Intellectual Capital: Applications

Communicating on intellectual capital is minimizing the stakeholders’ judgment errors: shareholders, customers, suppliers, banks, analysts…

Analysts are always stressing the lack of information on intangible assets. A very approximate part is allocated to these assets through their estimate. Because they are seeking accuracy in their forecasts and want to stick to the reality of the companies, analysts are willing to take intellectual capital into account.

Communicating on a company’s hidden wealth is gaining in transparency by providing clear explanations. The aim is not to artificially increase the value of the organization, but on the contrary to adhere as much as possible to the reality. As the risk on estimate errors is decreasing, the stakeholders’ trust towards it is increasing. The company can borrow money at a better interest rate, gain more market shares, ensure the continued existence of its clientele, keep its shareholders, and hire high potential individuals.

"Competition on financial markets already urges companies to better show and manage their intellectual assets. But the best practices are not widely spread yet among companies and countries."

Intangible Assets and Value Creation, ODCE

Managing intangible assets makes it possible to compare the investments within a company and know which ones will be beneficial, that is the ones that will increase the value of the company. Justifying charges related to supportive activities becomes possible thanks to measurement and managing tools dedicated to intellectual capital. Budget management and spending optimizations are made easier, and the whole organization benefits from this virtuous cycle.

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