Knowledge Management: Intellectual Capital Development
The research identifies that information and technology economy is increasing competition in the business environment, as businesses strive to maintain knowledge. The business world is driven towards focusing on globalization and liberalization, expansion and protection of business assets including corporate knowledge with the intention of increasing competitive advantage.
This research identifies knowledge management as a key ingredient in the management of intellectual capital and gaining a competitive edge in the business world described above. Knowledge management is a tool of connecting processes, people, and technology knowledge management approaches like training and development to realize organizational learning, build a business's intellectual capital, and realize organizational innovation. This then leads to the use of intellectual capital development strategies to realize innovation in a business to maintain a competitive advantage.
The strategy requires the use of human resource development activities like training and development of management and staff. The design of training and development is to increase the skill and knowledge of the employees through workshops and conference resources. This also entails the maintenance of intellectual capital, by capturing, processing, and storage of experience, knowledge, and skills of experts. Knowledge useful to a business like processes, procedures and rules, technical knowledge, management style and culture is stored and used to train recruits. This is in realization a business cannot fully own employees or human capital, but can own knowledge, business process, and technical processes. The strategy also uses management and leadership development to train management.
The information and technology economy is increasing competition in maintenance of corporate knowledge that can improve performance of an organization. The current business field is driven towards focusing on knowledge management as a tool of connecting processes, people, and technology with the aim of leveraging corporate knowledge (Ahmed et al., 2011). The rise of globalization and liberalization of the markets has driven businesses to expand and protect their assets including corporate knowledge with the intention of increasing competitive advantage. It is for this reason the intellectual capital of a business is considered a key asset to business (Huang, 2011). The challenge for today's manager is the knowledge management of intellectual capital, with the maintenance of the competitive position of a business. This need creates the goal for this research, in investigating the development of intellectual capital in knowledge management. This research will provide theoretical foundation for proposed methods of intellectual capital development with the concepts of knowledge management. This will assist businesses to capture, store, maintain, and leverage their knowledge in the organization. This is necessary given the high rates of employee attrition and turnover to globalization, global economic crisis, and stiff competition in the market.
Different scholars and schools of management thought has proposed various ways of managing and understanding knowledge creation to grow intellectual capital in businesses. Marr, Gupta, Pike and Roos (2003),
identify intellectual capital is the driver of competitive advantage and innovation in a knowledge-based economy. This driver is developed with knowledge management, which is the fundamental tool in gaining, developing, and sustaining intellectual capital in organizations. This implies that the successful management of intellectual capital is linked to knowledge management processes. Ahmed, Seleim, Omar, and Khalil, (2011), identify three ways through which knowledge management impacts on intellectual capital. First, knowledge management influences intellectual capital by affecting organization, human, and relational capital. Secondly, knowledge management is influenced by intellectual capital when human capital affects the acquisition and transfer of knowledge (Ahmed et al., 2011). Thirdly, knowledge management and intellectual capital involves a two-way influence between organizational capital and knowledge documentation, relational capital and knowledge transfer.
The connection between knowledge management and intellectual capital implies that businesses can use knowledge management to accumulate intellectual capital to cope with the increasing demands of the environment. Ahmed et al. (2011) suggests this involves the use of a wide range of intellectual activities like knowledge creation and knowledge advantage. This implies the first step in this management approach is the creation of organizational learning that finally leads to intellectual capital stocks. In essence, knowledge management provides an organization with systematic and organized activities designed to offer employees opportunities of learning necessary skills and knowledge, to meet future job demands.
Intellectual capital development begins with the identification of key intellectual capital resources in a business (Marr et al., 2003). This is to identify the most important knowledge resources that will assist an organization achieve its strategic objectives. These include human resources like competence, skills, and expertise, stakeholder relationship resources like licensing agreements, customer relationships, distribution agreements (Marr et al., 2003). Other intellectual capital resources include organizational resources like management philosophy, brands, organizational culture, processes, and systems. Intellectual capital resources assist businesses increase the value creation of the business. This implies after identification of resources, the next step is the mapping out or building of logical steps in value creation. These are the pathways that assist a business achieve strategic objectives and satisfaction of stakeholders interests. This creates the pathway of intellectual capital management and development, through the identification, measurement, and mapping out of knowledge assets.
The next step is organizational learning involving training and development programs, to increase knowledge and skills on business policy, processes, and practices. The goal is to assist employees acquire necessary knowledge and skills needed in business strategy, while maintaining the human intellectual capital. A business today must emphasize on learning as a key human resource development effort, which leads to workplace performance and learning. According to Ahmed et al. (2011), the focus of businesses should be on differentiation from other businesses through creation, development, distribution, and use of knowledge. Therefore, organizational learning should be about the construction of distinct competencies and competitive capabilities, especially knowledge-based abilities of the organization. The development of intellectual capital through this mode of organizational learning is based on the human capital theory. In this theory, businesses focus learning that postulates people have skills, abilities, and knowledge that offer economic value to the business (Ahmed et al., 2011). Human capital is the key contributor to transformation and acquisition of knowledge in intellectual capital development. Organizational learning and development programs for staff can take the form of training and development workshops which use coaching, learning-on-the-job, in-house experts, and team building activities.
In organizational learning and development programs, literature identifies intellectual capital development through knowledge management dimensions. These include knowledge absorption, storage, sharing, and conversion (Huang, 2011). To build intellectual capital, a business must build a culture of knowledge sharing where elements like externalization, socialization, internalization, and combination occur. Knowledge is only transmitted to the human capital through interpersonal, organizational, and inter-group level interaction (Huang, 2011). Moreover, intellectual capital of a business will absorb knowledge in the learning processes, through knowledge acquisition, integration, application, and absorption of knowledge. This is possible through human resource development activities like capturing, processing, and storage of key knowledge through surveys and interviews. According to Huang (2011) knowledge absorption, integration, and capacity development is through interaction, communication, and learning. The goal of capturing, storage, conversion or processing, and storage of core job knowledge of managers and employees' experience and key skills employees. Data from the capturing process is useful building a knowledge repository of business processes, procedures and rules, technical knowledge, management style, and culture that is transferable to employees. Human capital is also developed through management and leadership development programs. These are to capture and use management knowledge in the implementation of new commercial approaches to business. This is necessary as human resource development tries to develop peoples' expertise, knowledge, productivity, and satisfaction, for the individual manager and employee, for personal, team, and organization benefit.
Mouritsen, Larsen, Bukh, and Johansen (2001), identify development of intellectual capital, especially human capital through knowledge management processes, is a means that improves business processes. Business processes are improved through the realization of innovation, which creates new and improved products and services, and business strategies. Through knowledge management aspects like knowledge sharing, absorption, conversion, and storage, a business can structure capital, reproduce, and share technologies, data, inventions, culture, strategies, and procedures. Though a business cannot fully own human capital, it can management this capital along with its knowledge to achieve a higher market share, reduce defection rates, employee turnover, and increase profitability (Mouritsen et al., 2001).
For this reason, learning activities should entail training and development workshops which use coaching, learning-on-the-job, in-house experts, and team building activities. This is to increase the knowledge and skills of the business through training of human capital. The review of literature indicates that knowledge management is a central tool in intellectual capital development. Of essence are the organizational learning activities that assist a business to develop innovative intellectual capital. In addition, activities like coaching can assist a business build leadership capabilities and knowledge in employees to develop managerial role. Through organizational learning and training, businesses can benefit from the advantages of developing innovative intellectual capital. Moreover, this also assists businesses to have a workforce that develops managerial role through leadership coaching. This creates a focus-directed…