Intellectual Capital

Essay by qwertyytrewq123A, March 2014

download word file, 2 pages 0.0


In this era of modern world, Intellectual capital is a real business asset, although measuring it is a very subjective task. Companies spend millions annually training their employees in business-specific topics and also their expertise, knowledge and a firm's organizational learning ability in their staff. It is these things that we normally cannot put a price tag on. This capital employed provides a return to the company, one that can contribute for many years' worth of business value. It doesn't appear on the company balance sheet but it has more value for organizations than physical assets. Economic wealth is driven more by knowledge and information than the production process.

The economic value of the nation's productivity depends more upon employee skills and knowledge and business problem solving aptitude than it does upon the market value of the firms output. In the modern world, intellectual capital is the primary resource and driver of our information economy.

While past economies depended on use of land, natural resources, equipment and capital for the creation of value, our information economy now is largely dependent on the application of knowledge.

Knowledge is very important source for people, firms and countries. Managing knowledge and intellectual capital creates new source of competitive advantage. The fortunes and values of firms can increase or decrease depending on how well they create, capture, and leverage their knowledge. Intellectual capital encompasses the models, strategies, unique approaches and mental methodologies organizations use to create, compete, understand, problem-solve and replicate.

We are living in a knowledge economy. "Knowledge driven economy is one which the generation and exploitation of knowledge plays the predominant part in creation of wealth. People are an organization's greatest asset, providing the intellectual capital that drives differentiation and value-added services.

Intellectual capital...