The Impact of the Knowledge Economy on Intellectual Capital Development

Knowledge is a key driver of the modern economy, serving as a competitive advantage for organizations. The increasing emphasis on the knowledge possessed by individuals within an organization is a direct result of the modern era, where all activities and services are knowledge-based. Furthermore, globalization, information technology, and communication have led to a knowledge explosion, facilitating access to knowledge without significant restrictions. This has highlighted the importance of knowledge management as a key contemporary intellectual development, given its crucial role in achieving a competitive edge. Consequently, organizations are increasingly focused on adopting and implementing knowledge management concepts, especially in light of the rapid technological advancements of the 21st century. These advancements play a vital role in organizing the expertise, skills, and knowledge within organizations to achieve their goals and foster innovation.

As global developments in knowledge, technology, and technique accelerate, knowledge, embodied in human expertise and values, has become a driving force for economic and social progress and one of the most valuable and effective resources. It is a crucial tool for any organization seeking progress and development, provided its knowledge is managed effectively.

The true competition among organizations in the knowledge management environment lies in building and developing intellectual capital through all available means, even by attracting talented individuals from competitors. Most organizations are now fully aware that success depends not only on material factors but also on intangible, intellectual factors, which may be even more important. These factors include human and organizational elements, represented by intellectual capital, which forms the basis for technological innovation and the means to implement plans aimed at building and developing competitive capabilities in all areas of work within the educational institution.

1. Knowledge Management:

Knowledge management is defined as “the organized collection of information from internal and external sources of the organization, its analysis, interpretation, and the deduction of indicators and implications used to guide and enrich the operations in organizations and achieve improved performance and higher levels of achievement.”

It is also defined as the use of technology to facilitate access to information wherever it exists. This perspective focuses on the technological dimension of knowledge use, as modern technology and electronic media help facilitate the dissemination of knowledge among individuals and make it available to individuals within institutions.

2. Intellectual Capital:

Intellectual capital is defined as the valuable human resource with inherent capabilities, possessing the ability to analyze, innovate, and address new developments, which can effectively impact organizations and their performance through its ability to manage all activities within the organization.

Some also suggest that intellectual capital is the result of the interaction between the organization’s human capital (the sum of knowledge, experience, and skills of employees), structural capital (including the infrastructure and organizational factors that support employees’ production), relational capital (including the relationships the organization develops with customers and beneficiaries of the service), and institutional capital (the result of formal and institutional relationships related to the field and sector to which the organization belongs).

According to this definition, intellectual capital consists of:

• The sum of innovations, inventions, proposals, constructive ideas, unconventional solutions, and distinctive solutions to current and expected problems in the future. This represents the output of human capital.
• All relationships formed between employees within the organization, the organization itself, or between the organization and its stakeholders. This represents relational capital.
• The internal structure for production, obtaining, and benefiting from all internal and external information. This represents structural capital.
• The result of formal and institutional relationships related to the field and sector to which the organization belongs. This represents institutional capital.

Intellectual capital is also defined as the economic value of two types of intangible assets: organizational structural capital and human capital. Structural capital refers to things like proprietary rights to ready-made software systems, distribution networks, and equipment, while human capital includes the human resources within the institution.

3. The Economic Approach:

This approach links the concept of knowledge management with the concept of the knowledge economy. Proponents of this approach view knowledge as intellectual capital, which is represented by explicit knowledge that can be measured and circulated among faculty, staff, and universities, which can add value to the physical capital in the university through its investment and the acquisition of a competitive advantage.

Through these approaches, knowledge management seeks to emphasize the importance of investing in knowledge resources and focusing on knowledge management processes, such as storing, preserving, exchanging, sharing, and applying knowledge in the work environment. This achieves the ultimate goal of knowledge management, which is for the organization to achieve its goals with high efficiency, improve the performance of its members, and, consequently, achieve excellence for the organization compared to its peers in the same field.

4. The Impact of the Knowledge Economy on Intellectual Capital Development:

• Modern technology and electronic technology play an important role in achieving the goals of knowledge management by facilitating the dissemination of knowledge among individuals within the organization and the ease of access to various knowledge. There is no knowledge management without technology.
• Knowledge management focuses on how knowledge is used to achieve the organization’s goals by improving performance within it and reaching higher levels of quality.
• Knowledge management is concerned with how to transform the tacit knowledge residing in the minds of individuals within the organization into explicit, clear knowledge that can be utilized to improve the organization.
• Knowledge management in organizations leads to achieving quality in all the organization’s processes, which leads to the organization’s distinction from other organizations in the same field.