and
(4) Synergy

2. Methodology
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Flow
(ex. Experience sharing
for cultural change,
eventually systemic change)
Stock
(Intangible Assets)
Flow
(ex. Donation and
Subscription by
Followership)

3. Conclusion
• The research area of both intangible assets and systemic change is
comparatively new and still widely unknown.
• It is true that defining intangibles is difficult (Nichita, 2019).
• However, intangible assets play a huge role in our society and have an
important function for systemic change as introduced above.
• The originality of this essay is to clarify how intangible assets contribute to
systemic change qualitatively, and to share the importance of the concept
of intangible assets for social entrepreneurship practice and research.
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References
Buonomo, I., Benevene, P., Barbieri, B., & Cortini, M. (2020). Intangible assets and performance in nonprofit organizations: a
systematic literature review. Frontiers in Psychology, 729.
Castilla-Polo, F., & Sánchez-Hernández, M. I. (2020). Cooperatives and sustainable development: A multilevel approach based on
intangible assets. Sustainability, 12(10), 4099. Chareonsuk, C., & Chansa‐ngavej, C. (2008). Intangible asset management
framework for
long‐term financial performance. Industrial Management & Data Systems.
Chareonsuk, C., & Chansa‐ngavej, C. (2010). Intangible asset management framework: an
empirical evidence. Industrial Management & Data Systems.
Meadows, D. H. (2008). Thinking in systems: A primer. chelsea green publishing.
Nichita, M. E. (2019). Intangible assets–insights from a literature review. Journal of Accounting and Management Information
Systems, 18(2), 224-261.
Ocean Tomo. (2020). Intangible Asset Market Value Study https://www.oceantomo.com/intangible-asset-market-value-study/
Radonić, M., Knežević, S., & Mitrović, A. (2020). INTANGIBLE ASSETS PERFORMANCE–THE USE OF ‘ROIA’AS THE HYBRID
INDICATOR.
Romero., C. (2017). Growth Mindset at Work. paradigm.
Senge, P. M., Lichtenstein, B. B., Kaeufer, K., Bradbury, H., & Carroll, J. S. (2007). Collaborating for systemic change. MIT Sloan
management review, 48(2), 44.
Westley, F., Zimmerman, B., & Patton, M. (2009). Getting to maybe: How the world is changed. Vintage Canada.
Zeeb, H., Ostertag, J., & Renkl, A. (2020). Towards a growth mindset culture in the classroom: Implementation of a lesson-
integrated mindset training. Education Research International, 2020.
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