VAIC: Metonymies, Ambiguities and Inconsistencies

Purpose: The paper offers a critical assessment of the VAIC, highlighting metonymies, ambiguities and inconsistencies that affect the model. The aim of the paper is offering support to both researchers and managers. By enlightening pitfalls and shortcoming relating to the VAIC, the paper helps IC researchers to decide whether using the VAIC and how to do it. Managers, on the other side, avoid poor decision-making caused by the VAIC’s shortcomings. Methodology: The paper examines the VAIC through an in-depth analysis of articles written by Pulic from the conceptual point of view, focusing on metonymies, ambiguities and inconsistencies affecting the model. Findings: The metonymy Pulic operates, which changes the cause (IC) with its effect (VA) generates confusion. The lack of a theoretical framework is responsible for many ambiguities and inconsistencies as for the ratios that compose the VAIC and for the way they are factored into the VAIC. The measure appears as being unable to correctly take into account the role of the efficiency of Intellectual Capital. Also, the way Pulic interprets the VAIC is ambiguous and not based on theoretical argumentation. Other criticisms come from the way the model accounts for some labour-related expenses. Therefore, its use as a management tool and in IC research is problematic. 2 Research implications: The paper clarifies the strict constraints within which IC researchers and managers should use the VAIC, and offers a broader theoretical basis for all those proposing a modified version of the VAIC, to help them avoid the same drawbacks affecting the original model. Limitations: This study does not treat its empirical validity as a proxy for business productivity or market value. Empirical validity, indeed, is pointless without a theoretical framework. Originality/value: The paper offers new insights into the analysis of the VAIC and restore the content and the extent of some previous critiques apparently overcome. Paper type: Conceptual paper