we know that intellectual capital is very much important to a business.In what way,it may act as a key factor of increasing valuation.
Intellectual capital can be codified and documented for safeguard and measurability. This will help in increasing corporate valuations.
I agree with Tejinder. I will also suggest that publicizing the fact that you have highly competent manpower in your establishment may nave a salutary effect on your goodwill and valuation.
Dear Sanjeev Bansal
Greetings,
Please find the attached file about your topic , Intellectual capital and organizational advantage , may be useful for you,
Best Regards,
If you use your expertise anywhere in the world, you can occupy any higher position equivalent to a higher remuneration for your financial liberation. What you need is to be confident about your skills and decide where to apply them, either in other's business, or create a structured business where you become an owner and founder. Now, you have a title and financial freedom!
Intellectual capital in the strict sense is temporally sensitive. It is of value only if and when documented and protected as intellectual property. The conveyance of intellectual capital into value is rare and hard to achieve in most commercial settings, This is because intellectual capital rests with the owner as custodian and is highly portable. Consequently, one can understand why individuals with valuable market-tested intellectual capital are offered generous emolument and benefits.
Intellectual Capital has many connotation. In the institutions of science and technology, it manifests into patents, design etc. which has very high value when commercialized. In institutions of art and commerce it ends with publications, which again can be monetized through books, paintings and other artifacts.
IC enhances both the competitive position as well as the the valuation of individuals as well as organizations.
In short, store information, knowledge and experiences of success and failure, can be a good way to understand past contexts and improve decision-making process. However, the collection of available knowledge will add value to the position of the company and its market value the more for challenge to innovate continuously and improve processes, products and service.
In case of corporate entity, intellectual capital goes much beyond the accounting treatment. It results in patents, copyrights, trademark, industrial design etc. which can be monetized through product and services or sale/licensing of such IPRs created from Intellectual Capital.
Dear Sanjeev Bansal,
That is a very interesting question and I would like to bring in a new perspective. Intellectual capital is considered by most of the authors as a potential, but the competitive advantage is created by the operational intellectual capital. Thus, I introduce the idea that in any company there are two levels of intellectual capital: the potential level and the operational level. It is like in mechanics when we consider potential energy and kinetic energy. Potential intellectual capital can be transformed into operational intellectual capital by organizational integrators. This is a new concept I introduced in the intellectual capital transformation in order to show that a company may have a high level of intellectual capital but is its integrators are not performant then the level of operational intellectual capital is rather low and will not contribute to the competitive advantage. The most important organizational integrators are: technology & associated processes, management, leadership and organizational culture. For more information please read the attached chapter I published in a book, and a paper about challenges for intellectual capital in universities.
Best regards,
Constantin Bratianu
You migt be interested the attached paper on core competence, mission, strategy and competitive advantage.
Valuation of a corporate entity is done in variety of ways. Financial accounts give one valuation, future earnings yet another while as a target company for acquisition, it may have totally different valuation. However, in all the cases, the latest practice is to take intellectual capital in the reckoning.
Intellectual capital will drive innovation and eventually lead to creation of core competence, thereby enhancing competitive advantage. Valuation of a corporate entity will depend on the innovation ability in product , process, technology , as well as on managerial competence. Conducive organizational culture will promote learning organization, which will build up intellectual capital, thus driving innovation resulting in organizational value creation.
Intellectual capital builds organizational capability which in turns contributes to building Innovation capability of the organization. Gone are the days of core competence which is being copied day and night. The only core competence that a firm can have today is its capability to innovate, thus, the intellectual capital has become the most valuable resource.
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