Intellectual capital thereafter refers to as “IC” is an emerging multidisciplinary field that cuts across knowledge management, accounting and economics. From the knowledge management discipline, it is often viewed as a strategic resource that is required in an organisation to achieve the stated goals and objectives.
Accounting discipline on the other hand views IC as an intangible capital or assets of the company that creates the difference between the book value and market value of an organisation. Economics as a discipline also views IC as a hidden treasure that promotes competitiveness, improves growth and sustainability.
While knowledge managers and accountants address it as a resource for organisation management, Economist on the other hand do not only view it as an organizational intangible resource but a tool for the creation of national wealth, regional and global competitiveness of nations. It is also a vital resource for global prosperity. IC having generally adjudged as a tool for competitive advantages, what then is the composition of intellectual capital?
IC is the stock of skills, competence and capabilities which lies within the employees in an organisation or citizens of a nation; the processes and infrastructural facilities that supports a company or nations to function; and the reputation and relationship with internal and external stakeholders in the organisation.
Summarily, IC is the stock of human, structural and relational assets in an organisation or a nation. The intangible nature of IC makes it difficult to measure, hence different measurement approach has been employed to measure it, examples of such approaches are the Skandia navigator, the balance scorecard approach, and the Pulic measure of intellectual capital etc.
Pulic measure of IC employs quantitative techniques while other methods are based on subjective use of questionnaires and other qualitative approaches. Pulic measure of intellectual employs annual reports of organisations to measure IC hence, the method is adjudged suitable for cross– organisational and industry(s) comparison.
For value addition to be all encompassing in an organisation, Pulic combined the efficiency in financial capital (capital employed) with the efficiencies of human, structural and relational capital to derive a concept known as the Value- added Intellectual Capital (VAIC). Despite being the most widely employed measure of intellectual capital, it is also not free from criticism. Some of which are based on its structural capital measurement proxy.
Before now, IC is usually viewed as a mere content for information disclosure, but in this fast-changing economy where the globe is knowledge driven, the need to develop IC for long term sustainability becomes imperative. The traditional production model is now shifting frontier from mere composition of labour, capital to the use of information system to drive productivity and hence catch-up with global competitiveness.
This is however seen in the business success of companies like Apple, Google, Toyota, Microsoft etc. These companies are able to drive their market and keep-up with changing market environment due to fast changing and technological driven competitiveness.
Same with majority of developing and emerging companies like Switzerland, Germany, Brazil, China and India.
The companies invested in their human capital through training, provided enabling structural environment and exhibit excellent inter-personal relationship with stakeholders.
It is however pertinent to underscore that sound development and management of IC improves productivity, develops innovative capacity, enhances growth and guarantees sustainability. Once companies and nations can assure investment protection, then increased attraction of investors, both domestic and foreign is assured. Therefore, companies and nations should strive to build their intellectual capital.
YINKA ENIAYEWU
