CHAPTER 4
Recognizing a Firm’s Intellectual Assets:
Moving beyond a Firm’s Tangible Resources
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©McGraw-Hill Education.
1
Learning Objectives
After reading this chapter, you should have a good understanding of:
4-1 Why the management of knowledge professionals and knowledge itself are so critical in today’s organizations.
4-2 The importance of recognizing the interdependence of attracting, developing, and retaining human capital.
4-3 The key role of social capital in leveraging human capital within and across the firm.
4-4 The importance of social networks in knowledge management and in promoting career success.
4-5 The vital role of technology in leveraging knowledge and human capital.
4-6 Why “electronic” or “virtual” teams are critical in combining and leveraging knowledge in organizations and how they can be made more effective.
4-7 The challenge of protecting intellectual property and the importance of a firm’s dynamic capabilities.
©McGraw-Hill Education.
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The Importance of Intellectual Assets
Consider. . .
A company’s value is not derived solely from its physical assets. Rather it is based on knowledge, know-how, and intellectual assets – all embedded in people.
In the knowledge economy, wealth is increasingly created by effective management of knowledge workers instead of by the efficient control of physical & financial assets.
©McGraw-Hill Education.
In today’s knowledge economy, it does not matter how big your stock of resources is—whether it be top talent, physical resources, or financial capital. Rather, the question becomes: How good is the organization at attracting top talent and leveraging that talent to produce a stream of products and services valued by the marketplace? Human capital is the foundation of intellectual capital, but the attraction, development, and retention of human capital is a necessary but not sufficient condition for organizational success. Social capital, the appropriate use of technology, and protection of physical and intellectual property are all also critical. Knowledge economy = an economy where wealth is created through the effective management of knowledge workers instead of by the efficient control of physical and financial assets. Investing in a company is, in essence, buying a set of talents, capabilities, skills, and ideas – intellectual capital – not physical and financial resources..
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The Central Role of Knowledge
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Intellectual capital is a measure of the value of a firm’s intangible assets – the difference between a firm’s market value & book value. It includes these assets:
Reputation
Employee loyalty & commitment
Customer relationships
Company values
Brand names
Experience & skills of employees
©McGraw-Hill Education.
Intellectual capital = the difference between the market value of the firm and the book value of the firm, including assets such as reputation, employee loyalty and commitment, customer relationships, com ...