Intellectual capital refers to the intangible assets that contribute to a companys bottom line. It is the result of mental processes that form a set of intangible objects that can be used in economic activity and bring income to its owner (organization) . Intellectual capital includes the expertise of employees, organizational processes, and the sum of knowledge contained within the organization. Intellectual capital is broadly summarized into three different types of capital: human capital, structural capital, and relational capital.
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Human Capital: This refers to the knowledge, skills, and experience of a companys employees. It includes the competencies of its people.
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Structural Capital: This includes the organization, process, and innovation capital that supports an organizations human and relational capital. It includes culture, processes, databases, intellectual property (IP), non-physical infrastructure, hierarchy, and more.
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Relational Capital: This refers to the value that is derived from an organizations relationships with its customers, suppliers, and other stakeholders.
Intellectual capital is used in assessing the wealth of organizations. A metric for the value of intellectual capital is the amount by which the enterprise value of a firm exceeds the value of its tangible (physical and financial) assets. Intellectual capital is considered an important asset for companies, as it can provide them with a competitive advantage. Examples of intellectual capital include the knowledge that a factory line worker has developed over many years, a specific way of marketing a product, a method to cut downtime on a critical research project, or a mysterious, secret formula (e.g., Coca-Cola soft drink) .
