A Brief Overview of Intellectual Capital and Analysis of the Edvinsson/Malone Framework

Human resource is an appellation used in referring to the workforce of an organization or company. Human resource management is involved in the act of putting together employees in an organized manner to assure the objectives of the organization are achieved in a competent and experienced manner. Human resources are the most important services of any organization since they are the catalysts of non-human resources and the medium for developing competitive advantages and sounds of creativity. No organization can exist without a human resources department (Walsh, 2009). A company without an HR department would be reducing its operations and could collapse within a short amount of time.

With the ever increasing pace of change in the world, today’s market leader can be out of business tomorrow if the organisation fails to adapt to the changes around it. One of the key assets of each organisation is its human capital, i.e. the knowledge, skills and abilities of its staff. If the organisation is to adapt,

Human resources plays a great part in the functioning of the company and could impact the success

All organizations have the common objective of being successful and nowadays due to competition that is not an easy achievement. The most important capital that companies have is the human capital and, to be successful, is essential for the organizations to focus on people.

Human capital refers employee’s knowledge, personal characteristics which include behaviour and creativity. Motivation does not increase the human skill but it can increase the ability of a worker by using his or her full knowledge with maximum interest or attention on job. In Amazon motivation will increase the ability of their working power (Storberg, 2013).

“Human capital refers to the sum of the attributes, life experiences, knowledge, inventiveness, energy, and enthusiasm that the company’s employees their work (Weatherly, 2003).” These intangible assets have proven to be critical aspects of an organizations competitive advantage. T&D has a direct influence on these assets because “they affect education, work-related know-how and competence, and work relationships (Noe, 2013, p.14).

Human capital is in essence the knowledge and attributes a person is able to provide every corporation. Basically the additional knowledgeable a person has, the more valuable they become; consequently human capital is increased by education. Whole Foods takes pleasure in encouraging and training their team members, at the same time they are gaining a committed workforce. As a result of continuous coaching this makes their team member’s further value and a positive feature in human capital. Whole Foods builds human capital by setting high standards therefore their employees can succeed (wholefoodsmarket).

Intellectual Capital, a collective knowledge of leaders in a global organization, has three key attributes, such as global business savvy, cognitive complexity, and cosmopolitan outlook. First, Global business savvy indicates how business operates worldwide, and risks arising due to various environment. Second, cognitive complexity is an ability to scrape together different information when leaders are facing multiple choices. Last, cosmopolitan outlook states that leaders are needed to have interest in various cultural, history, geography, political, and economic.

Intangible Assets were part of the 2006 “memorandum of understanding” between FASB and IASB. Eventually, intangibles assets were cut from the list of changes to be made. In future years the problems will have to be addressed. As far as research and development costs, IAS 38 will likely be fully adopted. One major problem still being faced is the revaluation of intangible assets. Under GAAP, revaluation is strictly prohibited. Under IFRs, revaluation

Structure capital defines the institutional knowledge and experience codified in databases, routines, procedures, and organization structures. Examples of structure capital in healthcare are a vision, mission, values, strategic plan, programs, tools, and information systems, ways of working together, best practices, and routines. This capital refers dimension of culture, access to information, information technology, external environment, and internal processes. For instance, numerous systems represent structure capital such as a certified quality management system and software for evidence-based medicine. According to the intellectual capital in a healthcare industry in Taiwan, organizational capital plays a crucial role to drive organizational performance. Study results illustrate employee recruiting and selection, including healthy and safe working highly relevant to the performance. Also, health and safety environment is related to organizational strategy, structure, and system in the healthcare industry. Furthermore, the result from the knowledge management enabled performance for hospital professionals shows critical process capabilities determine the success of a hospital.

Howard Gardner, a developmental psychologist, believes that there are multiple types of intelligences. He broke them into seven categories:

A company’s resources include two types: tangible and intangible. The former is asset that can be observed and counted, such as, office furniture, production equipment, computer, and warehouse, etc. Unlikely, the intangible resources are assets that are rooted deeply in the company’s history, accumulate over time, and are relatively difficult for competitors to learn and copy, such as brand, intellectual property and reputation, etc.

The importance of Intellectual Capital information (IC) has been increased in the current economic. It refers to intangible resources which create company value (Ashton, 2005). Human capital, structural capital and relational capital are the main categories of IC (Meritum 2002). There are some factors of the IC, such as employee knowledge and innovative capacities (Usoff, Thibodeau, Burnaby; 2002). This is an “unrecorded value” of an company which is not shown

Human capital management plays an important role in the recruitment process. It is essential for hiring, managing, training high performing employees. Human capital management is important for hiring the right talent, orienting him/her to the organization, making a new employee feel comfortable, training employees in order to constantly upgrade their skills, retaining employees and making employees self sufficient and prepare them for adverse conditions.

AASB 138 defines intangible assets as “identifiable non-monetary assets without physical substance”. Such assets include but are not limited to goodwill, trademarks, patents and research and development. AASB 138 Intangible Assets has been implemented to prescribe the accounting treatment for intangible assets that have not been specifically dealt with in any other standard. Therefore, this standard only applies to intangible assets that have not been previously dealt with. Furthermore, it can be established that this standard is an example of normative accounting theories because the standard prescribes what should be done, rather than predicts what people may do. According to AASB 138 Intangible Assets, in order for an asset to be recognised in the financial statements it must meet specific criteria. The required criterion states that the asset must be identifiable, the entity has control of the asset, future economic benefits are probable and the cost of the asset can be measured reliably.