Intellectual Capital as a Tool for Managing Knowledge

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Intellectual Capital as a Tool for Managing Knowledge
Karl Sveiby was an early proponent of the intellectual capital evolution and has advanced the notion of intellectual capital as it applies to organisational knowledge management. As a researcher and manager of numerous ‘knowledge intensive’ organisations Karl Sveiby, along with other prominent gurus in knowledge management, viewed knowledge as comprising of tacit (ie., verbalised, non-codifable knowledge, such as culture, symbols, artefacts) and explicit (ie., codified information such as systems, procedures, libraries, databases) elements. Essentially a company’s intellectual capital offers a means for producing the tacit and explicit dimensions of knowledge. While numerous technology solutions for codifying knowledge prevail, the challenge for management is to translate unique and valuable dimensions of tacit knowledge to create sustainable competitive advantage. This challenge has prompted researchers to search for ways of understanding the tacit dimension and to offer solutions that tap into and build upon its worth. Moving from early transaction cost economy theories (Williamson 1975) viewing human capital as essentially a cost to the organisation, management theorists have entertained relational (Dyer & Singh 1998) based perspectives of firms, viewing human capital as an investment. These theorists focus on the tacit dimension and ways of creating knowledge through investments in the social intelligences of the firm. This means developing cultures based on trust, commitment, collaboration and work practices that encourage quality human interactions. In making the transition from strategies based on physical assets to those based on intangibles, companies have began to implement work practices to encourage quality social interactions. Progressive organisation such as 3M, KPMG, McDonald’s, Disney, General Electric and Boeing have touted the benefits of encouraging healthy social interactions...
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