This document discusses organizational intellectual capital (IC). It presents several models of IC, including Sveiby's model which divides intangible assets into competence of personnel, internal structure, and external structure. Stewart's model defines IC as packaged useful knowledge. The document also discusses IC resources, noting they behave differently than monetary/physical resources. It presents an operational structure for organizational IC, dividing it into human capital, structural capital, and relational capital. Human capital contains employee knowledge, intelligence, and values. Structural capital contains organizational structures and systems. Relational capital reflects internal/external stakeholder relationships. Integrators are described as combining elements of potential IC into usable, operational IC.

1. OrganizationalIntellectual Capital
Prof.dr.dr.dr.h.c. Constantin Bratianu
Faculty of Business Administration
Academy of Economic Studies

2. Learning objectives
To understandthe concept of organizational intellectual capital (IC) and its implications in management
To explain the correlation between organizational intellectual capital and business excellence
To present the most important models for IC and their implications in management
To explain the role of integratorsin the dynamic model of the organizational intellectual capital

3. Karl Erik Sveiby The new organizational wealth (1997)
Any organization has:
-tangible assets
-intangible assets
Tangible assetscontribute to the Book value, since they are visible, tangible and can be measured
Intangible assetscontribute to the Market value. They are invisible, intangible and cannot be measured in the same way as physical objects.

4. Assets
Tangible assets
Intangible assets
Competence of personnel
Internal structure
External structureSveiby’s model for Intangible assets

5. Thomas Stewart Intellectual capital. The new wealth of organizations (1997)
Intellectual capital is intellectual material –knowledge, information, intellectual property, experience –that can be put to use to create wealth. It is collective brainpower (p.XI)
Intellectual capital is packaged useful knowledge (p.67)
Intellectual capital is the sum of everything everybody in a company knows that gives it a competitive edge. Unlike the assets with which business people and accountants are familiar –land, factories, equipment, cash –intellectual capital is intangible.

6. Intellectual Capital
Intellectual Capital can be defined as all nonmonetary and nonphysical resources that are fully or partly controlled by the organization and that contribute to the organization’s value.
(Göran Roos, Stephen Pike & Lisa Fernström, Managing intellectual capital in practice, 2005, 19p.)

7. Total Capital
Financial Capital
Intellectual Capital
Monetary Resources
Physical Resources
Organizational Resources
Relational Resources
Human Resources

8. IC RESOURCES
IC resources behave differently from monetary and physical resources, and therefore must be managed in a different way.
Monetary and physical resources are additive in nature; that is, if one uses them, one has less left to use and if one invests in them, one has more left to use.
Both follow the law of diminishing marginal returns, and both are owned and controlled by the organization in whose balance sheet they appear.

9. IC RESOURCES
IC resources are not additive in nature, i.e. they have a nonlinear behavior.
When one shares some knowledge with others, he/she still has that knowledge, the level of knowledge did not diminish.
When one invests in IC resources, the result is not necessary more resources.
Structural and relational resources follow the law of network economics. This means that initial investments tend to exhibit very little return and substantial cumulative investments are needed before returns reach reasonable levels.
After this the marginal return of further investment in these resources will increase until an inflexion point is reached, after which there will be a decline of the marginal return

10. FAX MACHINES
The first investor in a fax machine had no use whatsoever out of his investment since there was nobody to fax to.
Subsequently, each new investor in fax machines generated value for all existing users of fax machines since the user base increased.
Each subsequent investor in fax machines is here generating more marginal value to the existing users of fax machines than the preceding investor.
This continue until a certain limit is reached, when each subsequent investor reduces the increase value in having fax machines.

11. IntellectualCapital
Human
Capital
Structural
Capital
Relational
Capital
Operational structure for the organizational IC

12. Human Capital
It contains all knowledge, experience and skills of all employees: cognitive knowledge, emotional knowledge and spiritual knowledge
It contains all intelligencesof all employees: logical- mathematical, linguistic, musical, bodily, spatial, naturalistic, interpersonal, and intrapersonal
An intelligence is a computational capacity –a capacity to process a certain kind of information –that originates in human biology and human psychology (Gardner)
Cultural and professional values

13. Structural Capital
It contains all intangibles structures of the company
All regulations and procedures concerning the decision making process for operational problems
All regulations and procedures concerning the quality assurance of the company
The organizational and functional structure of the company
The specific legislation for the business field
All software systems and platforms

14. Relational capital
It reflects relationsbetween the inner business environment and the external business environment
It reflects the transferof knowledge and technology toward society
It reflects the interactionsbetween internal stakeholders and external stakeholders: with suppliers, customers, business partners, regulation bodies, government etc.

15. HumanCapital
Knowledge
Intelligence
Values
Operational structure of the human capital

16. Gardner’s Multiple Intelligence
Linguistic intelligence
Logical-mathematical intelligence
Musical intelligence
Spatial intelligence
Bodily-kinesthetic intelligence
Naturalist intelligence
Personal (intrapersonal and interpersonal) intelligence
Existential intelligence

17. IntellectualCapital
Human
Capital
Structural
Capital
Relational
CapitalKnowledge
Intelligence
Values

18. Knowledge
Intelligence
ValuesINTEGRATORS
Potential Intellectual Capital
Operational Intellectual Capital

20. Integrators
An integratoris a powerful field of forces capable of combining two or more elements into a new entity, based on interdependenceand synergy. These elements may have a physical or virtual nature, and they must poses the capacity of interacting in a controlled way.

21. Potential IC (Available IC)
Operational IC (Usable IC)
Level of IC
Power of integration
Transformation of the potential IC into operational IC
Not usable IC
Result of the integrators action

22. L
M
T&P
OC
Legislation context
Cultural context
Structural capital

23. Knowledge
Intelligence
Values
Integrators
IC
Knowledge
Intelligence
Values
Tacit
Explicit
Cognitive
Emotional
Business
Social
Individual level
Organizational level

24. University autonomy
Decentralization
Eliminating politics
Differentiation

25. Human Capital
Relationship Capital
Structural Capital
University Performance
Potential Intellectual Capital
Integrators
Operational Intellectual Capital
The pivotal role of the Structural Capital

26. Human Capital
Relationship Capital
University Performance
Potential Intellectual Capital
Integrators
Operational Intellectual Capital
The pivotal role of the Structural Capital

27. Cambridge University, UK