Understanding Intellectual Capital: Definition & Value

Intellectual capital is an asset that every company has that can be difficult to value. Here are the basics of intellectual capital and what it means to a company.

Intellectual Capital

Intellectual capital is a term that is used to describe resources at a company's disposal that cannot be included on a financial statement or balance sheet. There are several different things that could be included as part of the designation of intellectual capital.

Types of Intellectual Capital

One type of intellectual capital is referred to as human capital. This is the value that the employees in your company provide. For example, the knowledge that is inside the heads of top-level employees might be very valuable. However, there is not a particular way to put a price tag on this knowledge.

Another type of intellectual capital is known as relational capital. This deals with the relationships that you have developed over the years with suppliers or other businesses. For example, you might have a strong relationship with another company that allows you to pay a cheaper price than everyone else for supplies.

The third type of intellectual capital is referred to as organizational capital. This deals with the organization itself and can include systems or policies that the company has implemented.