An exploratory study to identify operational knowledge assets from intangible value drivers in the high tech sector

Abstract

Knowledge workers are the primary owners of intangibles that drive organizational performance. However, 84% of executives who participated in a human capital research indicated that they do not understand the drivers behind human capital investments. This lack of understanding can be attributed to the fact that the primary focus of the field has been on the measurement and valuation of intangibles and the epistemological form of knowledge respectively. The problem remains that there is a lack of a fundamental and coherent understanding of the operational knowledge assets that drive intellectual capital and business performance. The purpose of this research is: (a) to develop a list of operational knowledge assets that employees leverage, and (b) measure its impact on intellectual capital and business performance. The study is empirical and combines qualitative (i.e., focus groups) and quantitative (i.e., SEM) research. The scope of the study is high tech organizations in the Washington DC metropolitan area. The study resulted in validating a list of 7 performance focus areas and 31 knowledge asset categories. The levers modeled explain almost 40% of business performance. The developed model of levers has some very important applications. First, it improves management's understanding of the factors that drive knowledge worker productivity. For example, prioritization of the levers modeled in this study show that resource allocation could be focused on the: (a) human resource department, (b) technology department and (c) marketing department. Human resource professionals understand how well the organization leverages the cognitive abilities of its workforce and what programs (e.g., recruiting and training) to invest on to develop them further. Similarly technology managers have an understanding of how well the enterprise is integrated (i.e., business and system) and what technology investments to make that facilitate integration. Marketing people could use more resources to improve competitive intelligence. Second the model can be applied on evaluating merger and acquisition decisions. Target companies can identify the core capabilities or competency areas that the target company is leveraging and assess their impact or integration potentials to the acquiring company.