CONCEPT OF INTELLECTUAL CAPITAL OF INDUSTRIAL ENTERPRISE IN THE KNOWLEDGE ECONOMY

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CONCEPT OF INTELLECTUAL CAPITAL OF INDUSTRIAL ENTERPRISE IN THE KNOWLEDGE ECONOMY

Journal Title: Knowledge International Journal - Year 2018, Vol 26, Issue 1

Abstract

In the knowledge economy, intellectual capital is a key driver of the value of industrial enterprise in the creation of a competitive advantage. It is a crucially important factor in achieving profitability, growth and development of an enterprise. Observed at the level of big world companies at the moment, it appears that about three quarters of their total market value is based on intellectual capital. However, despite indisputable significance of intellectual capital for profitability of the enterprise in contemporary conditions, the fact is that the generally accepted concept of intellectual capital has not been defined yet. Even more, various expressions are used as synonyms for the category of intellectual capital, such as intellectual resource, intellectual property, and intellectual assets. Besides, non-material property, non-material assets, non-material resources etc. are also used. In the context of the defined topic of the paper, intellectual capital should be considered a set of organised information, i.e. knowledge that can be used in the creation of value. Therefore, intellectual capital is the knowledge that can be transformed into value. The possibility to create economic value from intellectual property determines the capability of enterprise management and implementation of competent business strategies. For example, world leading companies are recognisable by their practice to manage research and development aimed at closer connection between expenses of research and development and business strategy of the company, thereby relying on both own and external knowledge to complete their portfolio of technological processes. As intellectual property becomes increasingly significant source of profit in time, the capability of an enterprise to keep intellectual property becomes more important. A special problem is the fact that intellectual property is not completely expressed in financial reports of the enterprise. Although accounting standards that include a wide spectrum of intellectual property can be defined, practically, it is very difficult to determine and verify monetary value of such property. Besides, monetary valorisation of intellectual property is very risky, since it is pronouncedly susceptible to moral devaluation. Relative failure in presentation of intellectual property in accounting, in combination with its increasing significance in the process of creation of value, points to the fact that balance sheet does not show a part of value to shareholders. Logically, this can lead to wrong allocation of capital to prevent other information to fill in this gap. The supply of market with adequate information on intellectual property improves and leads to more complete exploitation of property rights of shareholders. Although empirical research shows that markets of capital, while assessing the enterprise, calculate intellectual property to some extent, it is not applied to all markets and all their segments, especially bearing in mind small and medium enterprises that do not take prominent position on stock market. Besides intellectual property that is not expressed in balance of assets, which includes the property that provides the power of enterprise on the market, such as brand, customer loyalty, exclusive contracts etc., the concept of intellectual capital involves intellectual property that is recorded in balance of assets, such as patents, trademarks, copyright etc. In addition, the concept of intellectual capital of an enterprise includes the property that provides this business entity with internal strength. These are primarily corporate culture, managing and business processes, information systems and so on. Even more, property contained in the characteristics of human resources such as knowledge, competence, skills, experience, capability of connection and cooperation are the components of intellectual capital of the enterprise.

Authors and Affiliations

Dušan Cvetanović, Dragan Turanjanin, Slobodan Cvetanović

Keywords

EP ID EP50036
DOI -
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