The Use of Intellectual Capital as a Competitive Tool : A Danish Case Study

Increasing pressure from low-cost competition has forced many Western companies to respond by offshoring, i.e. by relocating labor and production facilities to emerging economies (Jensen, Kirkegaard and Laugesen, 2009). This study presents an alternative strategic response, involving investments in Intellectual Capital (IC) to maintain competitiveness. In particular, we analyze a mid-size, listed, multinational Danish manufacturer of retail equipment and shop solutions with a revenue above 50 million Euro and more than 300 full-time equivalent employees (as of 2010). The company had satisfactory financial performance until the joint effect of low-cost competition and the financial crises caused losses in 2009 and 2010. To re-gain profitability, the top management actively attempts to increase the customer value added through substantial investments in IC. Despite financial pressure and the top management’s impetus, our study illustrates that resentment to this strategic change is caused both by a culture that upholds tradition, seniority and collectivism as well as by fear among the most expert employees that their experience and current skills will be devaluated. We employ an explanatory case study with multiple data sources, principally a semi-structured interview with the CEO. To elucidate our observations, we rely on theories on IC, business models (BMs) and resistance. We point out possible reactions to mastering a contended transformation in order to make the majority of employees feel legitimate. Our findings are relevant to academics and practitioners who wish to understand the challenges of strategic and structural changes in Western companies at the micro-level