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5 Is There A Difference Between Knowledge Management and Intellectual Capital?

The document discusses the differences between knowledge management and intellectual capital. It provides definitions of both terms from various sources and perspectives. Knowledge management is defined as systematically identifying, managing and sharing knowledge assets, both explicit and tacit knowledge of employees. Intellectual capital is defined as collective brainpower and knowledge that can be used to create wealth for a company.

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Miran Milos
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111 views2 pages

5 Is There A Difference Between Knowledge Management and Intellectual Capital?

The document discusses the differences between knowledge management and intellectual capital. It provides definitions of both terms from various sources and perspectives. Knowledge management is defined as systematically identifying, managing and sharing knowledge assets, both explicit and tacit knowledge of employees. Intellectual capital is defined as collective brainpower and knowledge that can be used to create wealth for a company.

Uploaded by

Miran Milos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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5 Is There a Difference between

Knowledge Management and


Intellectual Capital?

Knowledge management has become increasingly popular as a concept in


business and management circles as the following quotes illustrate:

Knowledge Management is an integrated, systematic approach to iden-


tifying, managing, and sharing all of an enterprise’s assets, including
databases, documents, policies, and procedures, as well as previously
unarticulated expertise and experience held by individual workers.
(Barron, 2000)
Knowledge Management is a generic description of the culture,
processes, infrastructure and technology within an organisation which
maintains, grows, and optimises the use of its intellectual capital to
deliver the strategic goals of an organisation with measurable financial
results in the market place. (Handley, 2000, personal communication)

Knowledge Management is the expropriation and process of profes-


sional knowledge in the hands of professionals who have traditionally
used their knowledge to barter power, prestige and autonomy from
management. It represents the last battleground between management
and intellectual labour. (Kouzmin, 2000, personal communication)
Knowledge Management caters to the critical issues of organizational
adaption, survival and competence in face of increasingly discontinuous
environmental change … Essentially, it embodies organizational
processes that seek synergistic combination of data and information
processing capacity of information technologies, and the creative and
innovative capacity of human beings. (Journal for Quality & Participa-
tion, 1998)

According to Thomas Stewart (1997, p. x):

72
N. Bahra, Competitive Knowledge Management
© Nicholas Bahra 2001
Knowledge Management and Intellectual Capital 73

Intellectual Capital is intellectual material – knowledge, information,


intellectual property, experience – that can be put to use to create
wealth. It is collective brainpower. It’s hard to identify and harder still
to deploy effectively.

Stewart also describes the time we live in as the ‘new era’ (p. x) and
writes, ‘wealth is the product of knowledge’. Stewart then describes some
changes in international accounting practices. For example, the book price
of a company, which appears on its balance sheet, and its market capital-
ization price may be two very different figures. A firm may be valued at
£10,000,000 on its balance sheet, yet be worth £100,000,000 on the
London Stock Exchange. So how does the £90,000,000 appear? The
answer, according to Stewart, is in its intellectual capital.
Stewart’s argument is based on his perception and understanding of the
information age. He writes (1997, p. ix):

Information and Knowledge are the thermonuclear competitive


weapons of our time. Knowledge is more important and more powerful
than natural resources, big factories, or fat bank rolls.

He notes that Wal-Mart, Microsoft and Toyota were not richer than Sears,
IBM and General Motors, but owned something for more valuable than
physical or financial assets – their intellectual capital. He then suggests
that numerous companies do not manage their corporate brainpower,
which is the most important asset they have, and this represents a loss of
billions of dollars in revenue and profit.
Other writers on this subject seem to follow a different theme. Roos et
al. (1997, p. v) believe that intellectual capital is:

a language for thinking, talking and doing something about the drivers
of companies’ future earnings. Intellectual capital comprises relation-
ships with customers and partners, innovation efforts, company infra-
structure and the knowledge and skills of organizational members. As a
concept, intellectual capital comes with a set of techniques that enable
managers to manage better.

The perspective taken by Roos et al. is that the definition of intellectual


capital must be clear in order to understand it and it must be measurable,
that is, in order to manage intellectual capital it must be measured. For
Roos et al., intellectual capital is essentially a strategic organizational

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