What is the value of intangible assets:
Intangible assets have been argued to be one possible contributor to the disparity between company value as per their accounting records, and company value as per their market capitalization.
While intangible assets don't have the obvious physical value of a factory or equipment, they can prove very valuable for a firm and can be critical to its long-term success or failure.
The Market Value of GE and Boeing are a case in point.
“Our Assets walk out of the door each evening. We have to make sure that they come back the next morning”
Narayan Murthy
What Constitutes Intangible assets:
Human Capital is defined as the combined knowledge, skill, innovativeness, and ability of the company’s individual employees to meet the task at hand. It also includes the company’s values, culture, and philosophy. Human capital cannot be owned by the company.
Structural Capital is the hardware, software, databases, organizational structure, patents, trademarks, and everything else of organizational capability that supports those employees’ productivity - in other words, everything that gets left behind at the office when employees go home. Structural capital also provides customer capital, the relationships developed with key customers. Unlike human capital, structural capital can be owned and thereby traded.
Intellectual Capital equals the sum of human and structural capital. According to Edvinsson and Malone (1997), IC encompasses the applied experience, organizational technology, customer relationships and professional skills that provide Skandia with a competitive advantage in the market
While intangible assets don't have the obvious physical value of a factory or equipment, they can prove very valuable for a firm and can be critical to its long-term success or failure.
Eventually the structural capital and the intellectual capital that an organization owns will be dependent to a very large extent to the quality of it’s human capital.
Dynamic change, as well as innovation, demands robust human capital that is fully engaged and agile, aggressively developed and skillfully deployed.
Yet, despite an overwhelming need to draw upon it, human capital still remains a lightly tapped resource. Are organizations superficially enamored with the value of human capital or just unaware of what it takes to leverage such a powerful asset?
Increasing Importance of Intangible assets:
Human Capital is asserted to be the most important element of success in business today. Developing human capital requires creating and cultivating environments in which human beings can rapidly learn and apply new ideas, competencies, skills, behaviors and attitudes.
