Chapter 2: Libraries’ Worlds of Production and intellectual capital utilization – Managing Intellectual Capital in Libraries

2

Libraries’ Worlds of Production and intellectual capital utilization

Abstract:

Chapter 1 introduced the fundamental concepts and issues of library intellectual capital. Furthermore, the level of libraries’ intellectual capital management awareness is being linked to their survival within a competitive economic environment, where the core product is knowledge itself. On the other hand, the development of this intellectual capital consciousness may promote libraries as key organizations for the creation of a valuable network of information and knowledge creators/distributors. In this chapter, the utilization of intangible assets is explored by analyzing their role within the framework proposed by Stopper and Salais (1997) for the analysis of different economic models, referred to as the Worlds of Production. This framework includes four Worlds of Production: industrial, market, interpersonal, and intellectual. Each “World” is a conventional socioeconomic construct, appearing as a set of rules and norms, coordination and operation practices among organizations and enterprises that develop specific information services.

Key words

intellectual capital utilization

Worlds of Production

industrial world

market world

interpersonal world

intellectual world

The worlds of intellectual capital utilization

Intellectual capital assets have been part of human activities ever since the origins of our civilization (Baruch, 2001; Lev, 2001). Although one may safely assume that some intangible assets were somehow always present within human economies (for example, the experience and competences of the workforce), their conscious utilization within the production process has only been observed during the past few decades. In fact, as Hand and Lev (2003) point out, in the United States of America, investments in intangible assets, including Research and Development (R&D) and software development, have impressively increased over the past 20 years. As opposed to intangible assets, investments in tangible assets (such as plant facilities and equipment) during the 1990s remain largely unchanged as compared to those made during the 1950s and 1960s. The shift towards investments in intellectual capital can be attributed to the unprecedented advances of ICTs, the Internet, and the fearsome competition caused by market globalization. In the modern era, value is not only associated with the allocation of capital or tangible assets, but also with innovation and knowledge, which seem to be the main wealth-producing resources (Andriessen, 2004).

The existing intense competition calls for the utilization of intellectual capital, accumulating it through a cooperation of distinct organizations as well as users, suppliers, or even competitors. This competition also promotes creativity and innovation, through the utilization of human resources and new management techniques. Globalization and the advances in information technologies are the main causes of an enormous increase in the utilization of intangible assets over the past decades. Beginning in the mid-1970s, the current globalization process was supported by the status quo of three worldwide dominant currencies (dollar, euro, and yen) and the liberation of capital circulation (OECD, 2005).Libraries in both their tangible forms (for example,infrastructure, equipment, and traditional collections) and their intangible forms (for example, digital collections,automation systems, and networking synergies) are becoming very important for businesses and enterprises. Harris (2002) recognizes that within this process of globalization the development of innovation, entrepreneurship, and synergies among employees, customers, suppliers, or even competitors, the utilization of physical and human resources, as well as innovative marketing strategies, are considered to be essential. With the exception of physical resources, all other factors identified by Harris (2002) are intangible in nature. Libraries have the opportunity, if not the responsibility, to participate actively in the establishment of a new economic reality that relies heavily upon information and knowledge. It is an undisputed fact that within the new intellectual economy, driven by ICTs, libraries can actually coach the business community, which is currently in a discovery process, by using well-established library practices (Kostagiolas and Bohoris, 2010).

Intellectual capital has been historically related to libraries, in terms of their services, administration, and culture. Libraries traditionally use and/or produce intellectual assets. Koenig (1997) characteristically stated that a librarian’s first response to the management of intellectual capital is likely to be: “Hold on. We have been in the knowledge management business, the intellectual capital business for years. What do these people think a library is, anyway?” In this chapter, the framework of Stopper and Salais (1997) based on the four Worlds of Production (industrial, market, interpersonal, and intellectual) is employed for analyzing the utilization of intellectual capital investments over the years (Kostagiolas and Asonitis, 2009). The Worlds of Production framework is employed for studying intangible asset utilization in library production models. The analysis includes all three intangible asset categories: human, structural, and relational capital.

The "Worlds of Production" framework analyzed for libraries

As stated before, the main aim of this chapter is to examine the use of intangible assets in the light of the diversity and complexity of the ever-changing library environment. Before proceeding any further, it might be useful to present briefly the Worlds of Production framework, as introduced by Stopper and Salais (1997). The Worlds of Production can be seen as a theoretical discussion method for classifying new realities and proposing an analytical framework that explicitly tackles changes in the economy. Stopper and Salais (1997) introduced the four “Worlds of Production” in an effort to categorize different eras in the economy. In that sense, each “World of Production” comprises a distinct and complete framework, not necessarily in time order, within which specific rules, conventions, organizational logic, and requirements are being developed. According to the terminology used to describe the Worlds of Production as presented by Stopper and Salais (1997), the different categories are: the Industrial World, the Market World, the Interpersonal World, and the World of Intellectual Resources. Within the Industrial World framework, products and services are examined on the basis of the relations created between stakeholders. Therefore, products and services are categorized under the four Worlds of Production based on whom they are produced for and not according to their material substance, conventional or digital.

The Industrial Library World for libraries includes the following characteristics.

1. Library services are impersonal, substitutable, generic, and serve undifferentiated needs of specific groups of scholars.

2. Libraries compete in the field of physical status improvements and collection richness.

3. Library operations and services are based solely on tangible material objects (printed collections,conventional cataloging methods, etc.).

4. The library’s printed material is substitutable, which means that the various items can be replaced or transferred from one person or place to another, while library collections have no individual character.

5. Library operations and services are static in the sense that the librarian’s contribution has very small impact on stable bureaucratic organizational structures.

The Market Library World includes libraries with the following characteristics.

1. Library building location and status are important and library operations and services are hybrid, that is, they encompass printed and electronic material mainly originating from the physical and administrative bounds of the library.

2. Library operations and services are targeted towards specific market segments.

3. Standards and guidelines for organizing library collections are operationally incorporated.

4. Libraries compete in the fields of production cost and direct response to demand, while organizational innovations are encouraged in order to reduce the time required to handle large collections and respond to user demand.

5. Libraries build networks for conventional collection, experience, and technology sharing (for example,interlibrary loan services).

The Interpersonal Library World includes libraries with the following characteristics.

1. Library operations and services are hybrid or digital, so they encompass conventional and digital material within and outside of the library’s physical and administrative bounds.

2. Libraries become personalized and are designed to satisfy specific needs of particular communities widely dispersed throughout the network.

3. Library operations are extended in order to incorporate new and traditional material, regardless of its form or format.

4. Location is not that important within an Impersonal World industry, since library services are based on both electronic material and interlibrary networks developed for conventional library material.

5. Formal relations based upon direct mutual understanding are established among stakeholders who share knowledge based on long-lasting relations and content-rich transactions for information interchange over wide information networks.

The World of Intellectual Library Resources has the following characteristics.

1. Library services include intellectual activities that aim to improve the quality of the existing user actions in their work-lines and their life-lines, or create new ones.

2. The knowledge produced through this intellectual activity is linked to theories, concepts, and formal technological and management methods.

3. Investments are related to innovation, quality, and R&D.

4. Library professionals assume roles with wider impact and develop generally applicable new knowledge, such as protocols, practices, and rules, thus gaining ongoing intellectual knowhow from their career.

5. Relations with other actors largely depend on confidence and trust, and new methods of communication and promotion, such as library blogs and book blogs.

The discussion presented above includes a wide range of library types ranging from conventional libraries to hybrid and digital libraries. Libraries have come a long way over the years, moving from an industrial production framework to the intellectual World of Production era of the new millennium. Now there are thousands of libraries of all types worldwide and they have all managed to adjust to new socioeconomic realities. Amazingly enough, libraries include and will include the memory and the future of civilization as we know it. The current financial depression and rapid technological changes require the utilization of libraries’ intellectual content and potential contributions to all aspects of economy and society, so that we may enjoy libraries for many centuries to come. The Worlds of Production library taxonomy expands and extends the traditional library through the integration of innovative information technologies, new processes, and media. It should further be noted, however, that the Worlds of Production framework goes beyond the “historical” (chronological) taxonomy,which means that nowadays all the worlds can coexist, expressing different variables around the world. Thus, the industrial world can be found in a small conventional library in a rural area or an underdeveloped school library. The market and interpersonal worlds may express the vast majority of libraries of all types (public, academic, hospital, etc.). The intellectual world expresses the transition to the next library generation of Web 2.0, for example, the Public Library 2.0 (Chowdhury et al., 2006), based on a social, mobile, and open organizational culture and service orientation that can be found in prominent libraries worldwide (the Library of Congress, the British Library, and the Library of Alexandria, among others).

Moreover, for each of the distinct Worlds of Production, a unique model of production has been introduced by the authors. A model of production can be defined as “the set of routines, organizational structures and operational principles which guide the firm from day to day and year to year” (Stopper and Salais, 1997). In the Industrial Production model, library services change over time, requiring fixed investments, especially in tangible assets, which can assure low production costs under a rather steady competition environment. In the Market Production model, production focuses on specific segments of the market (specific population groups and/or specific groups of scholars). Production is still conventional but competition is conditioned by demand satisfaction. The Interpersonal Production model is characterized by a diversification in library service quality and quantity within a family of services that satisfy similar purposes. Organizational flexibility, personalized relationships with the users, and the use of specialized information technology and the Internet are the requirements for a successful activity within the interpersonal model. Economies of variety are being developed in this world. Finally, in the Intellectual Production model, production is based on innovative services and the use of specialized information technologies, investments in Research and Development (R&D), highly educated, experienced, and specialized professional teams, and flexible organizational structures.

The same library may include all four Worlds of Production in its development through time. Historical libraries that continue to play an important role have for the most part exploited the opportunities of all four worlds. The Biblioteca Marciana (National Library of St. Mark’s) in Venice is a typical example. Founded in 1537—after the donation of Cardinal Bessarion’s famous collection to Venice in 1476—it was the library of a city and not of a nobleman or a monastery. The role and work of chief librarians, the famous building by architect J. Sansovino, collections of manuscripts and printed material, as well as legislation and decisions taken by those in political power, led to the development of the library throughout its first phase (industrial). Famous since its foundation, the Marciana Library passed through all three other Worlds of Production. Efforts were made for a more rational organization of the library, and collaboration with scientists, scholars, politicians, and artists took place. New methods for storing and retrieving information and providing access to books had been applied and new methods had been introduced as regards reader needs and expectations. It must be noted that chief librarians in the Renaissance and the Enlightenment were usually scholars of noble descent. They were men of letters and men of political power at the same time. A few of them went on to become Doges later on.

As libraries evolved, moving from one production world to another, they differentiated their operations and their services in terms of material circulation (for example,handling of user accounts, loaning, returning, and shelving), reference and other information services (for example, answering user questions, gaining access to specific reference material), collection maintenance (for example, cataloging materials, classification, preservation), collection development (for example, ordering materials and subscriptions budgets), and information technology (for example, developing and maintaining databases, web services). During the Enlightenment and the Industrial Revolution, the enlargement of the reading audience combined with social, political, financial, and cultural factors led to libraries being “free to all, open to all” (Lerner, 2001). With the dawn of each era, the diachronic aims and values of libraries matured and were enriched by the needs and demands of the reading audience along with economic, social, cultural, and economic factors. When A. Panizzi was appointed Keeper of Printed Books at the British Museum in 1837, he set forth an ambitious plan to satisfy the needs of the library and the expectations of the readers, taking into consideration economic, social, and cultural factors. Apart from the cataloging rules, he enriched the collection, securing a substantial appropriation from Parliament and building the secular reading room (Lerner, 2001).

Although the Worlds of Production have a chronological succession, occurring one after the other, it should be noted that within each World of Production one can find features pertaining to previous models. Figure 2.1 indicates that earlier models of production may be present in successful Worlds of Production. For instance, the Industrial, Market, and Interpersonal Models of production are clearly present in the Interpersonal World of Production. Therefore, a specific library may be able to adopt the model of production that best serves its interests within the current Intellectual Resources World. If further studied, the above-mentioned suggestion may provide an industry-specific analysis for choosing the best-suited organizational approach, according to each different World of Production. Intellectual capital assets exist in all four Worlds of Production, but the rate of their utilization varies significantly.

Figure 2.1 The relation between the different worlds of production

Libraries’ intangible resources utilization within the Worlds of Production framework

Intellectual capital assets belonging to all categories (human capital, structural capital, and intellectual capital) were diachronically present in the economy and in any production model and/or World of Production. However, the way they were perceived and utilized varies significantly. Table 2.1 provides an analysis of the utilization of intangible assets for each of the four Worlds of Production (Industrial, Market, Interpersonal, and Intellectual). In order to comment on the use of intangible assets within the different Worlds of Production, a threefold methodology needs to be adopted. Firstly, a horizontal analysis of the information provided in Table 2.1 may enable changes to be identified in the utilization of a specific type of intangibles over time. For example, human capital is largely ignored in the Industrial World, while it becomes increasingly significant from the Market and the Interpersonal World onwards to the Intellectual World. Secondly, a vertical analysis can be applied to each specific World of Production in order to examine the utilization of intangibles in a holistic way. The third approach focuses on libraries and examines the utilization of intangible assets, using a combination of the production models found in all Worlds of Production.

Table 2.1

Utilization of intangibles in the Worlds of Production

Source: Adapted from Kostagiolas and Asonitis (2008).

An analysis of human capital utilization within all Worlds of Production is provided in the first row of Table 2.1 . There is no doubt that intangible assets, such as experience, specialized skills, knowledge, and flexibility, existed in libraries even during the Industrial World. However, they were not properly utilized and as Stopper and Salais (1997) point out, “the particular qualities of persons disappear, to be replaced by roles, tasks and positions within a hierarchy.” In the Market World, the production is still serial and thus intangible assets embodied within human capital are scarcely utilized, although specialized skills are required for library operations, services, and other administrative and management tasks. In the Interpersonal World, quality-based competition requires a significant number of workers with specialized skills in production and a relatively higher utilization of human capital. Library professionals in the Interpersonal World implement a practical knowhow in order to create quality products and services. A complete utilization of human capital is only required in the Intellectual Library World of Production. The creation of new knowledge and innovation is quite significant for the economy and society, turning labor into the main productivity factor, while other intangibles such as knowledge, experience, creativity, and flexibility are also being used.

Specific library organizational practices and production tools are intangible assets embodied in the structural capital, and can be identified in all four Worlds of Production, as shown in Table 2.1. However, bureaucratic library organization hierarchies, although heavily criticized, have been considered to offer a more propitious environment for innovation than the flexible, “post-bureaucratic” organizational structures (Harris, 2006). Other intangible assets embodied within structural capital (computer software, databases, patents, and copyrights) are more extensively utilized when library services need to be of personalized nature, e.g. in the Intellectual World, with their use declining as we move from the Interpersonal World on to the Market and Industrial Worlds. An example of the declining use of structural capital as we move backwards from the Intellectual to the Industrial World is the digital library material (in the Intellectual World) as opposed to a traditional library with only conventional printed material (in the Interpersonal World). While digital libraries operate mainly through acquiring copyrights from content handlers, a conventional library has probably no copyrights in its possession.

The change in use of relational capital from the Industrial to the Intellectual World of Production can be examined through a horizontal approach based on the information provided in Table 2.1. Relational capital in the Market and Interpersonal Worlds is expressed through the relations among libraries and between libraries and networks of external information suppliers and publishers. The main aim of those relations and subscriptions is to enrich the library’s information content. In the Interpersonal World the relational capital is used more extensively as compared to the two previously mentioned Worlds. Relational capital does not exist just in signing contracts with suppliers and publishers but mostly in creating personal relations between the library and each individual user. Relations in the Interpersonal World are based on mutual understanding between the producer-firm and the customer (Stopper and Salais, 1997). These relations may or may not be formal (e.g. user subscriptions) but are being confirmed and developed in day-to-day practice between the two parts. In the Intellectual World, relational capital is being extensively utilized. We can identify intangibles deriving from contracts, the relationships between the library and its users, or between the librarians and the users. Relations in the Intellectual World are based on confidence, trust, and mutual respect. In the Intellectual World, when a library professional comes to (or leaves) a library they bring (or take) with them not only a part of the firm’s human capital value but also a part of the firm’s relational capital, since relations in the Intellectual World are not absolutely vested in the library itself (contracts, relationships between the firm and its customers), but also depend upon each individual person (Kostagiolas and Asonitis, 2009).

For libraries there might be cases where a market or even an industrial production model may be sufficient. For example, in a conventional school library serving a rather small community, the administration might focus mainly on investments in human capital and less on structural and relational capital. On the other hand, an academic library requires the most up-to-date intellectual model of production, which should be based heavily on intangible asset investments of all three types. The library’s relations with its stakeholders, customers, potential customers, suppliers, and partners are valuable intangible assets (White, 2007A), embodied in its relational capital. Library relational capital, as a sustainability factor, is perhaps more important for academic libraries than for any other library type. The information needs of the community that libraries serve are growing rapidly, forcing them to participate in information networks set up by other academic libraries, publishers, electronic journals, information services, etc., instead of trying to expand their own collection (Sheng and Sun, 2007).

The analysis of intangible asset utilization, as provided in this chapter, attempts to explore and highlight the fact that an effective exploitation of intangible assets, combined with innovation and information, should form an integral part of the management operations and activities within every library. However, we should avoid generalizations since a single World of Production model cannot be appropriate for all types of libraries. This may be justified by the fact that libraries are rather unique organizations, being throughout their long history both tangible and intangible in nature. For a library, fixed investments in real assets and particularly in buildings are absolutely essential. Tangible investments in furniture (e.g. workstations, seats, and study carrels) and office equipment (e.g. photocopiers) are necessary for every library. Childs (2006) provides a number of examples illustrating that tangible investments in refurbishment, location, and new building projects are an effective way to attract new library users. Investments in intangible assets may include the recruitment of specialized personnel, small-scale training programs, and acquiring special software to support library services. In other cases, however, library operations demand substantial investments in any of the three intellectual capital categories: human, organizational (structural), and relational. Such cases include, for example, digital libraries and/or research/academic libraries (Kostagiolas and Asonitis, 2009), where the library staff quality, team development, copyrights, computer software and databases, participation in information networks, etc., are absolutely essential.

Summary

In this chapter, the Worlds of Production framework for libraries was employed in order to study and understand the utilization of library intellectual capital according to different economic/production models. This theoretical analysis examines the utilization of intellectual capital within the different socioeconomic models presented in the Worlds of Production framework. It is certain that the existence or the creation of intangible assets increases the value of the services/products provided and improves their efficiency, effectiveness, and quality. Nowadays, different production models may actually coexist and it is not necessary for all libraries, whether older or newly founded ones, to follow strictly the modern approach of the Intellectual World of Production. On the contrary, libraries might be able to acquire certain features from previous Worlds of Production, utilizing tangible and intangible assets according to the existing socioeconomic context.