Chapter 4: Recognizing

a Firm’s
Intellectual Assets
Moving beyond a Firm’s Tangible
Resources

BUSINESS AND
CORPORATE
 Reporters

Sheba Caluyong Kea Soria Francis Monique Garces

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

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.
The Central Role of Knowledge in
Today’s Economy
Market to book
A company’s value derives not from things, but from Book Value Market Value value ratio
knowledge, know-how, intellectual assets, ( Oct. 14,2022)
competencies—all embedded in people
Microsoft 364.840 B 1746.94B 10.49
 Knowledge economy
- an economy where wealth is
Pfizer Inc. 195.29 B 241.22B 2.75
created through the effective
management of knowledge workers
Toyota 602.43 183.59 B 0.86
 Intellectual Capital
-the difference between the
market value of the firm and the book Intellectual capital = Market value of firm - Book value
value of the firm.
 How do companies create value in the
knowledge-intensive economy?

1. 2. 3.

Human Capital Social Capital Knowledge

network of friendships Explicit knowledge

individual capabilities, codified,
knowledge, skills, and and working
documented, easily
experience relationships reproduced, and widely
of the company’s between talented distributed.
employees and people both inside and
outside the Tacit knowledge
managers. in the minds of
organization. employees and is based
on their experiences
and backgrounds.
Human Capital: Three Interdependence Activity
Human Capital: The Foundation
of Intellectual Capital

ATTRACTING HUMAN
CAPITAL
1. Hire for attitude, Train for Skills
 General knowledge and
experience
 Social skills
 Values
 Beliefs
 Attitudes
2. Sound Recruiting Approaches and
Networking
 The challenge becomes having the
right job candidates, not the greatest
number of them.

3. Attracting Millennials
 they have many of the requisite
skills to succeed in the future
workplace and they are more racially
diverse than any prior generation.
 DEVELOPING HUMAN
CAPITAL
1. Encouraging Widespread
Involvement
2. Mentoring and Sponsoring
 Mentoring: program to transfer
knowledge and experience from more
senior managers to up-and-comers.
 Sponsoring: someone in a senior
position who’s willing to advocate for
and facilitate and enjoy more career
moves
3. Monitoring Progress and Tracking
Development
4. Evaluating Human Capital
 360-degree evaluation and feedback
systems: superiors, direct reports,
colleagues, and even external and
internal customers rate a person’s
performance.
 1. Help employees identify with an

RETAINING HUMAN CAPITAL organization's mission and values.

2. Provide challenging work and a
Provide mechanisms that stimulating environment .

prevent the transfer of 3. Offer financial and nonfinancial rewards &

valuable and sensitive incentives

information outside the

 Rewards are a vital organizational
organization
control mechanism
 money is not the most important
reason why people take or leave jobs
 Sound management of diverse workforces
can improve an organization's effectiveness &
competitive advantages by making the
following arguments:
Enhancing Human Capital:
The Role of Diversity 1. Cost Argument
2. Resource acquisition Argument
3. Marketing Argument
4. Creativity Argument
5. Problem solving Argument
6. Organizational flexibility Argument
Vital Role of Social Capital 1. Interaction, sharing, and collaboration will
help develop firm-specific ties, with a higher
probability of retaining key knowledge

“ the friendships and working workers.

2. Attraction, development and retention of
relationships among talented
talent is a necessary but not sufficient
individuals - helps tie knowledge
condition for creating competitive
workers to a given firm.”
advantage
3. Knowledge workers often are more loyal to
their colleagues and profession than to their
employer
How Social Capital Helps Attract and Retain Talent?
Through SOCIAL NETWORK

1. The Pied Piper 2. Emigrate employee 3.Provide a mechanism

Effect for startup ventures for obtaining outside
resources
 Social Networks
Social network analysis - depicts the pattern of
interactions among individuals and helps to diagnose
effective and ineffective patterns.

Social ties can link individuals so they can:

1.Convey needed resources.
2.Exchange information & support.
3.Treat each other in positive ways.
4.Develop trusting relationships to improve the groups
effectiveness.
Social Network Analysis
 Closure Relationships
Bridging Relationships
The degree to which all members of the
Relationships in a social network that
social network have relationships with
connect otherwise disconnected
other group members
people
Overcoming Barriers to
Collaboration
Effective collaboration requires
overcoming barriers:
1. The not-invented-here or
hoarding barrier
2. The search barrier
3.The transfer barrier
To encourage collaboration, leaders can
choose a mix of three levers:
1. Unification levers create compelling
common goals & articulate a strong value of
cross company teamwork
2. People levers get the right people to
collaborate on the right projects through
T-shaped management
4. Network levers build nimble interpersonal
networks across the company
 Social Networks:
Implications for
Career Success
Effective social networks provide
advantages for the firm and for an
individual's career advancement:

1. Access to private information

2. Access to diverse skill sets
3. Access to power
 A Cautionary Note: Three Kinds of Network Traps

Wrong Structure
 the “formalist” - relies too much on his firm’s official hierarchy,
missing out on the efficiencies and opportunities that come from
informal connections.
 The “overloaded manager” has so much contact with colleagues
and external ties that she becomes a bottleneck to progress and
burns herself out.
 A Cautionary Note: Three Kinds of Network Traps

Wrong Relationship
 The “disconnected expert” sticks with people who keep him
focused on safe, existing competencies, rather than those who
push him to build new skills.
 The “biased leader” relies on advisers who reinforce her biases,
when she should instead seek outsiders to prompt more fully
informed decisions.
 A Cautionary Note: Three Kinds of Network Traps

Wrong Behavior
 The “superficial networker” engages in surface-level interaction
with as many people as possible; mistakenly believing that a
bigger network is a better network.
 The “chameleon” changes his interests, values, and personality to
match those of whatever subgroup is his audience, and winds up
being disconnected from every group.
The Potential Downside of Social Capital

1. “groupthink” —a tendency not to question shared

beliefs.
2. deep-rooted mindsets
3. socialization processes (orientation, training, etc.)
can be expensive in terms of both financial
resources and managerial commitment.
4. individuals may use the contacts they develop to
pursue their own interests and agendas that may
be inconsistent with the organization’s goals and
objectives.
Using Technology to Leverage Human
Capital and Knowledge

1. Using Networks to Share

Information

2. Electronic Teams: Using

Technology to Enhance
Collaboration
 • E-team members either work in
geographically separated work places or
they may work in the same space but at
What are electronic teams (or
different times.
e-teams)?
• Most of the interactions among members
of e-teams occur through electronic
Communication.
 Advantage
 less restricted by the geographic
constraints that are placed on face- to-
face teams, thus, e-teams have the
potential to acquire a broader range of
“human capital”
 can be very effective in generating
“social capital”—the quality or
relationships and networks that form
Challenge
 Members identify who among them can
provide the most appropriate knowledge
and resources, and,
 E-team leaders and key members know
how to combine individual contributions
in the most effective manner for a
coordinated and appropriate response.
  Tacit knowledge is embedded in personal
experience and shared only with the consent
and participation of the individual.

Codifying Knowledge Ex: Leadership and Creativity

for Competitive  Explicit knowledge is knowledge that can be

Advantage documented, widely distributed, and easily
replicated.

Ex: company data sheets, white papers, research

reports, etc.
Protecting The Intellectual Assets Of The Organization:
Intellectual Property And Dynamic Capabilities

1. Intellectual Property Rights

These are intangible property owned by a firm
in the forms of patents, copyrights, trademarks,
or trade secrets.

2. Dynamic Capabilities
It entail the capacity to build and protect a
competitive advantage.
 Chapter IV

Thank
You!