Recognizing a Firm’s Intellectual Assets: Moving beyond a Firm’s Tangible Resources Chapter Four McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives After reading this chapter, you should have a good understanding of: 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. LO4.4 The importance of social networks in knowledge management and in promoting career success.

Learning Objectives (cont.) 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 Knowledge economy wealth is increasingly created by effective management of knowledge workers instead of by the efficient control of physical and financial assets.

The Central Role of Knowledge in Today’s Economy Intellectual capital also includes assets such as reputation, employee loyalty and commitment, customer relationships, company values, brand names, and the experience and skills of employees

Ratio of Market Value to Book Value for Selected Companies Exhibit 4.1

Human Capital: Three Interdependent Activities Exhibit 4.2

Attracting Human Capital Sound recruiting approaches Firms must take recruiting seriously Challenge becomes having the right job candidates, not the greatest number of them

An Excerpt from General Electric’s 360-Degree Leadership Assessment Chart Exhibit 4.4

Retaining Human Capital Challenging work and a stimulating environment opportunities that lower barriers to an employee’s mobility within a company

How Three Companies Are Keeping Their Best During Tough Times Exhibit 4.5

The Vital Role of Social Capital Attraction, development and retention of talent is a necessary but not sufficient condition for creating competitive advantage Knowledge workers often are more loyal to their colleagues and profession than to their employer

Social Networks: Implications Social network analysis depicts the pattern of interactions among individuals and helps to diagnose effective and ineffective patterns helps identify groups or clusters of individuals that comprise the network, individuals who link the clusters, and other network members. helps diagnose communication patterns and communication effectiveness

A Simplified Social Network Exhibit 4.6

Protecting the Intellectual Assets of the Organization Dynamic capabilities a firm’s capacity to build and protect a competitive advantage, which rests on knowledge, assets, competencies, complementary assets, and technologies.