Intellectual Capital Knowledge Management: Organizational Value Creation
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European Online Journal of Natural and Social Sciences 2013; www.european-science.com vol.2, No.3 (s), pp. 462-476 ISSN 1805-3602 Intellectual capital knowledge management: organizational value creation Soheila Asadi Department of Accounting, Behbahan Branch, Islamic Azad University, Behbahan, Iran Abstract strengthening the internal skills and abilities which is done through internal organizational knowledge In the knowledge-based economy, products and bases and intellectual capital and that the organi- organizations ensure their survival based on knowl- zations are using to get better performance in the edge; the most successful organizations are those business world. Knowledge and intellectual capital which are using these intangible assets better and as a valuable strategy for achieving value and main- faster. Studies have shown that, unlike return loss of taining competitive advantage of organizations traditional sources, knowledge is really a resource have been detected (Barney,1991). In this current to increase the value of organizations and to gain knowledge-based world, organizational capabili- competitive advantage and business performance. ties are based on knowledge and intellectual cap- In strategic perspective, nowadays, knowledge and ital, and managers need to understand that what intellectual capital are used to create and enhance features are needed to maintain the value and com- organizational value, and the success of an organi- petitive advantage of organizations. So, the intel- zation depends on its ability to manage these scarce lectual capital and knowledge assets are becoming resources. So, mental assets and the knowledge of a strategic lever to manage the company’s business individuals are as important as other financial and performance and continuous innovation; thus, the physical assets of organizations, recently. In organi- organizations are no longer producing just prod- zations, the important matter is the role of knowl- ucts and services but should produce value-add- edge and intellectual capital, which are trying to ed services to stay in the new economy; and in this efficiently manage them so that in their processes era, the major challenge of managers is to prepare they can effectively use these key capitals to get to a suitable environment for the development and a higher positions. This paper examined the rela- growing of the human mind in a knowledge-based tionship between intellectual capital and knowledge organizations. Knowledge management and intel- management and their roles in creating Organiza- lectual capital have changed into the basic skills of tional value. managers in the organizations; and in the current economy, value and competitive advantage of orga- Keywords: Knowledge management, intellectu- nizations are based on knowledge and intellectual al capital, value creation. capital that are achieved by creating proper com- munication with customers, gaining experience in Introduction this line, and relying on organizational techniques knowledge and special skills. In the era of ultra-competition of organiza- “ The 21st Century is called knowledge econo- tions, we are facing the environment whose char- my, and prior to knowledge economy, the world was acterizations are globalization and increasing com- run based on manufacturing or industrial econo- plexity and dynamics. Thus, the organization in my. In this economy “the factors of economic val- order to continue their settlements, are facing with ue production” were considered physical resources the challenges that for getting out of these chal- such as land, “labor force”, money, machine, etc. lenges need further attention to the developing and and a combination of these productive factors creat- Corresponding author: Soheila Asadi, Department of Accounting, Behbahan Branch, Islamic Azad University, Behbahan, Iran. E-mail: [email protected]. Copyright © Soheila Asadi, 2013 European Online Journal of Natural and Social Sciences; vol.2, No. 3 (s), pp. 462-476 462 Social science section ed value for economic, where, as previously knowl- ment of a new concept known as intellectual capi- edge was not considered as a productive factor, in tal. knowledge-based economy, knowledge and intel- In the first half of the twentieth century, new lectual capital (IC) were considered as a productive economic and trade concepts were seen deeply. Be- factor of the economic value compared with physi- cause of the outbreak of World War and the eco- cal assets. nomic recession, countries, especially developed Knowledge management is an inseparable part countries, were to establish new economic ap- of the concept of intellectual capital. Ganzi (2007) proaches and frameworks and develop human ca- distincts between knowledge management and in- pacities available in order to compensate damages tellectual capital, and believes that knowledge man- resulting from the war. This led to intense compe- agement is intellectual capital management is. Of tition to get resources and competitive markets. But course, yet, the precise distinction between these with the increasing demand for physical resources two concepts, in his opinion, is hard. Capital man- and resource constraints, the availability of organi- agement, as an umbrella concept, contains knowl- zations to physical resources was limited. edge management. Knowledge management, in The second half of the twenty century was mile- fact, is responsible for the management of intellec- stone in changing attitudes and organizational per- tual capital, that, according to experts, is in con- formance. Proposing a theory of innovative en- trast with intellectual capital or is its supplement. terprise, on the one hand, organizations that were looking for alternatives of trade at this time got new History of Knowledge basics. On the other hand, the new requirements Over time and with the shaping of political appeared to be more servicing that gained more and trade relations between the countries, gaining added value for the organizations. Proposing new knowledge from the environment has been consid- theories about the role of information in the organi- ered as a source to create new conditions to enhance zation and consequently the attention to the infor- the welfare and trade. So, efforts have been devel- mation technology and the formation of new forms oped to expand knowledge in the form of science as of entrepreneurship, the scope of achieving and developed forms such as book or the first samples of creating value opportunities for the organization educational and training organizations. The atten- developed. New forms of servicing combined with tion of kings to the scientists in this period, and the information, divided the organizations into two attempt to apply them for the governance and rais- parts of physical and virtual. Hence, what has been ing the welfare of people can be taken into account known as a source of wealth for the communities or as the first step towards the human capital. organizations experienced fundamental change and Beginning with the Renaissance and the growth transformation and this change resulted in changes and spread of the approach based on humans, pay- in economic and business principles in communi- ing attention to the individual knowledge expanded ties. This issue led to the difference between book little by little. On the other hand, paying attention to value and market value, which increased the impor- the human as the basic foundation of development tance of paying attention to the intangible resources in the economic and business sciences, and sociol- which are effective in added value beyond the usu- ogy leading up to the Industrial Revolution, helped al calculations of the past. The 90s can be regarded the role of knowledge in the development of tools to as the beginning of wide attention to the concept of create value. For example, in the early seventeenth intellectual capital. Theorizing in this decade ex- century, the first attempts were done by William pands and the attention of organizations has been Petty to calculate the effect labor force in national attracted. wealth. This process developed with the beginning Introducing issues of knowledge management of the industrial revolution in the eighteenth cen- and intellectual capital, defining new issues like tury. Paying attention to the value of human capital customer capital, introducing evaluation models and labor force by Adam Smith or designing human and extending the attention to the topics such as in- capital valuation methods by William Farr, using tellectual property, spiritual patenting, intellectual the production costs of parasite can be regarded as property, brands, trademarks are the features of this new attraction to human capital, and, consequent- decade. In the 90s, the national attention to intel- ly, creating a favorable environment for the develop- lectual capital was attracted and local frameworks to Openly accessible at http://www.european-science.com 463 Social science section report intellectual capital was presented. The term most popular subject of most authors, conferences, “intellectual capital” was first developed and ap- and papers. plied in the 80s in the field of management in an ac- Early 2000s: tion about attention to the intangible assets of com- Publishing the first scientific journal entitled panies that increase their performance. Pioneers in Intellectual Capital. this effort include: Hiroyuki Itami in 1980 in his Publishing the first Accounting Standards of book