Chapter 4

Recognizing a Firm’s Intellectual Assets:
Moving Beyond a Firm’s Tangible Resources

SUMMARY/OBJECTIVES

One of the key trends today is the emergence of the importance of the knowledge worker in today’s economy. It is critical for managers to not only recognize the importance of top talent but also the need to leverage human capital in order to innovate and, in the end, to develop products and services that create value.

This chapter is divided into four sections.

1. The first section focuses on the increasing role of knowledge as the primary means of wealth generation in today’s economy. After all, in the New Economy a firm’s value is based much more on knowledge, know-how, and intellectual assets — not the traditional factors of production (i.e., labor and capital).

2. The second section addresses the key resource itself — human capital — the foundation for the creation of intellectual capital. We explore ways in which the organization can attract, develop, and retain human capital as well as the importance of recognizing the interdependence of these three activities. We also address the value of a diverse work force.

3. Third, we discuss the critical role of social capital, that is, the network of relationships among individuals. We address both social capital within organizations as well as across organizations.

4. The final section focuses on the role of technology in leveraging human capital. This can range from such basic technologies as email to more complex forms such as sophisticated knowledge management systems. We also discuss how technology can play a key role in electronic teams (or e-teams) and enhance the retention of knowledge in an organization.

LECTURE/DISCUSSION OUTLINE

The opening case describes how a licensing and marketing firm, The Wildflower Group, found