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Chapter 4

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Administrative Studies
ADMS 4570
Lois King

Chapter 4In the past we used to focus on tangible resources like land equipment and money and intangibles such as brands image and customer loyaltyNow more than 50 of GDP in developed economies is knowledge based GDP represents the total dollar value of all goods and services produced over a specific time periodyou can think of it as the size of the economyoIt is based on intellectual assets and intangible people skills oA companys value derives from knowledge know how intellectual assets and competencies in PEOPLEThe gap between a firms market value and its book value is far greater for knowledge intensive corporations than it is for firms with strategies based primarily on tangible assetsFirms whose intellectual capital are key contributors to developing products and services and where physical resources are less critical the ratio of market to book value tends to be much higher Intellectual capitalmarket valuebook valuethis will give the measure of value of intangible assetsIntellectual CapitalDivided into 3 human capital social capital and intellectual property1 Human capital individuals capabilities knowledge tacitbased on experiences and backgrounds and explicitbased on codified documented easily reproduced and widely distributed skills and experiencesso knowledge that is relevant to the task at hand2 Social capital the network of relationships that individuals haveformal and informal personal and professional and organizational Should also include relationships with suppliers customers and alliance partners3 Intellectual property ideas innovations and creations contribute to sustainable competitive advantage only when you can protect it and prevent others from imitating it Copyrights trademarks patents brands etc Should have leadership culture and trust to help create knowledge Knowledge management has played a central role in creating wealth in organizations Should emphasize teamwork have learning programs and provide great benefits and incentives to make employees stay Human capitalFirms must recruit talented and qualified people at all levels with the proper sets of skills and capabilities coupled with the right values and attitudes You must motivate your employees and make them stay focused on goals People dont just stay with you to stay loyal they want professional development and personal enrichmentNeed to attract recruit and select the right peoplebut after you select you must develop them otherwise they will leaveso this helps retentionbut also need to provide other intrinsic and extrinsic rewards to retain them Attracting human capital Should put more emphasis on the broad general knowledge and experience social skills values beliefs and attitudes of employees and then if these elements are right the individual can then learn the task specific skills in relatively short
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