2. 4
Recognizing a Firm’s Intellectual Assets: Moving beyond a Firm’s Tangible Resources
McGraw-Hill/Irwin
Strategic Management: Text and Cases, 4e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

3. Learning Objectives
After reading this chapter, you should have a good understanding of:
Why the management of knowledge professionals and knowledge itself are so critical in today’s organizations.
The importance of recognizing the interdependence of attracting, developing and retaining human capital.
The key role of social capital in leveraging human capital within and across the firm.
The importance of social networks in knowledge management and in promoting career success.
Why teams are critical in combining and leveraging knowledge in organizations and how they can be made more effective.

4. Learning Objectives
After reading this chapter, you should have a good understanding of:
The vital role of technology in leveraging knowledge and human capital.
How technology can help to retain knowledge even when employees cannot be retained by the organization.
The challenge of protecting intellectual property and the importance of a firm’s dynamic capabilities.
How leveraging human capital is critical to strategy formulation at the business, corporate, international, and Internet levels.

5. The Central Role of Knowledge in Today’s Economy
Creation of wealth in a knowledge economy
Effective management of knowledge workers
Intellectual capital
Assets such as
Reputation
Employee loyalty and commitment
Customer relationships
Company values
Brand names
Experience and skills of employees

6. The Central Role of Knowledge in Today’s Economy
Intellectual capital = Market value of the firm – Book value of the firm
How do companies create value in the knowledge-intensive economy?
Human capital (individual capabilities, knowledge, skills, and experience of the company’s employees and managers)
Social capital (the network of relationships that individuals have throughout the organization)
Knowledge
Explicit knowledge
Tacit knowledge

7. Human Capital: The Foundation of Intellectual Capital
Exhibit 4.2 Human Capital: Three Interdependent Activities

8. Enhancing Human Capital: How Diversity Benefits the Organization
Cost argument
Resource acquisition argument
Marketing argument
Creativity argument
Problem-solving argument
System flexibility argument

9. How Social Capital Helps Attract and Retain Talent
Hiring via personal (social) networks
Some job candidates may bring other talent with them
Emigration of talent from an organization to form start-up ventures
Can provide mechanism for obtaining resources and information from outside the organization

10. The Potential Downside of Social Capital
Groupthink
Cost of financial resources
Managerial commitment

11. Knowledge of Social Networks
Implications that an understanding of social networks has on one’s career
Closure
Bridging relationships
From an individual’s perspective, social networks deliver three unique advantages
Private information
Access to diverse skill sets
Power

12. Using Technology to Leverage Human Capital and Knowledge
Sharing knowledge and information
Technology can leverage human capital and knowledge
Using networks to share information and develop products and services
Codifying knowledge for competitive advantage

13. The Central Role of Leveraging Human Capital in Strategy Formulation
Leveraging human capital and business-level strategy (Chapter 5)
Sustainable over time
Integrate primary and support activities in the firm’s value chain
Leveraging human capital and corporate-level strategy (Chapter 6)
Manage businesses to create synergy
Create more value by working together across business units

14. The Central Role of Leveraging Human Capital in Strategy Formulation
Leveraging human capital and international-level strategy (Chapter 7)
Achieve economies of scale
Adapt to local market needs
Facilitate the flow of information and knowledge between business units in different countries

15. The Central Role of Leveraging Human Capital in Strategy Formulation
Leveraging human capital and entrepreneurial strategies (Chapter 8)
Create value through technology
Lower costs
Enhance customer service
Improve performance