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Intellectual Capital

393 words | 2 page(s)

Definition
Intellectual capital can be defined as the total amount of resources that make a company competitive in the market and therefore, defines its worth (Adelman, 2010). However, these resources do not necessarily imply the financial worth of an organization. It may include the expertise and skills that workers of a company have developed regarding how to meet the expectations of their clients through the quality of goods and services produced. It may also entail the rich company history that is not readily available in the public limelight that could seem important for competitors.

Summary of the Article
This article seeks to find out whether it is possible for an organization to apply and ‘lock-in’ IC accounting methods in its work processes and eventually ‘un-lock’ it using effective managerial processes (Chiuchi & Dumay, 2015). After the ‘unlocking’ is done, it seeks to find out whether it would be possible to implement a new IC ‘locking-in’ process. The authors found out that the initial ‘lock-in’ process to the accounting processes of a company does not make Intellectual Capital disappear as long as proper instruments were used to ‘un-lock’ IC to be utilized in daily management activities. As pointed out by the authors, the process of measuring IC is usually a challenging one that can only be done by experienced accountants.

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Discussion
This article is essential in understanding how the concept of intellectual capital can be used in a company in the accounting department. It is essential for organizations to embrace this concept and conduct in-depth research to know how it can be used beneficially in various departments to yield competitive advantage in the market. The authors of the article have made a noble step by looking at how the concept applies to the accounting processes which require key input from the management in decision making. The term intellectual capital deals with the management of knowledge and skills in an organization. In the Bible, Proverbs chapter 24 verse 4 says that, “And by knowledge the rooms are filled with all precious and pleasant riches”. This implies that an organization that effectively manages knowledge stands to succeed in the market.

    References
  • Adelman, S. (2010). Intellectual capital: A human resources perspective. Retrieved from http://www.eiminstitute.org/current-magazine/volumn-4-issue-5-october-2010/intellectual-capital-a-human-resources-perspective
  • Chiuchi, M.S., & Dumay, J. (2015). Unlocking intellectual capital. Journal of Intellectual Capital 16(2), 305-330. Retrieved from https://doi.org/10.1108/JIC-01-2015-0004.

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