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What Is the Connection between Intellectual Capital and Knowledge Management?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 31 May 2018
  • Copyright Protected:
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    Conjecture Corporation
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The connection between intellectual capital and knowledge management can be drawn from the value of knowledge management as a facility for harnessing and assessing intellectual capital. Intellectual capital refers to the repository of knowledge and experience that is deposited within the various individuals that make up the employee base of the company. Generally, all of the individuals in an organization have different types of intellectual capital ranging from different applications and varying levels of capital. The link between intellectual capital and knowledge management is the manner in which the various intellectual capital is assigned to the places where they are most needed in the organization.

Without proper knowledge management, a company with the brightest and most experienced employees may not be able to perform at its optimum level. Applying a judicious dose of knowledge management helps eliminate this negative trend. This connection between intellectual capital and knowledge management can be seen in the case of a company that hires employees with different skill sets. Such a company will assess the level of intellectual capital possessed by the individuals with the view of finding the position where they will fit in the most. Those with more education, experience and training will be assigned to a more managerial position than those with less education and experience.

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The application of knowledge management also means that employees who show an aptitude for other duties beyond those they were originally employed to do will be reassessed based on their increased value to the organization. An example would be an employee who was hired to do secretarial work but exhibits a great repertoire of knowledge about Information Technology in general. The company may remove this employee from the secretarial post and reassign him or her to a position where this knowledge will benefit the organization. Such a company will weigh the value of the employee’s secretarial knowledge and its value to the organization versus the Information Technology knowledge of the employee and its value before deciding which one is more important.

Knowledge management within a company is further linked to intellectual capital by the fact that a company’s knowledge management structure is part of its intellectual capital. Intellectual capital management benefits a company in various ways. It allows the company to increase its output by the simple fact that the intellectual capabilities of the employees are put to their best use. When the effectiveness and output of an organization increases it also translates to higher profit margins and growth.

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