Intellectual Capital is the learning capacity, ability, and knowledge of employees, which in turn, reinforces the organizations' competitive edge. Initially, the gap between a company's book value and market value treated as IC. IC is helpful in improving firms' financial and market performance.
Components of Intellectual Capital
Human Capital: Human capital is the summation of a person's intellect and expertise used by a company to attain its long-term gals.
Structural Capital/ Organizational Capital: It consists of supporting structure that enable the company to access. It consists of hierarchical structures, methods, schedules, frameworks, technologies, data bases and so on that stay within the company.
Relational Capital/ Customer Capital: It is capital formed outside the organization and is mainly linked to the market, boosting its capabilities. It shows relationship with the customers, industry, suppliers, society, government, shareholders and relationship with other companies.
Innovation Capital: Introduction of unique products, which give greater value to the customers. In addition, it offers better options for consumers than competitors in terms of quality, price, and rewards. Therefore, therefore, the company's expenditure on R&D is considered the innovation capital.
Process Capital: Process have evolved into a vital component of every company and a critical instrument for defining how assets are managed. It describes how a firm prepares its activities to achieve its goals. It is a part of Innovation Capital that encourages the development, accessibility, and sharing knowledge.
