What is Knowledge Capital? | Read Examples, Meaning and Components


Knowledge Capital – Basic Meaning & Definition

Knowledge capital refers to the intangible and intellectual assets held by a company. This type of capital comprises of knowledge, tried-and-tested techniques, relationships and innovations associated with the business.

A company’s knowledge capital provides an edge over its rival companies within the field. It also includes everything ranging from procedures and innovations to industry knowledge, expertise and techniques.

KEY TAKEAWAYS

  • Knowledge capital is intellectual capital, referring to the knowledge, procedures, relationships, and techniques that define a business.
  • Knowledge capital demands a careful investment of time and money as it is prone to depreciation.
  • Knowledge capital consists of the intangible assets of the organisation, which provide immeasurable value to them, additionally providing them with an edge over their competitors.
  • Knowledge capital can be increased by organising seminars, discussions and group meetings where an ethical sharing of information is prompted.

Components of Knowledge Capital

Knowledge capital consists of 3 major components:

1. Human Capital

Human capital refers to the work put in by the employees. The immeasurable contributions made by the workers towards the organisation count as intellectual assets. They utilise their skills and expertise to get work done efficiently. Human capital is not owned but nurtured in one or more ways.

If a hard-working employee leaves the company, that is a loss of knowledge capital. To avoid such losses, organisations make efforts to retain good employees by approving salary hikes and solving workplace issues. Companies also try to imbibe and preserve intellect by conducting seminars and regular discussions.

2. Structural Capital

Structural capital substitutes the non-physical capital, consisting of techniques, unique methods and procedures. It comprises all the infrastructure and intangible assets that connect employees with processes to create positive outcomes. It allows the said business to operate and leverage its capabilities.

Structural capital also includes intellectual property like databases, patents, codes, copyrights, trademarks, software, etc. A company's structural capital helps it hold everything together and present it as a cohesive unit. It also enhances the efficiency among different participants.

3. Relational Capital

Relational capital refers to the professional relationships created between workers, customers, vendors, partners, suppliers and other parties. Market relationships, power relationships and cooperative activities done by individuals and companies fall under this.

If there is a strong sense of reliability formed within corporations, the advantage of smoother teamwork is granted, offering them a competitive edge in the fast-paced market.

Examples of Knowledge Capital

Here are some examples of knowledge capital:

1. Strategies - Strategizing is key to the smooth implementation of a plan. It includes identifying and setting realistic goals, defining objectives, and effectively planning ways to implement them.

2. Leadership Skills - Includes the drive to step up and take control of a situation, guide a team and coordinate their performances, hear everyone out while also making sure that the objectives are met.

3. Creative Skills - It entails introducing new value and perspective through innovative designs and artistic approaches.

4. Problem Solving - This includes skills in identifying problems, analysing them further to detect the cause, and finally, providing viable solutions.

5. Influences - With a better ability to influence a business’s customer base, a salesperson can sell products with more ease.

6. Practical - It refers to the necessary practical knowledge which will allow employees to complete their assigned tasks.

7. Decision Making Skills - Ability to make critical decisions to derive the desirable outcome.

8. Talent - A certain degree of talent is required for employees to be naturally inclined to complete their tasks without having to overexert themselves.

9. Experience - Prior experience in a particular field helps with making more informed decisions and moves. By applying the knowledge gained from their past experiences, employees are more likely to unlock better outcomes.

Final Words

Knowledge Capital is necessary for any company to taste the fruit of success. Every organisation should effectively harness the potential of its knowledge capital and work towards developing it further. Through coordinating workshops, seminars and regular discussions, the management can efficiently manage said knowledge capital utilising talents and skills.

Other Words

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