Valuing investments in intellectual capital

Abstract

The measurement and evaluation of the impacts and value of investments in intellectual capital is a critical obstacle to turning those investments into sources of competitive advantage. Yet, most organisations have only a dim notion of what they spend on intellectual capital let alone what they receive from those investments. As a result, many firms either under-invest or make ineffective investments in intellectual capital. Evidence from a cross-industry survey of over 500 organisations in the United States reveals preliminary, yet tantalising evidence of a link between investments in intellectual capital and organisational measures of performance, including market-to-book value. Particular attention is given to relationships between measures of human capital and organisational performance in a subset of 70 publicly traded firms.