...MEANING OF INTELLECTUAL CAPITAL This is the intangible value of a company, and is measured as the difference between the enterprise value of a company and the market value of its tangible assets. Intellectual capital is knowledge that can be exploited for some money-making or other useful purpose. The term combines the idea of the intellect or brain-power with the economic concept of capital, the saving of entitled benefits so that they can be invested in producing more goods and services. Intellectual capital can include the skills and knowledge that a company has developed about how to make its goods or services; individual employees or groups of employees whose knowledge is deemed critical to a company's continued success; and its aggregation of documents about processes, customers, research results, and other information that might have value for a competitor that is not common knowledge. Classification of Intellectual capital • Human capital- The value that the employees of a business provide through the application of skills, know-how and expertise. It can be defined as all the unique ideas, skills, and knowledge that an individual owns and contributes to an organization. • Structural capital- Structural capital is the structures and mechanisms that help support employees and includes procedures, routines and everything that is left in the organization. It includes processes, intangible assets like patents, and trademarks, as well as the organization’s image, information...
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...Intellectual Capital The term intellectual capital (IC) is synonymous with Intangible capital. IC collectively refers to all the resources and assets that defy conventional accounting measures, but which still determine the value and the competitiveness of an enterprise. IC is commonly divided into the areas of Human Capital, Structural Capital, Relationship/Relational Capital, and the Business Model. In our modern Information and Knowledge Economy, intangibles have progressively become the driving factors around which business revolves. Conventional bricks-and-mortar accounting is no longer sufficient to explain how Google, Netflix, LinkedIn, Apple, and General Electric are far more valuable than their financial assets. As of June 2011, Netflix's tangible equity was $290 million USD, yet its market value is over $12.8 billion USD (source: Yahoo Finances). The Apple Corporation, with $55 billion USD in conventional hard assets, was valued at over $272 billion USD with its intellectual capital included (source: Yahoo Finances). These dramatic value differences in company wealth defy traditional accounting logic. Intellectual capital is the new economics discipline that strives to explain the value of these high-knowledge organizations, and how they add value for their customers far beyond what bricks-and-mortar can measure. Karl-Erik Sveiby and Leif Edvinsson are commonly considered to be the first thought leaders of modern Intellectual Capital. Thomas Stewart and Patrick Sullivan...
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...Another article that we choose is "dealing with the management of intellectual capital". Intellectual capital means the collective knowledge of the individuals in an organization or society. This knowledge can be used to produce wealth, multiply output of physical assets, gain competitive advantage, and/or to enhance value of other types of capital. Intellectual capital includes customer capital, human capital, intellectual property, and structural capital. As the intellectual capital is intangible, it is difficult for the accountants to make valuation on it. In this article, it said" it is observed that valuation should not be left to the market but that internally the role of strategic management accounting can inform valuation, support decision and promote competitive advantage." There are three special and important element in this model. It used a discounted economic approach to determine the comprehensive value of the enterprise. It models the firm as a series of inputs, conversion processes and financial outputs. These are joined together using cause and effect linkages which are developments of performance measures. The benefits of this model are information is generated in a form that can be used as a supplement to the annual accounts for the benefit of management and shakeholders. It can assist management in making decisions, particularly where alternatives need to be investigated and valued. It avoids the categorisation of the BSC...
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...Intellectual Capital Disclosure Practices and Effects on the Cost of Equity Capital: UK Evidence Researchers: Musa Mangena Richard Pike Jing Li Intellectual Capital Disclosure Practices and Effects on the Cost of Equity Capital: UK Evidence by Musa Mangena Richard Pike Jing Li University of Bradford Published by The Institute of Chartered Accountants of Scotland CA House, 21 Haymarket Yards Edinburgh EH12 5BH First Published 2010 The Institute of Chartered Accountants of Scotland © 2010 ISBN 978-1 904574-14-9 EAN 9781904574149 This book is published for the Research Committee of The Institute of Chartered Accountants of Scotland. The views expressed in this report are those of the authors and do not necessarily represent the views of the Council of the Institute or the Research Committee. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the authors or publisher. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopy, recording or otherwise, without prior permission of the publisher. Printed and bound in Great Britain by T. J. International Ltd. C 1. ontents Foreword ...................................................................................... i Acknowledgements ......................................................
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...IMPACT OF INTELLECTUAL CAPITAL ON FINANCIAL PERFORMANCE - AN EMPERICAL STUDY ON THE INDIAN BANKING SECTOR. Abstract: Purpose: Present study makes an attempt to examine the impact of intellectual capital on financial performance of firms based on a sample consisting of 12 Indian banking companies which constituted the CNX Banking index of NSE during 2012-13. More specifically, it seeks to examine the impact of the IC represented by VAIC and the value added, on corporate financial performance measured by return on assets, earnings per share, and return on equity. Design/methodology/approach: In this study VAIC™ is considered as a key valuation model for measuring the IC performance of Indian Banking Companies. Capital employed, human capital and structural capital are used as components of intellectual capital and return on assets (ROA), return on equity (ROE) and Earning Per Share (EPS) indexes are used as criteria of financial performance. The value of three performance measures i.e. Return on Equity (ROE), Return on Assets (ROA), and Earning Per Share (EPS) are obtained from the annual reports of respective banks, whereas the values of VAIC and Value added are computed using appropriate formula and the ranking is made. The companies having highest value is ranked 1, next highest is ranked as 2, and so on. Next, a bar chart is prepared using the computed values of HCE, SCE, CEE representing various components of intellectual capital efficiency which constitute the VAIC...
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...to report intellectual capital Summary In today’s knowledge economy, intellectual capital has been playing an increasingly significant role in creating corporate sustainable competitive advantages and becomes instrumental in determining the enterprise value. Though measuring the value of intellectual capital is difficult, with the emerging of intellectual capital valuation models, a number of leading companies have decided to make additional intellectual capital disclosure. This paper discusses and illustrates the intellectual capital statement. How to effectively measure and disclose intellectual capital in external financial reporting and how the accounting rules for reporting intangibles limit the recognition of intellectual capital and will also be discussed. The final part is proposed approaches to intellectual capital reporting. Introduction Our world is in the rise of new economy, principally driven by the information and knowledge. Today, a number of companies and organizations rely heavily on the knowledge and skills of their stuff and the network of the customer. As these intangible assets became increasingly critical, the limitations on financial statements in explaining a company’s value stress the fact that the source of economic value is no longer the production of material goods but the creation of intellectual capital. Background Definition Stewart first defined intellectual capital as intellectual material-knowledge, information, intellectual property,...
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...Reporting on intellectual capital Intellectual Capital importance has shown a huge growth, research has exposed that 50% to 75% of the market value of companies reflects intangible assets such as innovation processes, patents, brands, trademarks, customer databases, etc. Traditional Balance sheet only reports the value of physical and financial assets and accounting system is not equipped to deal with Intangible assets. Shareholders have to make their own assumptions on how intangible assets have changed in value during the year. An Intellectual Capital Report helps in eliminating this problem, and in demonstrating the real value of IC. An IC Report is a statement of changes in the company’s Intangible Assets much like a Balance Sheet is a statement of Changes in the Company’s Physical and Financial Assets. Unlike physical and financial assets, intangibles cannot be valued directly. Intangibles are represented by proxies called indicators. The change in values of these indicators during the reporting period indicates the growth or decline in intangibles during the period. Accordingly lots of models and researches have been developed to for reporting intellectual capital of which the Danish Guidelines, the Austrian Research Centre’s model, the balanced scorecard, the Skandia Navigator, and the CVH are some. Below is a brief about the Austrian Research Centre’s model which has developed its own method for reporting on intellectual capital and has done so since 1999...
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...Maximizing the intellectual capital of the organization Table of contents 1. Introduction……………………………………………………….3 2. Definition of the concept………………………………………….4 3. Ways of maximization and important aspects IC………………....4 4. Conclusions………………………………………………………..5 5. Bibliography……………………………………………………….9 1. Introduction With their practical and organizational experiences, working habits, interpersonal relations and motivation, people influence a company’s business performance and activities. It is very difficult though to measure the influence of knowledge, i. e. to quantify...
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...интеллектуальных барьеров, с которыми сталкиваются студенты, направлена на достижение успеха, поощрение активности, что способствует формированию у студентов таких качеств как самостоятельность, активность, самоорганизованность. Ключевые слова: интеллектуальные мотивы учения, педагогическая поддержка, интеллектуальные барьеры, самостоятельность, активность. PEDAGOGICAL SUPPORT IN GETTING OVER THE INTELLECTUAL BARRIERS AS A MEANS OF FORMATION OF INTELLECTUAL STUDY MOTIVES OF STUDENTS Nina Ozhgibesova, senior teacher, Department of foreign languages №2, Surgut State Universit Surgut Annotation The article is devoted to the usage of pedagogical support as a means of pedagogical conditions of formation of intellectual study motives. The pedagogical support includes teacher’s help in intellectual barriers of students, in reaching success, in stimulating cognitive activity. It furthers the formation of students’ self-dependence, activity and self-organization. Key words: intellectual study motives, pedagogical support, intellectual barriers, pedagogical process, intellectual activity, self-dependence, activity. ВВЕДЕНИЕ Современное общество вступило в такой период своего развития, когда произошло не осознаваемое многими переосмысление приоритетов в общей направленности мотиваций личности. Направленность «совершенствуй себя, чтобы быть полезным...
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...figures. The school systems are not taking advantage of what interests students could be grasping through subjects that they already know and love. Graff believes that street smarts are every bit as important as school smarts. He believes that true intellectuals can bring interesting points to any topic. Graff grew up in a neighborhood in Chicago. He was not raised as what our society considers as an “intellectual,” but rather, a regular city kid. As a child, Graff loved sports, and more sports. He was not interested in any type of literature or publications, or even reading for that matter. As his interests in sports grew, he decided to take up reading Sports Illustrated. After he decided that reading sports was in his interests, he moved on to other sports books and novels. Graff was completely wrong about his perception of reading. Graff’s childhood trained him to be an intellectual. Growing up in Chicago wasn’t easy for him; he had to become street smart in order to thrive in his location. In his case, sports and being cool were his idea of street smarts. He decided that he had to improve his school smarts. However, through sports stories, personal experiences, magazines and books, and movies, he learned to be an intellectual in his own unique way. In “Hidden Intellectualism,” Graff uses his childhood to back up his point: You don’t need to read and study the cliché pieces of literature and publications in order to gain wisdom and brain power. Graff absolutely hated the...
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...in making an object with a view not to the human good of the agent, but to the exigencies and the proper good of the object to be made, and by employing ways of realization predetermined by the nature of the object in question. Art thus appears as something foreign in itself to the sphere of the human good, almost as something inhuman, and whose exigencies nevertheless are absolute: for, needless to say, there are not two ways of making an object well, of realizing well the work one has conceived -- there is but one way, and it must not be missed. The philosophers go on to say that this making activity is principally and above all an intellectual activity. Art is a virtue of the intellect, of the practical intellect, and may be termed the virtue proper to working reason. But then, you will say, if art is nothing other than an intellectual virtue of making, whence comes its dignity and its ascendancy among us? Why does this branch of our activity draw to it so much human sap? Why has one always and in all peoples admired the poet as much as the sage? It may be answered first that to create, to produce something intellectually, to make an object rationally constructed, is something very great in the world: for man this alone is already a way of imitating God. And I am speaking here of art in general, such as the ancients understood it -- in short, of art as the virtue of the artisan. But where the maker of works especially becomes an imitator of God, where the virtue...
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...An Intellectual False Dichotomy Hidden Intellectualism by Gerald Graff, addresses the educational issue in the problem of unlocking a student’s unique intellectual interest and abilities. He believes that the main issue in the approach of education is the false dichotomy between “street-smarts” and academic intelligence. It is demonstrated through his tonal writing, which is littered with criticism of the educational system, yet is fully supportive of education in terms of intellectual growth. Staying true to his stance, Graff constructs his hidden intellectual argument that sticks to an everyday, relatable tone associated with banter without compromising his ideas. Graff begins the text using familiar colloquial terms, such as “street-smart”...
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...In “Hidden Intellectualism” by Gerald Graff, he claims that intellect does not just exist in academics. Graff insists that street smarts can also be a form of knowledge. In addition, he claims that even if individuals do poorly in school, it doesn’t mean that they aren’t smart. It could just mean that they are very street-smart with a knowledge on different subjects. Furthermore, schools usually overlook street-smarts and associate them with non-intellectual interests. Graff thinks that students should find something they are actually interested in first so then they can build from there and eventually become intellectuals. Additionally he suggests that if they could somehow see these interests through “academic eyes” with language they understand,...
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...Schooling Obscures the Life of the Mind. I agree with Graff’s point about how teachers should try to get students more engaged in schoolwork using subjects students find interesting. Graff clarifies how being intelligent is not only about being academically smart, but also being “street smart”, using his own experiences. At the beginning of his chapter, Hidden Intellectualism Graff says, “We assume that it’s possible to wax intellectual about Plato, Shakespeare, the French Revolution, and nuclear fission, but not about cars, dating, fashion, sports, TV, or video games.” (245). What I believe Graff is trying to convey is, how it is viewed more important to know what started the French Revolution, than it is to know how to keep a conversation going, even when the two people have nothing in common. Although keeping up conversation would not be viewed as non-academic, but could very well be used to give presentations or speeches in class or in a debate. Graff goes on to offer his own experience of his youth. He describes himself as a typical anti-intellectual teenager that preferred sports to schoolwork. He explains how intellectualism was treated very hostile in the 1950’s and because of that he tried avoiding seeming book smart. He explains about how he was torn between proving he is smart and the fear of being beaten up, and that it was a choice between physically tough or verbally. Graff uses his own experience to make himself sound convincing. He describes himself as a typical...
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