Leveraging intellectual capital through product and process management of human capital

The current framework of intellectual capital is examined. It is argued that transformation of human capital into structural capital is counter-productive for certain types of highly tacit, experiential and intuitive knowledge. In fact, the very process of structuralizing intellectual capital may institutionalize knowledge stocks and create core rigidities or result in the “false recipe” syndrome. An important understanding is that intellectual capital does not have to be explicitly owned by the firm in order to be valuable to it. Attempts to measure all aspects of intellectual capital may be counter-productive and neglect the actual management of these intellectual capital assets towards a higher real firm valuation. Ultimately, a strategy for determining what knowledge to structuralize and manage as product and what knowledge not to structuralize and manage as process is necessary for a practical and profitable means of developing value in the concept of intellectual capital.