What is 'Intellectual Capital'

The value of a company or organization's employee knowledge, business training and any proprietary information that may provide the company with a competitive advantage. Intellectual capital is considered an asset, and can broadly be defined as the collection of all informational resources a company has at its disposal that can be used to drive profits, gain new customers, create new products, or otherwise improve the business.

Some of the subsets of intellectual capital include human capital, information capital, brand awareness and instructional capital.

BREAKING DOWN 'Intellectual Capital'

Intellectual capital is a real business asset, although measuring it is a very subjective task. Companies spend millions annually training their employees in business-specific topics and otherwise paying for increased competence in their staff. This capital employed provides a return to the company, one that can contribute toward many years' worth of business value.

As technology and process improvements become more of a differentiating factor within modern companies, intellectual capital is likely to become an even stronger force in the marketplace.

RELATED TERMS
  1. Intellectual Property

    A broad categorical description for the set of intangibles owned ...
  2. Intellectual Property Rights (Biotechnology)

    In health care, intellectual property rights give their owners ...
  3. Knowledge Economy

    A system of consumption and production that is based on intellectual ...
  4. Capital Asset

    A type of asset that is not easily sold in the regular course ...
  5. Knowledge Capital

    An intangible asset that comprises the information and skills ...
  6. Human Capital

    A measure of the economic value of an employee's skill set. This ...
Related Articles
  1. Small Business

    How To Protect Your Intellectual Property

    Intellectual property rights - patents, trademarks, trade secrets and copyrights - protect creators of everything from new products to new pop songs.
  2. Small Business

    Understanding Capital

    Capital has a variety of meanings, but it generally refers to financial resources.
  3. Small Business

    Understanding Capital Investment

    Capital investment is a term that describes a company’s expenditures for long-term assets used in the operation of its business.
  4. Investing

    Explaining Capital Employed

    Generally, capital employed refers to all of the assets used in a business that contribute to the company’s ability to earn revenue.
  5. Insights

    Factors Of Production

    Factors of production is an economic term describing the general inputs used to produce goods and services to make a profit. Under the classical view of economics, the factors of production consist ...
  6. Small Business

    Explaining Cost Of Capital

    Cost of capital is the cost of funds used to finance a business.
  7. Small Business

    What's Human Capital?

    Human capital is a company asset, but it’s not listed on the balance sheet. Human capital is all of the creative skills and knowledge embodied in the employees of a company -- skills that bring ...
  8. Investing

    Understanding Capital Assets

    A capital asset is one that a company plans on owning for more than one year, and uses in the production of revenue.
  9. Investing

    American Capital Sells Itself to 2 Companies

    Prominent business development company American Capital (NASDAQ: ACAS) is soon to be no more. The company has agreed to sell its assets to a pair of peers, fellow BDC Ares Capital (NASDAQ: ARCC) ...
  10. Investing

    Advantages of Maintaining Low Working Capital

    Understand the benefits and advantages of maintaining low working capital as related to liquidity needs, capital allocation and operational efficiency.
RELATED FAQS
  1. Is intellectual property considered a form of capital asset within a company?

    Discover what certain types of intellectual property are considered to be a form of capital asset recorded on the financial ... Read Answer >>
  2. What is human capital and how is it used?

    Learn about the concept of human capital, how it is developed and why it is important for businesses to protect their human ... Read Answer >>
  3. How does total capital investment influence economic growth?

    Discover the basic relationship between capital investment and economic growth, and why improving the capital structure increases ... Read Answer >>
  4. How do different economic schools of thought treat the factors of production?

    Read about how different schools of economic thought treat the factors of production, both in terms of ownership and macroeconomic ... Read Answer >>
  5. What is the difference between financial capital and economic capital?

    Read about the differences between types of financial capital, which companies use to raise money, and economic capital models ... Read Answer >>
  6. Human capital vs. physical capital: What is the difference?

    Learn the difference between physical capital and human capital and how to find the value of each in financial statements ... Read Answer >>
Hot Definitions
  1. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  2. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  3. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  4. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  5. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  6. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
Trading Center