Strategic use of IC reporting in small and medium‐sized IT companies

Purpose The purpose of this paper is to report on how IT sector organizations in all five Nordic countries have worked together to start a project on using intellectual capital (IC) reporting to improve strategy formulation in SMEs in the IT sector. The project, called PIP (Putting IC into Practice), is partly funded by the Nordic Innovation Centre ( www.nordicinnovation.net ). Design/methodology/approach The paper builds on the existing literature as well as the experience from the Nordic project. Findings The objective of the project is to produce, implement and disseminate harmonized indicators for realising intangible values in companies. Results from the project include the identification of common indicators for intangible values and how they can be used as supportive evidence for IC reporting. By using these indicators with strategy maps and scorecards, the companies are provided with tools and information to improve their strategy formulation process and develop further their competitive advantage. Practical implications The project aims to provide ways to put IC into practice as a tool for management in order to improve performance. Providing an open source framework for assisting the knowledge transformation process within companies is an important step is this respect. If successful, this will affect the management and reporting of IC. Originality/value This paper reports on the practical application of the resource‐based view of strategy, where intangible resources play a major role in the internal development path of a company. Even though the scope is limited to SMEs in information technology in the Nordic countries, the results are of interest, especially in terms of practical value to other types of companies and industries.