Intellectual capital

Intellectual capital
The value of an enterprise is made of physical assets, various financial assets and, finally, intangible assets, i.e., intellectual capital (IC). The term intellectual capital conventionally refers to the difference in value between tangible assets (physical and financial) and market value. [1]. [2]. Measuring the real value and the total performance of intellectual capital's components is essential for any corporate head who knows how high the stakes have become for corporate survival in the knowledge and information age. So, the main point is how an organization can affect the firm's stock price using the leverage of intellectual assets.[3]

Classification
Intellectual Capital is normally classified as follows: Human Capital The value that the employees of a business provide through the application of skills, know how and expertise.[4] Human capital is an organizations combined human capability for solving business problems. Human capital is inherent in people and cannot be owned by an organization. Therefore, human capital can leave an organization when people leave. Human capital also encompasses how effectively an organization uses its people resources as measured by creativity and innovation. Structural Capital The supportive infrastructure, processes and databases of the organisation that enable human capital to function.[5] Structural capital includes such traditional things as buildings, hardware, software, processes, patents, and trademarks. In addition, structural capital includes such things as the organizations image, organization, information system, and proprietary databases. Because of its diverse components, structural capital can be classified further into organization, process and innovation capital. Organizational capital includes the organization philosophy and systems for leveraging the organizations capability. Process capital includes the techniques, procedures, and programs that implement and enhance the delivery of goods and services. Innovation capital includes intellectual properties and intangible assets.[6] Intellectual properties are protected commercial rights such as copyrights and trademarks. Intangible assets are all of the other talents and theory by which an organization is run. Relational Capital Consists of more identifiable items such as trademarks, licences, franchises, but also the less definable, such as customer interactions and relationships. The notion that customer capital is separate from human and structural capital indicates its central importance to an organizations worth.[7]

References
[1] Paolo Magrassi (2002) "A Taxonomy of Intellectual Capital", Research Note COM-17-1985, Gartner [2] Sveiby, Karl Erik (1997). "The Intangible Asset Monitor". Journal of Human Resource Casting and Accounting 2 (1). [3] Khavandkar , Jalil & Khavandkar , Ehsan . (2009), "Intellectual Capital: Managing, Development and Measurement Models". Iran Ministry of Science, Research and Technology Press. [4] Maddocks, J. & Beaney, M. 2002. See the invisible and intangible. Knowledge Management, March, 16-17. [5] Maddocks, J. & Beaney, M. 2002. See the invisible and intangible. Knowledge Management, March, 16-17. [6] Edvinsson, L. & Malone, M.S. 1997. Intellectual Capital: Realizing your Companys True Value by Finding Its Hidden Roots. New York: Harper Business. [7] Skyrme, D.J. 1998. Valuing Knowledge: Is it Worth it?

Article Sources and Contributors

Article Sources and Contributors

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