The importance of intellectual capital information to SMEs in Malaysia

Abstract

In the globalised and knowledge-based economy, SMEs need to develop, manage and monitor their soft assets or intellectual capital (IC) to enhance their competitiveness. However, the present accounting system was designed to account for the tangible assets rather than the intangibles. Hence, IC may not be captured and reported by most firms. This paper explores the importance of IC to Malaysian SMEs and the types of IC information deemed important to them. A postal survey with the aid of a questionnaire was carried out. IC information was found to be relevant to SMEs in Malaysia. Intangible resources are regarded as important as the tangible ones. SMEs have often considered IC when defining strategies. Consequently, more specific IC information needs to be communicated in the annual reports. Guidelines on IC reporting should benefit SME managers and decision makers.