Intellectual capital

Intellectual capital is normally classified as follows: • Human capital, the value that the employees of a business provide through the application of skills, know-how and expertise Human capital is an organization's combined human capability for solving business problems and exploiting its intellectual property. Human capital is inherent in people and cannot be owned by an organization. Therefore, human capital can leave an organization when people leave, and if the management has failed to provide a setting where others can pick up their know-how. Human capital also encompasses how effectively an organization uses its people resources as measured by creativity and Innovation. • Structural capital, the supportive non-physical infrastructure, processes and databases of the organisation that enable human capital to function The value of the relationships a business maintains with its customers and suppliers is also referred as goodwill, but often poorly booked in corporate accounts, because of accounting rules. ==Management==

The intangible nature of many knowledge products and processes, in combination with the increasing importance of their value in corporate balance sheets leads to a growing interest in management of intellectual capital. Creating, shaping and updating the stock of intellectual capital requires the formulation of a strategic vision, which blends together all three dimensions of intellectual capital (human, structural and relational capital) within the organisational context through exploration and exploitation, measurement and disclosure. The management of intellectual capital is conceptualised as occurring via a multiple stage process, governed by an evolutionary logic. Intellectual capital management is defined as a cycle of four inter-related sets of practices: strategic alignment, exploration and exploitation, measurement, and reporting of intellectual capital. ==Exploitation==

The management of intellectual capital is conceptualised as occurring via a multiple stage process, governed by an evolutionary logic. Works that focus on the subset, namely the patents, copyrights, and trade secrets, ignore the benefits of their use with the business. Other terms include "intangible assets". While corporate reports often stress the value and the know-how of its staff, this crucial asset cannot be considered property. The term "workforce-in-place" can be used as a category when companies with their staff are purchased. Without that category, most of the excess purchase price over the tangible book value would just appear as goodwill. In order to profit from intellectual capital, knowledge management has become a task for management. Often, intellectual capital, or at least rights to it, are moved off-shore for exploitation, which entails risks that are hard to value. ==Measurement==

An intellectual capital audit is an audit of a company's intellectual capital to monitor and oversee the intellectual capital of a firm in order to capitalize on intellectual capital already within the company, and to identify opportunities to increase the intellectual capital of the company. == Intellectual capital and stock returns growth ==

Changes in stock returns are primarily determined by external factors such as inflation, exchange rates, and socioeconomic conditions. Intellectual capital does not affect a company stock's current earnings. Intellectual capital contributes to a stock's return growth. ==References==