1,384
15
Essay, 2 pages (300 words)

Intellectual capital: corporate culture

Intellectual capital refers to knowledge which can be exploited through money-making ventures by a company. Intellectual capital embodies both skills and knowledge developed by a company on how to make products. A corporate culture embodies the organization’s core values, beliefs and behaviors based on people’s interpretation of experiences, either individually or as groups. One of the ways through which corporate culture can increase a firm’s market value is the generation of incremental innovation. Radical business innovation has been noted to propel many new market entrants into positions of successful market driven entities (Kumar, Scheer & Kotler, 2000).

Kumar, Scheer and Kotler studied 25 pioneering companies (such asIkea, Tetra Pak and Body Shop) whose business success was based on radical innovation made possible by investment in intellectual by the companies. Market driven processes are extremely excellent channels through which new market entrants can transform their focus from a niche market to the mass market. They can introduce unique business systems that increase their market value without incurring heavy advertising costs. However, the ability for a company to revolutionize the industry and reap vast rewards depends on the nature of corporate culture. The corporate culture should stimulate employees to take high risks.

According to Chen, Cheng & Hwang (2005) a firm’s intellectual capital has a positive impact on a firm’s market value and financial performance. Therefore, a company’s corporate balance sheets can give an indication of the value that a corporate culture is adding to the company. Additionally, Chen, Cheng and Hwang found out that investors may attach different value on the three main elements of value creation efficiency: human capital, physical capital and structural capital. However, determining the exact level of influence of corporate culture on a company’s market value may not be as straightforward as it seems. One may find it difficult to attribute different elements of increase in market value to specific aspects of corporate culture, especially in newly established companies that bring new, innovative structures into the industry. This is because there are many confounding variables that need to be put into consideration.

Thank's for Your Vote!
Intellectual capital: corporate culture. Page 1
Intellectual capital: corporate culture. Page 2
Intellectual capital: corporate culture. Page 3

This work, titled "Intellectual capital: corporate culture" was written and willingly shared by a fellow student. This sample can be utilized as a research and reference resource to aid in the writing of your own work. Any use of the work that does not include an appropriate citation is banned.

If you are the owner of this work and don’t want it to be published on AssignBuster, request its removal.

Request Removal
Cite this Essay

References

AssignBuster. (2022) 'Intellectual capital: corporate culture'. 1 October.

Reference

AssignBuster. (2022, October 1). Intellectual capital: corporate culture. Retrieved from https://assignbuster.com/intellectual-capital-corporate-culture/

References

AssignBuster. 2022. "Intellectual capital: corporate culture." October 1, 2022. https://assignbuster.com/intellectual-capital-corporate-culture/.

1. AssignBuster. "Intellectual capital: corporate culture." October 1, 2022. https://assignbuster.com/intellectual-capital-corporate-culture/.


Bibliography


AssignBuster. "Intellectual capital: corporate culture." October 1, 2022. https://assignbuster.com/intellectual-capital-corporate-culture/.

Work Cited

"Intellectual capital: corporate culture." AssignBuster, 1 Oct. 2022, assignbuster.com/intellectual-capital-corporate-culture/.

Get in Touch

Please, let us know if you have any ideas on improving Intellectual capital: corporate culture, or our service. We will be happy to hear what you think: [email protected]