Presentation in ICICKM 2014 in Sydney. The paper aims to elaborate how customers’ negative experiences are perceived and encountered in construction business. Negative experiences are investigated through intellectual capital approach. Special interest lays in intellectual liabilities that are categorized into two main categories: 1) obligations or risks and 2) depreciation of intellectual capital. The paper applies qualitative research approach with empirical data gathered by interviewing 10 employees representing four different construction companies in Finland. Analysis of the interview data leads to the recognition of six major antecedents of intellectual liabilities.

1. 5.11.2014 ICICKM, SYDNEY / HARRI LAIHONEN, MAIJU VUOLLE, JONNA KÄPYLÄ
NEGATIVE CUSTOMER EXPERIENCES
AND INTELLECTUAL LIABILITIES

2. AGENDA
I. Scope of our research
II. How we approached it?
III. What we learned?

3. NEMO - BUSINESS VALUE FROM
NEGATIVE EMOTIONS
• Positive emotions, such as pleasure and happiness, are clearly related to
business performance.
• Based on everyday experience as well as on research, it is known that
positive customer experience strengthens loyalty and brings the customer
back. Significantly less we know about the business value of contradictory
and negative emotions.
• How contradictory and negative emotions can ethically and
sustainably be used as sources not merely for improving customer
experience and working climate but also for growth, innovation and
new business models?

4. TWO PERSPECTIVES
1. Knowledge worker
• Performance is strongly
determined by ’inner
work life’ (Amabile and
Kramer, 2007)
2. Customer
• Service management
highlights the role of the
customer; how emotions
relate to this?
Figure: Amabile and Kramer, 2007

5. INTANGIBLE LIABILITIES (IL)
• Intangible liabilities (IL) have been defined as the responsibility of the
firm to transfer economic resources or provide services to other
entities in the future (Harvey and Lusch 1999).
• Caddy (2000) builds on this definition and defines intellectual capital as a
net figure gained by subtracting intellectual liabilities from intellectual
assets (IC=IA-IL).
• Garcia-Parra et al. (2009) recognize two views on intangible liabilities:
1. intangible liabilities as non-monetary obligations or risks and
2. intangible liabilities as depreciation of intangible assets.

6. FRAMEWORK FOR INTELLECTUAL
LIABILITIES
Intellectual liabilities
External liabilities Internal liabilities
Force majeure Market liabilities Human liabilities Structural liabilities Relational liabilities
Main research task: Recognition and better management?
Stam, D. (2009) “Intellectual liabilities: lesson from The Decline and Fall of the Roman Empire”,
VINE: The journal of information and knowledge management systems, Vol. 39, No. 1, pp 92-104

8. EMPIRICAL EXAMINATION:
METHODS AND DATA
• Qualitative research approach
• We interviewed 10 employees representing four different construction
companies in Finland. Employees engaging customer contact: project
managers, work foremen, construction managers, site engineers and
customer service managers.
• Three broad themes: 1) personal experiences on negative
customer encounters, 2) the existing feedback channels and
organization’s practices of handling these situations, and 3)
suggestions for better management of negative customer
experiences.

9. NEGATIVE CUSTOMER EXPERIENCES
AS INTANGIBLE LIABILITIES
Intellectual
capital
Intellectual
liabilities
Obligation or risk
Depreciation of
intellectual
assets
Mismatch of customers’ expectations
and reality
Lack of trust towards construction
industry
Undervaluation of customer
The loss of trust during or after the
building project
Problems in co-operation and
coordination of network partners
Inability to proactively respond to
product/service failure
DIFFICULT!
WHY?
Poor theory?

10. MANAGERIAL IMPLICATIONS
• Two perspectives stand out from our empirical exercise:
1. from the viewpoint of ILs as non-monetary obligations or risks, it
seems highly important for construction companies to pay careful
attention on marketing (materials and customer encounters)
2. when considering ILs from the viewpoint of depreciation of IC, four
aspects stand out from the empirical data. All of these relate to
communication. Respectful, open and active communication
seems to be a solution to most of the challenges.

11. FUTURE WORK
• This research continues along two complementing paths.
• The empirical work continues with interviews and development
workshops where industry participants from various organizations
share and develop best practices that would improve the overall
quality of construction processes in Finland.
• There is also plenty of theoretical work to be done. The forthcoming
empirical work is expected to deepen the analysis of negative
customer experience as a relational liability and to develop new
categories for intellectual liabilities.

12. THANK YOU!
Novi research center for knowledge management
http://www.tut.fi/novi
Performance management team
http://www.tut.fi/pmteam
harri.laihonen@tut.fi