Importance Of Intellectual Capital

“The term “Intellectual Capital” collectively refers to all resources that determine the value of an organization, and the competitiveness of an enterprise.” It is an intangible assets of the organization which grows if the firm is to prosper unlike other assets which begin to depreciate the day they are acquired. It is considered as a valuable, non-substitutable and inimitable strategic resources with similar propositions in knowledge – based theory concerning knowledge based resources and capabilities. Some people has also described intellectual capital as Intellectual property is the value of a company or organization 's employee knowledge, skills, business training or any proprietary information that may provide the company with a competitive

Intellectual capital is consequently a product of “capacity which is the knowledge, skills abilities, information and experience of people; willingness of people to apply capacity; and opportunity provided by the work system to activate stocks of intellectual capital”. It is also said as a product of competence and commitment. It is evident within two broad levels which are individual and organisational. The interplay between ability, behaviour, effort and time to which the employees have the sole autonomy is said to be an important contributing factor for organisations. The effectiveness of this theory to employee performance is seen on how it clarifies the issue of competence and commitment as limited or insufficient factors in the development of intellectual capital. It is used in understanding HRM principles particularly in employee performance. As per Burr and Girardi, intellectual capital has three core ideas integrated into it: capacity, willingness and opportunity. The measure of intellectual capital is regarded as the measure of capacity, skills utilisation and efficiency when it comes to competence requirements as well as commitment, either affective, continuance or normative. And the

Both the concepts include the commitment factor which should be there in every firms to increase the working efficiency. Burr and Girardi’s model says that the intellectual capital is the product of commitment and competence. Without commitment, a firm can get a talented employee but can’t get things done. Similarly, Watson’s elements also consist the traditional engagement element which says employees’ commitment to the organization and willingness give extra effort to their employer. Commitment is the degree of identification and involvement that individuals have with their organizations’ mission, values and goals. Employee engagement goes further than simple compliance or surface behaviour, it is an emotional attachment to the organization. Employee think not just of “what’s in it for me?”, but also “what’s in it for us?” Companies that have engaged employees perform better and have higher staff retention than those that do not. A highly passionate employee will have a high level of intellectual capital and engagement, it means that s/he who is smart or competent and highly engaged employee will perform well at work. And also, Intellectual capital cannot be separately applied in efforts to explain performance and performance management. So, both the elements are required for increasing the organizational performance. As per the Burr