1 Introduction
Eradicating poverty, protecting the planet and ensuring prosperity for all are the United Nationâs new Sustainable Development Goals (SDGs). In 2015, all UN members pledged their commitment to the 2030 Agenda for Sustainable Development. All member countries are expected to frame their respective development agendas on 17 goals relating to poverty, health, education, women, water, energy, economy, infrastructure, inequality, habitation, consumption, climate, marine systems, ecosystems, innovation, sustainable cities, institutions and overall sustainability that is to strengthen the means of implementation and revitalise the global partnership for sustainable development (UN n.d.).
Although the world is rapidly urbanising yet most of the worldâs poorest population lives in rural areas. Sound government policies are required to achieve SDGs in the context of rural areas in particular and urban areas in general. However, for business enterprises, sustainable development also refers to adopting business strategies and activities that will meet the needs of the enterprise and its stakeholders while protecting, sustaining and enhancing the human and natural resources that will be required for the future. All this, in turn, needs to be implemented through, or perhaps complemented by, programmes and projects that deliver goods and services to rural people through the public sector, private sector or non-governmental sector. Rural development initiatives require developing leaders and networking with those leaders to create rural economic vitality. The first step in creating this economic vitality is building an agreement that focuses efforts on significant activities based on community assets. In this context, Young (2010) surmised that rural businesses often embed locally, through personal networks, as a part of their survival strategies. The economic functions of rural areas have evolved considerably in recent decades. Among various economic activities, agriculture still plays a central role despite its declining importance worldwide economically and in the labour market. Agricultural intensification is common on âgood landâ or in more prosperous regions, whereas agricultural decline or abandonment is common in poorer or more marginal land.
Agriculture prosperity has been influenced by demographic and economic changes, which have reduced the dependency of rural inhabitants upon farming and other primary industries (Satterthwaite et al. 2010). New industrial and service activities have emerged that to a certain extent have started replacing agriculture activities (Baldock and Lowe 1996; Baldock et al. 2001). A gradual shift from a sectoral to a spatial focus is affecting the rural economy resulting in a progressive detachment from the exclusive production of food and fibre and in a concomitant increasing reliance on the service economy, tailored to the new requirements of the urban society (Baldock and Lowe 1996). Although some of the requirements (e.g., housing, business relocation and certain kinds of outdoor recreation) cannot be easily reconciled with the carrying out of farming activities, agriculture can still have a pivotal and catalysing part in meeting other equally relevant demands placed on the countryside such as rural tourism, the preservation of rural landscapes and traditions, environmental education and the production of healthy native food.
Many social scientists are finding it difficult to develop a rural development model that is capable of bringing a paradigm shift (Ploeg et al. 2000). Polidori and Romano (1996) remarked that sustainable rural development is a process of multidimensional change affecting rural systems. Economic growth, improvement of social conditions and conservation of natural values are important for sustainable rural development and should be induced according to a bottom-up approach through a participated and sustainable use of local endogenous resources (environment, labour force, knowledge, patterns of production, consumption and communication) (Pugliese 2001). Public-private participation has become a widely advocated methodological principle to work for the overall sustainable development of the rural regions (Leeuwis 2000).
Looking into the aforementioned rural development issues, this chapter highlights the role of intellectual capital, which can also be considered as the DNA for rural business growth in particular and rural development in general. The following section discusses, in brief, the concept of intellectual capital and its dimensions.
2 Intellectual Capital
Intellectual capital is recognised as one of the critical sources for an organisation to gain competitive advantage (Barney 1991). Its role in sustaining this competitive advantage is recognised by various researchers in service and manufacturing organisations in both developed and developing countries. Rapid changes in customer expectations and technology, unpredictable customer behaviour, hyper-competition are acknowledged as significant factors leading to the rise in the research on intellectual capital for sustaining business performance (Chahal and Bakshi 2015, 2016). The concept of intellectual capital has been drawing attention globally with its claim to be an effective competitive tool for value creation. However, there is no such single definition that is shared by the researchers. Edvinson (1997) and Sullivan (1999), the two major contributors in the development of intellectual capital, considered intellectual capital as a composite of human competencies, knowledge, ability, skills, experience and customer relationships that provided the competitive edge to an organisation. Specifically, Edvinson (1997) defined intellectual capital as a set of intangible assets that includes resources, competencies and capabilities that enhances organisational performance through an increase in value creation. Similarly, Sullivan (1999) considered intellectual capital in terms of competencies and relationships and defined it as an intangible asset resulting from (intangible) resources. This concept was also supported by Ulrich (1998). From a financial perspective, intellectual capital reflects the difference between the market value and the book value of the firm (Sveiby 1997). Further, Roos and Roos (1997) defined intellectual capital as a combination of significant capabilities and structures that generate organisational value. However, all these definitions have been derived from a narrower perspective. Bontis, in 2004, expanded the concept of intellectual capital from a broader perspective and defined it as âthe hidden values of individuals, enterprises, institutions, communities and regions that are the current and potential sources for wealth creation. These hidden values are the roots for nourishment and the cultivation of future well-beingâ. Hence, the role of intellectual capital in the sustainable development of rural sector can be considered from the role played by different organisations and stakeholders that include employees, suppliers, customers, society, government and so on.
Human capital, relational capital and structural capital, the three components of intellectual capital, are well accepted in the literature by majority of the researchers such as Chahal and Bakshi (2015), Shih et al. (2010), Cabrita and Bontis (2008), Kavida and Sivakoumar (2009), Bontis et al. (2000), Edvinson (2000), Sullivan (1999), Stewart (1997) and Roos and Roos (1997). Hsu and Wang (2010) have also remarked that human capital is a basic component of the intellectual capi...