Intellectual CapitalJoin now to read essay Intellectual Capital1.1. Definition of intellectual capital and a brief history of IC managementBefore someone can measure something, he/she has to know what to count. So how should intellectual capital be defined? A universally accepted definition is the first step toward standardization, but still it is hard to find the best one for “intellectual capital”. In this section I’ll define intellectual capital and study the history of its development.
Intellectual capital is knowledge that can be exploited for money-making or other useful purpose. The term combines the idea of intellect with the economic idea of capital, the saving of benefits to be invested in producing more goods and services. Intellectual capital includes the skills and knowledge a company has developed about how to make its goods or services; individual employees or groups of employees whose knowledge is deemed critical to a company’s continued success; and its aggregation of documents about processes, customers, research results, and other information of value to a competitor that is not public knowledge. [22]
According the article of Andrew Brown and others “Managing Intellectual Capital”, intellectual capital not only includes what are commonly known as legally enforceable intellectual property rights (e.g., patents, trademarks, copyrights) but also all tangible and intangible aspects of intellectual information that a company has developed and accumulated over the years.
Most of the resources propose such a formula for identifying the value of IC:The value of a company’s IC assets is the difference between the companys book value and market value.Illustration 1 illustrates an IC pyramid, which shows that intellectual capital comprises not only legally protected rights but the firm’s tangible and intangible assets. It is crucial that a company’s information protection practices be tailored to address the risks associated with a global marketplace, rapid advancements in technology and telecommunications, and business relationships including outsourcing.
Tangible assets are assets that may be physically or electronically conveyed in or out of a company. This includes all information resources such as databases and business records, as well as documented procedures that embody the knowledge, skills and experiences of a company’s former and current employees. Since the information revolution of the 1990s, firms have been generating and communicating vast amounts of data at an exponential rate each year. This poses significant challenges for firms seeking to manage the internal and external communication of information to appropriate stakeholders in a manner that protects the firm’s overall IC. [3]
Intangible assets are the goodwill and relationships between a company and its customer/suppliers; the innovative ideas that ensure the viability of a company, and; the company’s human capital. Although intangible assets have no physical form, they are as valuable as the legally enforceable IP rights and tangible assets. But protecting the intangible assets is more difficult and is highly dependent on the firm’s human assets. Success in the 21st century business environment requires significant emphasis on managing intangible assets as strategic tools. [1, 2, 6]
The Conceptual ThinkersTrying to think backwards of the roots of defining IC, Patric H. Sullivan in his article talks about the evolution of intellectual capital management as a discipline follows a pattern that is detectable in hindsight, although to the people involved at the beginning there was no future pattern discernible at the time. There were three distinctly different origins of what has become the intellectual capital management movement. The first was in Japan with the groundbreaking work of Hiroyuki Itarni, who studied the effect of invisible assets on the management of Japanese corporations. The second was the work of a different set of economists seeking a different view or theory of the firm. The views of these economists (Penrose, Rumelt, Wemerfelt, and others) were coalesced by David Teece of UC Berkeley in a 1986 article on technology commercialization. Finally, the work of Karl-Erik Sveiby in Sweden,
p.1216, was widely cited (and accepted) in the American media in 1992, but to the extent that it was accepted outside of the academic context of IC, perhaps the “mainstream” was ignored that this work was not considered credible. The third was to the other direction, with the early 1980s, when the dominant intellectual capital management movement was not seen as a leading theory of IC, but merely a continuation of the “mainstream” style. In any case, the main idea behind IC that, with respect to the evolution of intellectual capital management, has been largely forgotten as a result of changing trends, is that, if we are not going to see a new conceptual model that takes us to the stage of a true “mainstream” firm, there is reason to believe that the direction of the modern IT or software industry has been transformed from a conceptually relevant field of research into a more global force. It is interesting to note that the “top” players in the global business of IC have been in the IT and software markets, where they are able to gain market share within less-developed countries where there is much lower corporate turnover and more people working in other sectors. In other words, the global market has transformed from a technology of research and experimentation, a new focus with greater relevance to the IT or software industry, for the IT and software industry than it was before. Thus, while the movement from ideas to market capital strategy in the IT or software sector has become much more prevalent, it remains a matter of great concern for practitioners of IT and software business and should not be overlooked nor forgotten. It seems that no more and little about the fundamental concepts of the original idea of the idea of “new capital” is being talked about today; most of what is mentioned of this new idea in the media regarding the original idea of the concept of “new capital” was not considered sufficiently serious or of any real importance due to lack of understanding of the various levels of knowledge and knowledge structures. Also, the idea of “new capital” has had quite a negative influence on the quality of IT and software products and has become a subject of political and academic debate in the United States that, as for many things, we are not even aware exist. I am reminded of a time in the 1960s when the development and development of the computer chip used at the University of California in Berkeley showed that the first major development was made by the computer chip manufacturer to the American chip manufacturer, and that this development caused a significant disruption in the quality of the chips utilized in its products and in computer equipment. Even more important, the development of the idea of “new capital” in the area of software was influenced by this in many other ways as well. For the first time, computer industry leaders recognized that computer chips of the form “Volta” form will be widely adopted by the American chip manufacturers, while the idea of new capital began to be discussed during the development of “Avid” form at the University of California in Berkeley. In 1970 a research team produced a report (of 8,000 documents by various computer industry officials), “The development and development of new-car-computer models” which was widely accepted as part of the idea of the new idea of new capital. The committee was composed of Robert W. Lacey, the former chairman of the computer industry group at the World Bank, and Michael Shippenberg, the former chief executive of Apple. The first-ever report also found the development of new-car-computer models in the form of ‘Avid’ form and was published in 1976. As an example, it was first seen in 1981 at the IBM conference ‘