Intangibles Assets Identification and Valuation–A Theoretical Framework Approach to the Portuguese Airlines Companies

Abstract

Intangibles have emerged in the last decade as an important issue among companies' accounting theories. Companies have implemented strategies based on the robustness of their own intellectual capital. Competitive advantage is based on the capacity to anticipate, innovate and make shared use of opportunities. In the air transportation sector, strong changes have also occurred – traditional value chains based on linear activities alignment, were replaced by a new perspective: the innovation cycle (specific intangibles recognition associated with new business models) and its impact on the operational cycle. This paper presents a theoretical framework approach about intangible assets identification and valuation in the air transportation sector as a whole. The first step of this empirical evidence is based on the Portuguese Airlines companies.

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ISSN 1479-4411 193 ©Academic Conferences Ltd
Reference this paper as:
Lopes I, and Rodrigues A. M. G (2007) “Intangible Assets Identification and Valuation – a Theoretical Framework
Approach to the Portuguese Airlines Companies” The Electronic Journal of Knowledge Management Volume 5 Issue 2,
pp 193 - 202, available online at www.ejkm.com
Intangible Assets Identification and Valuation – a Theoretical
Framework Approach to the Portuguese Airlines Companies
Ilídio Tomás Lopes1,2 and Ana Maria Gomes Rodrigues2
1Polytechnic Institute of Santarém, Portugal
2Faculty of Economics, University of Coimbra, Portugal
ilidio.lopes@esg.ipsantarem.pt
anarodri@fe.uc.pt
Abstract: Intangibles have emerged in the last decade as an important issue among companies’ accounting theories.
Companies have implemented strategies based on the robustness of their own intellectual capital. Competitive
advantage is based on the capacity to anticipate, innovate and make shared use of opportunities. In the air transportation
sector, strong changes have also occurred – traditional value chains based on linear activities alignment, were replaced
by a new perspective: the innovation cycle (specific intangibles recognition associated with new business models) and its
impact on the operational cycle. This paper presents a theoretical framework approach about intangible assets
identification and valuation in the air transportation sector as a whole. The first step of this empirical evidence is based
on the Portuguese Airlines companies.
Keywords: intangible, knowledge, intellectual capital, valuation, air transportation
1. Introduction
Intangible assets appear, nowadays, as an
important issue in the accounting rules frontier – a
tension between those responsible for accounting
standards establishment and those who use the
information, are indeed evident. Intangibles have
a value but due to their volatile nature and
difficulties in their measurement, they are normally
excluded from the financial statements. However,
according their linkage and contribution for certain
businesses, their importance for stakeholders is
irrefutable. Traditional financial reports, based on
traditional accounting rules that exclude the
potential return, seem to be irrelevant for decision-
making. Thus, intangibles identification and
measurement approaches can contribute for a
better decision-making. Innovation cycle or the
innovation value chain claims for a deep analysis
on the intangibles identification, measurement and
reporting. Radical changes have been occurred in
the last two decades of the twentieth century. New
business models have also emerged in which
knowledge creation, capture, re(use) and diffusion
constitutes the way ahead to value creation.
Companies need to identify the drivers that
contribute for a higher value level and intensity.
Investment in intangibles is probably the first step
to innovation and consequently for wealth
creation. Intellectual capital management and
reporting can, on a feasible basis, support the gap
of perception between accounting and market
value.
2. Aims and objectives
This paper focuses on the importance of
intangible assets in the entire value creation
process. Although the standard accounting rules
specifications, intangibles act as a key driver in
businesses value creation and are strongly
interlinked with several strategies effectively
followed. Innovation is probably the most visible
face on this topic, which results from prior
investments in intangibles such as human and
structural capital. Despite the importance of
intangible assets, we underline a theoretical
framework approach for the Portuguese Airlines
companies. Specific intangibles should be
evidenced that contribute for value creation in this
particular branch of activity. Thus, our objective is
to underline the importance of intangibles in those
companies and define a theoretical approach to
identification, measurement and reporting of their
intellectual capital assets.
3. Intangibles: an interlinked
approach
The term “Intangible” is as concept to which no
consensus exists on their definition. Dependent
from accounting rules and measures, authors like
Cohen (2005), Andriessen (2004), Lev (2001) and
Brockington (1996) argue about their impact on
businesses and on company’s value creation.
Thus, historically, intangibles have been treated
as an aggregated amount (goodwill), without
impact on national wealth neither included in
financial statements of firms. Goodwill, in nature,
represents a residual, which incorporates all

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194
intangibles that cannot be measured separately.
In this paper we focus on those ones that can be
identifiable and be measured under impairment
approaches, having or not an indefinite lifetime
(Epstein and Mirza, 2005: 234).
According Blair and Wallman (2003:451)
“intangibles are non-physical factors that
contribute to, or are used in, the production
of goods or the provision of services or that
are expected to generate future productive
benefits to the individuals or firms that
control their use”.
Broadly, a typical intangible asset cannot be
bough or sold in an organised market, the
verification of its existence may be impossible, it
may not have a finite life, its value can fluctuate
(which means that it should be submitted to the
impairment analysis) and sometimes it is strongly
interlinked with a specific activity, product/ service
or business. Hence, intangible assets are
commonly development expenditures, patents
and trademarks, brand names, databases, human
know-how, strategic alliances and processes.
Despite that, individuals and companies have an
expected future return and benefits based on the
intangibles management. Nevertheless,
accounting systems defined by FASB has a very
conservative nature. Expenditures in research and
development, advertising and other similar ones,
should be immediately expensed even tough they
traduce expected future returns. However, as
stated by Lev and Sougiannis (2003:145), firms’
RandD capital was found to be associated with
subsequent stock returns.
It is, nowadays, irrefutable that intangibles
identification, management, measurement
(income, cost or market approaches) and
reporting is a key burner on the value creation
process. Lev (2001:5) defines intangibles as
“a claim to future benefits that does not
have a physical or financial (a stock or a
bond) embodiment. A patent, a brand, and
a unique organisational structure (for
example an Internet based supply chain)
that generate cost savings are intangible
assets”.
Intangible assets measures and risks such as
research and development capitalisation,
organisational innovation processes and
intellectual capital approaches act as key drivers
in the value creation process. Knowledge arises
as the main way to the wisdom achievement and
wealth creation. Although intangibles have non-
physical nature that contributes to the production
of goods and services, companies expect for their
future benefits and returns. Individuals and
companies responsible to manage them look for
the market; adjust their business processes
through customisation approaches. Broadly,
strategies followed by companies such as
alliances, mergers and acquisitions, internal and
external diversification or disinvestments, even
driven by integrated and innovative market
approaches, are based on intangibles in particular
research and developments programs. Thus,
knowledge based assets are responsible for the
major business changes occurred in those
decades. From an accounting point of view,
intangibles identification is the first step towards a
better financial reporting. Although those assets
are not included in the balance sheet, they should
be reported to the stakeholders. Accounting
systems stagnation and its conservative nature
has the primarily responsible for the perception
lack between accounting value (based on equity)
and market value (based on information
perception and integration). We underline that the
intangibles identification can contribute to a better
company’s analysis even those assets are not
included in the financial statements. Creating
value for companies through intangible assets
also requires the implementation of strategies
based on innovation processes, strongly
supported by investments in intangible (Lev,
2001).
4. New value throughout
intellectual capital approaches
As already previously mentioned, value has been
assuming a major role, reaching a
multidimensional plan. Intellectual capital
approaches (Edvinsson et al. 1997), efficient
knowledge management systems and intangible
assets management constitute strong burners on
the value creation and retention process.
Whereas the customer acquisition aims at
measuring in absolute or relative terms the
capacity of the company in attracting or acquiring
new customers for business, the client satisfaction
aims at measuring how well the company is
functioning. Retention capacity indicates the level
of customers that are set in each business
segment. However, to know the customer
satisfaction level is not by itself a condition to
assure high retention or profit level. Thus, high
levels of customer satisfaction are needed to
assure a recurrent behaviour in terms of
purchase. To ensure a deep customer satisfaction
level, it has strongly important the product or
service intrinsic characteristics (functionality,
uniqueness, quality, price and sense of
opportunity). Companies should acquire the
possibility of acting pro-actively regarding their
customer needs and answering them on time. It
results from the conjugation of several domains

Ilídio Tomás Lopes and Ana Maria Gomes Rodrigues
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throughout companies acquire a competitive edge
resulting on considerable financial returns.
Internal business dimension is an important
variable in achieving value. It matches customer
needs in providing them with a set of attributes,
which are also interlinked with shareholders
expectations by affording an excellent financial
return. Focusing on the processes with a
significant impact on customer satisfaction and on
the results achievement, it has an impact in the
creation of a new value chain, supported by new
business internal processes (Kaplan and Norton
1996). Traditional value chain was primarily
directed on focusing the processes and activities,
which supply products and/or actual services to
actual customers. This wave of value creation
begins by ordering a product and/or service
already in existence on the part of the actual
customer and finishes with their delivery.
According to the traditional value chain, the
company has created value based on production
activities, delivery and after-sales services. The
new view upon the value chain, which takes on a
long-term financial outlook, requires a structure
that can create new products and/or services,
which match the emerging future needs or
potential customers. The process of innovation
(Kaplan and Norton 1996:27-28) has become, for
a large number of organisations, a more important
mean of a future financial performance than can
be in itself, their operational cycle. This means
that, in the emerging markets, already catalogued
as new business models, the success states on
the organisation’s capacity to successfully
manage the products and services development
and in reaching new categories of costumers with
an highly retention power.
An approach based on the innovation value
represents a strategic logic in which the
orientation does not lie on the fact of wanting to
be constantly ahead of competitors. In fact, it was
a characteristic over the last decades in the
conventional logic, in which the competitors
become irrelevant on the prosecution and on the
value creation. Knowledge management was not
induced by processes or businesses by
themselves. Thus, it seems to us appropriate to
identify these two logics that seem to direct the
creation value on the strategic outlook. The
underlying differences of those strategic logics
can be reached throughout some key dimensions.
These differences intend to emphasise the main
questions that managers have to face: which
opportunities are diagnosed or sought after and
how is the business risk dealt with? Actually, the
value-based strategies are not established on the
industry conditions as a starting point, but in the
fundamentals in which the strategic options are
founded. Strategic focus is on confronting their
strong and weak points with those of the
competitors and, from they’re, identifying the best
way to establish a competitive advantage,
opposing the idea that the competition only works
as a simple benchmarking.
Conventional logic has oriented strategy for the
expansion of the customers’ data, always
responding to each of their specific needs.
Innovation based strategies have been directed
towards an opposite logic in the sense that they
are directed towards what the different customers
have in common, even if it means, in some cases,
loosing some of them. On the other hand,
conventional logic treats opportunities according
with its actual recourses and capacities whereas
innovation logic would never admit any kind of
constraint caused by that level or resources
and/or capacities. The supply of products and/or
services does not obey to this logic, the traditional
limits rule imposed by the industry - it focuses the
overall solution and, thus, on the generic value
chain, even if that leads the organisation to the
brink of a new business. In this manner and in the
ambit of business, the search for synergy ceases
to limit itself to the main activities and the support
activities of the value chain to assume the most
diverse shapes: knowledge sharing, strategy
coordination, physical resources sharing, vertical
integration, negotiation sharing and the creation of
combined businesses (Campbell and Goold
1998:133). That synergy may be of great help to
the organisation but it is essential in a first phase
to know how to distinguish true opportunities from
illusions. Sometimes the results obtained from
that synergy are more productive in cases where
a minor number of initiatives are pursued.
It has been also mentioned that organisations
have been seen for many years as value chains
or even as systems in which the value is created
by transforming certain inputs in more refined
outputs. Strategic changes associated with the
value chain management are related with the
production of goods with a proper quality at the
lowest possible cost. This cost reduction or the
value increase was initially associated to the
effect of economies of scale, to the efficiency in
the resource use capacity, to the learning effect,
to the information circuits about products as well
as to the quality measures. The key success
critical factors identified in this process of creation
value certainly include a whole set of relations
between the principal and the support activities.
Nowadays, this approach has also extended to
other means of value creation such as the
networks development. Besides the value chain
approach identified and formalised, two more
configurations of value were emerged: value

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networks and value shops. In the former,
organisations create value by sharing activities,
whereas, in the latter, competencies of helping
them to resolve a problem are sold.
The key factors of competitiveness which have
directed the evaluation of industry attractiveness
in the last decades continue to constitute an
essential basis for that evaluation, although due to
the differences of performance deriving from the
followed strategies, they have been
complemented with the analysis of the
competition position. Market development,
strongly marked by technology development, even
by the evolution of quality concepts and by the
business ethics in itself, has been demanding the
development of new techniques, which enable us
to measure the business-related performance but
also the business own risk measure. The
importance lost within traditional analysis of the
industry attractiveness has revealed over the last
decades. We are now oriented to the emergence
of new performance measures and to the
identification of new key factors that create value,
tangible or intangible assets, framed in the
domains of knowledge and/or in the information
and communication technologies - the knowledge
management system revolution. The impact of its
development is not due to the fact that the
companies are becoming more profitable by
increasing the rate of hourly production, but on
allowing access to a greater diversity of
information sources, but in its velocity processes.
Nowadays, there is a global market for the
technology and for the individual skills. The goal is
not only on developing competences that
represent by themselves a competitive edge, but
also on developing them economically and faster
than the competition. Clarifying the value system
and making it work is the major contribution that
each individual can give to the value creation.
This logic is the one, which has prevailed on the
last few decades and which seems to persist in
the digital economy, although in a more
integrated, aggressive and volatile way.
5. Intangible assets measurement
approaches
Literature focuses on three valuation techniques
towards intangible assets measurement: income,
market and cost approaches (Reilly and Schweihs
1998; Cohen 2005). Income approach is a
straightforward application using discounted cash
flows methodology, which are associated to the
expected future returns. Assuming the basic
principles of the financial theory, three main steps
should be followed in order to achieve a feasible
measurement: identify the asset from which we
expect an economic future return, estimate the
expected cash flows over time and finally assign
an appropriate measure of risk to our prediction
(using Capital Asset Pricing Model, Arbitrage
Pricing Theory or any other financial approach).
These approaches present, however, the
weakness that it may be very difficult to come up
with reasonable and unbiased expected future
cash flows. Under a market approach, we assume
that an asset can be related to the value of
comparable assets priced in the marketplace
(comparable method). The more heterogeneous
assets are the more difficult is to use the market
approach. For intangibles, comparable approach
cannot be followed once there is no active market
for those intangibles. Some evidences exist that
market approach can be followed for patents,
licences, strategic alliances and other intangibles
with a definite lifetime and subject to impairment
analysis. The cost approach for intangibles is
probably the most linear which considers the book
cost (recorded in the traditional financial
statements) or the replacement cost (with a wide
range of interpretation. Broadly, equals
reproduction cost less curable functional and
technological obsolescence). Reilly and Schweihs
(1998:144) argue that
“the cost approach is one fundamental way
of estimating the value of intangible assets
and intellectual properties. There are
several cost approach valuation methods,
the most common being the reproduction
cost method and the replacement cost
method”.
Thus, for intangibles without an active market or
under a comparison limitation, this approach
would be followed on a systematic basis.
6. The Portuguese airlines sector
6.1 Generic intangible assets
identification
The Portuguese Airlines Sector aggregates 38
companies, developing several activities, namely:
regular air transportation, charter activities and
emergence activities. All of them are certified by
the National Institute of Civil Aviation (NICA) for
those activities (Figure 1). However, in 2004, only
seven companies were certified to regular air
transportation activities (regular flights), as
mentioned in table 1. In the last two years, other
seven companies have been certified as regular
air transportation operators.

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3
7
14
2525
0
5
10
15
20
25
30
A. Air W ork B. Air
Transpor tation
(Charter)
C. Regular Air
Transpor tation
D. Medical
tranport ation
E. Medi cal
assistance
(rescue)
Source: National Institute of Civil Aviation (2006)
Figure 1: The Portuguese Air Transportation Sector
0 €
200.000. 000 €
400.000. 000 €
600.000. 000 €
800.000. 000 €
1.000. 000. 000 €
1.200. 000. 000 €
1.400. 000. 000 €
Euros
TAP AIR
PORTUGAL
AIR LUXOR PGA - PORTUGALIA
AIRLINES
SA T A
INTERNATIONAL
OMN I - A V I AÇ ÃO E
TE CNOLOGIA
SATA AI R AÇORES ATA -
AEROCONDOR
Source: Companies annual financial reports (2004)
Figure 2: Sales and services (euros) for companies with regular flights
TAP Air Portugal (Public company) represents
more than 80% of the sector activity, followed by
Air Luxor, a private company. PGA – Portugália
Airlines, a regional airline company, was classified
in 2005 as the best regional European company.
In 2006, other seven companies were certified to
regular transportation. However, relative position
for the companies mentioned in Table 1 was not
been modified. In this paper we present a
theoretical framework approach: our assertion is
that there are several intangibles not included in
the financial statements nor adequately included
in the management reports. In some cases, we
argue that some intangibles are incorrectly
expensed. In this preliminary step, our hypothesis
include the identification of several intangibles
(having or not a definite lifetime), which should be
feasibly analysed, in order to improve the
management information available to the
stakeholders as a whole. Those intangibles can
be identified as follows: preventive maintenance
programs, specific learning programs, cod share
agreements, strategic alliances (e.g. Star
Alliance), brands, frequent passengers programs,
flying certificates granted by NICA, research and
development investments, software and
databases and other rights. These intangibles
should be measured and integrated in the
financial statements or specified in the
management reports.

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Figure 3: Intangible assets in the Portuguese airlines companies
0
250
500
750
1.000
1.250
1.500
1.750
2.000
2.250
2.500
2.750
3.000
3.250
3.500
3.750
4.000
4.250
4.500
1999 2000 2001 2002 2003 2004Years
TA P A IR PORTUG A L AIR LUXOR
PGA - PORTUG Á LIA AIRLINES OMNI - A V IAÇÃ O E TECNOLOGIA
ATA - AEROCONDOR
Source: Annual financial reports (1999 - 2004)
Intangible assets included in the financial
statements relate to goodwill, research and
development (RandD) investments, property
rights and installation expenses. There is no
evidence about other intangibles identification
included in the annual financial reports. Thus, the
supremacy of TAP Air Portugal and PGA –
Portugália Airlines has no significance if we
compare the intangible assets impact on the net
balance sheet value. Intangibles like maintenance
programs, specific learning programs, cod share
agreements, strategic alliances, brands, frequent
passengers programs and flying certificates are
not included nor reported. Most of them are
immediately expensed and included in the profit
and loss account. Intangibles identification in the
balance sheet is evidenced in Table 1, as follows:
Table 1 – Intangibles reported in the annual financial statements
Company Airline
Goodwill
Research
and
Develop.
Industrial
Property
and Rights
Installation
Expenses
Other Rights
(contracts)
TAP AIR PORTUGAL ● ● ● ●
AIR LUXOR ● ● ●
PGA – PORTUGALIA AIRLINES ● ● ●
SATA INTERNATIONAL
OMNI – AVIAÇÃO E TECNOLO. ● ●
SATA AIR AÇORES
ATA – AEROCONDOR ● ● ●
Source: Annual financial reports (2004)
As stated in the Table 1, intangibles recognition or
identification is not a strategic issue. We have
focused our attention to intangible assets as value
sources but we are also aware that the essence of
value, although strongly conditioned by that
assets typology, wears itself out. Nevertheless,
integrated outlooks of the possible factors, which
can influence the value creation or destruction
from the stockholder’s point of view, are required.
For instance, strategic commercial based
alliances are usually formed between companies
that try to enter into new markets or expand their
existing ones. Stakeholders seem to perceive
those alliances as advantages and as a value
creation source.
Strategies in this type of company are based on
the capacity to anticipate, innovate and make
shared use of opportunities and knowledge. Other
more wide-ranging factors were also identified,
which cause fluctuations in the value of
companies: strategic alliances as “Star Alliance”,
diversification by international acquisition, and use
of “outsourcing”, mergers and disinvestment
decisions. Companies should anticipate the value
migration process focusing on their innovation
cycles and customers needs. Create value arises

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199
in the new economy as the key burner to maintain
a sustainable competitive advantage.
In the previous analysis to financial reports,
traditional intangible assets have been recognised
in the financial statements namely “goodwill” (as
an aggregate value), research and developments
investments, industrial property and rights,
company installation expenses and other
intangible as contracts. This is the traditional
approach based on the Portuguese accounting
rules and, since 2004, based on international
accounting standards. However, our concern
relates to other intangibles that are not accounted
and/or not reported in the financial statements.
Our assertion is that those intangibles strongly
drive the company value. Some of them,
emerging from air transportation literature review
are: brand names, cod share agreements,
international alliances, frequent passenger
programs, preventive maintenance programs, and
human capital typologies, license typology
granted by INCA, local agreements, and specific
contracts, among others not yet identified.
6.2 A theoretical framework approach for
specific intangible assets
identification
In order to achieve our investigation goal, a
theoretical approach is proposed, for the
Portuguese Airlines sector, as shown in Figure 4:
Figure 4: Intangibles framework approach I
We assume, in our investigation, five hypotheses
relating intangible assets identification and
measurement. These are shown in Table 2.
Table 2 – Investigation hypothesis
H11 Company size
H12 Type of license issued by NICA
H1
There is an information gap about intangibles in
the Portuguese Air Transportation Sector,
depending from: H13 Manager function
H21 Company size
H22 Type of license issued by NICA
H2
Air Transportation Sector evidences specific
intangible assets that should be measured and
reported, depending from: H23 Manager function
H31 Company size
H32 Type of license issued by NICA
H3
Intangibles are not included in the traditional
financial balance sheet statement. It depends
from: H33 Manager function
H41 Legal reports
H4
Intangible assets are not adequately reported in
the stakeholders’ management reports: H42 Voluntary stakeholders’ reports
H51 Company size
H52 Intangible typology
H5
There is a positive correlation between
intangibles valuation and potential future
returns. It depends from: H53 Accounting and financial rules
followed
Sector
(N=38)
Questionnaires
Specific intangibles in Air
transportation companies
Regular Air
Transportation
Companies
N=14
TAP AIR PORTUGAL
AIR LUXOR
PGA – PORTUGÁLIA
AIRLINES
….
Measurement
Interviews a
pp
roach
Intangibles identification
and importance ranking

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Meanwhile, the theoretical construct is evidenced by figure 5. In figure 5, hypothesis and theoretical
framework approach matching, is presented.
Figure 5: Theoretical framework approach II
After fieldwork completion, we expect that most of
the assertions assumed in this paper, will be
effectively confirmed. From an accounting point of
view, we expect that intangible importance and
consequent recognition depends from company
size, organisational culture and company maturity
stage. Accounting barriers in their fair
measurement will also affects the intangible non-
recognition. In air transportation sector, strong
changes have also occurred – traditional value
chains based on linear activities alignment were
replaced by a new perspective: the innovation
cycle (intangibles recognition) and its impact on
the operational cycle A new market approach has
also emerged which is based on customers needs
identification, the inclusion of those needs in the
innovation cycle and thus, their consequent
integration in the operations cycle management.
Air transportation companies also compete by
their innovation capabilities (human and structural
capabilities). Value migration (also dependent
from the innovation intensity), as stated by
Slywotzky (1996:58), requires that companies
recognise their value drivers that, on a feasible
and continuous base, contribute to the company
growth. That migration process, strongly
embodied on innovation capabilities, enables
companies’ airlines to acquire/develop
competencies (organisational learning process)
that can easily create value and maximise the
future expected returns. It is today irrefutable that
value creation is the main objective for
companies’ stakeholders.
Value became the key pointer for those
stakeholders. Searching information, design
systematic learning processes about companies’
innovation and operational cycles, and match
them with customers needs, can contribute for the
minimisation of value losses in the value migration
process.
6.3 Specific intangibles revised
As stated below, specific intangible assets are
indeed underlined for air transportation sector
(Table 3). However, further investigation is
required in order to point out their relative
importance. Questionnaires approach will be
followed in order to meet this objective in a
feasible basis.
Table 3 – Intangible assets (first approach)
Brand names
Fly share agreements
Preventive maintenance programs
Logos and trademarks
Strategic alliances
Frequent passenger programs
Human capital categories (e.g. pilots and
maintenance Human Resources)
Regional agreements
Contracts between air transportation companies
Licences to fly
Restructuring strategies
Fiscal planning strategies
Quality certificates
Airports certification
Evidence on
Financial
Statements and
divulgation in
Management
Reports
Value
H
2
H3
H4
H
5
H
1
Intan
g
ibles T
yp
e
Intan
g
ibles T
yp
e
Intan
g
iblesT
yp
e
Intan
g
ibles …
Intan
g
ibles T
yp
e

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As in Portugal, within Europe, some changes
have occurred in air transportation companies -
strategic alliances have taken place and deep
restructuring programs were implemented. Should
they be reported as intangible assets? According
their potential financial return stated by IAS 38, we
are aware about that approach.
Strategic alliances require “that the partners come
to some agreement on the value of their
respective contributions to the collaborative entity”
(Inkpen and Madhok 2001:49). Every partner has
access to new skills and knowledge, increased
return is expected. In fact, each alliance is
established on payoff to learning approach and on
the cost of continued collaboration analysis. In air
transportation sector, several companies join the
alliance (e.g. Star Alliance) in order to over new
destinations with higher passenger’s fidelity.
Synergies are the most important outcome in this
particular value creation process. Fiscal planning
and restructuring strategies can also be
considered as intangible assets and subject to a
patent process (and thus subjected to patent
portfolio management analysis). Since 1998, in
the United States of America, 49 fiscal planning
strategies were patented. Know-how embodied in
those strategies can be, in essence, translated
into strong future financial returns for stakeholders
(opportunity for competitive advantage or process
complexity risk increase!?). Nevertheless, no
consensus exists about this approach.
7. Final remarks and further
investigation
Intangible asset concept is associated with
expected future returns. It is viewed as an
identifiable non-monetary asset without physical
substance, controlled and the source of future
returns for the enterprise. In this respect, one of
the most visible sources of intangible assets is
patent registration, supported by the intensity of
research and development. This evidence is
consolidated at a later date by the number of
patents actually registered and granted by the
international agencies. Innovation management is,
therefore, a source of competitive advantage for
national economies in general and the business
sector in particular. Broadly and according to
modern economic theories, knowledge is the most
subjective asset that appears directly associated
to connectivity, information, technological and
organisational convergence, and complementary,
to mobility. It appears as the main source of
competitive advantage, responsible for the
organisational productivity improvement. As a
dynamic process, it is also understood as the
capacity to transform data, to use information, to
learn, to test results, to interpret, to support
decisions and to take sustainable advantage.
Portuguese airlines companies present poor rates
about intangible assets in their financial reporting
systems. Our assertion relates that several
intangible assets exist that are not included nor
adequately reported in the financial
statements/stakeholders reports. Future research
is required relating intangible assets identification
and measurement throughout an income, cost or
market approach. A theoretical framework
approach was presented in order to identify and
quantify the intangibles impact on the financial
statements and on value creation process. This
investigation is currently in the field. In the same
way, similar approach can be followed for
worldwide air transportation sector. Other
companies should be included in the sample in
order to support the assertions issued in this
paper.
8. Acknowledgements
We are thankful to NICA (National Institute of Civil
Aviation, Portugal) for providing us with the data
used in the fifth part of this paper. In advance, we
are also thankful for the expected support in the
following steps of the investigation process.
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