Intellectual Capital and Knowledge Management. Performance Measurement and Challenges

Academic Paper from the year 2017 in the subject Business economics - Business Management, Corporate Governance, grade: 78, University of South Wales (Business School), course: Strategic Systems Thinking, Tools and Techniques, language: English, abstract: This paper discusses Gray¿s statement: "Before we measure something, we must ask whether we understand what it is we are trying to measure", relating it to business performance management and management information system theories. With today¿s knowledge of management - which involves the way of organizing humans and the use of computers to manage information systems - the paper highlights the importance of hidden values (intellectual capital) in business success, knowledge and performance management, measurement techniques and challenges as well as how communities of practice are managing to solve real firm¿s problems and help it meet its goals.

It was argued by Gray (2015) that all businesses operate with specific sets of activities that result in their deliverables. The most challenging and important discussion topic, is how these business processes are effectively managed and measured against the firm¿s objectives, as well as how companies measure the contribution of their intangible assets to business outcomes.

Intellectual capital is the intangible assets of an organization resulting from employees' physical efforts, knowledge assets and other results of human innovation and thoughts. Due to firms that have neglected intellectual capital to focus on finance and operations for many years, Leif E. (1991) describes intellectual capital as a hidden value and explains its importance on the company value. Intellectual capital, as argued by some scholars and authors, including Edvinsson, can take many forms.