Recognizing a Firm’s Intellectual

Assets: Moving beyond a Firm’s

Tangible Resources

Chapter Four

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives

After reading this chapter, you should have a good understanding of:

LO4.1 Why the management of knowledge professionals and knowledge itself are so critical in today’s organizations.

LO4.2 The importance of recognizing the interdependence of attracting, developing and retaining human capital.

LO4.3 The key role of social capital in leveraging human capital within and across the firm.

LO4.4 The importance of social networks in knowledge management and in promoting career success.

4-2

Learning Objectives (cont.)

LO4.5 The vital role of technology in leveraging knowledge and human capital.

LO4.6 Why “electronic” or “virtual” teams are critical in combining and leveraging knowledge in organizations and how they can be made more effective.

LO4.7 The challenge of protecting intellectual property and the importance of a firm’s dynamic capabilities.

4-3

The Central Role of Knowledge in Today’s Economy

Knowledge economy wealth is increasingly created by effective

management of knowledge workers instead of by the efficient control of physical and financial assets.

4-4

The Central Role of Knowledge in Today’s Economy

Intellectual capital also includes assets such as reputation, employee loyalty and commitment, customer relationships, company values, brand names, and the experience and skills of employees

4-5

Ratio of Market Value to Book Value for Selected Companies

4-6Exhibit 4.1

Human Capital: Three Interdependent Activities

4-7

Exhibit 4.2

Attracting Human Capital

Sound recruiting approaches Firms must take recruiting seriously Challenge becomes having the right job

candidates, not the greatest number of them

4-8

An Excerpt from General Electric’s 360-Degree Leadership Assessment Chart

4-9Exhibit 4.4

Retaining Human Capital

Challenging work and a stimulating environment opportunities that lower barriers to an

employee’s mobility within a company

4-10

How Three Companies Are Keeping Their Best During Tough Times

4-11Exhibit 4.5

The Vital Role of Social Capital

Attraction, development and retention of talent is a necessary but not sufficient condition for creating competitive advantage

Knowledge workers often are more loyal to their colleagues and profession than to their employer

4-12

Social Networks: Implications

Social network analysis depicts the pattern of interactions among

individuals and helps to diagnose effective and ineffective patterns

helps identify groups or clusters of individuals that comprise the network, individuals who link the clusters, and other network members.

helps diagnose communication patterns and communication effectiveness

4-13

A Simplified Social Network

4-14Exhibit 4.6

Protecting the Intellectual Assets of the Organization

Dynamic capabilities a firm’s capacity to build and protect a

competitive advantage, which rests on knowledge, assets, competencies, complementary assets, and technologies.

4-15