Intellectual Capital

Innovation and knowledge resources are closely related. Knowledge facilitates innovation in such a way that both the application of unique pieces of knowledge and a novel blending of already existing knowledge result in creativity (Friesenbichler and Reinstaller, 2022; Heraud, 2021). At the same time, innovative actions might provide new information for further innovation that cannot be acquired in any other way (Trinugroho et al., 2022; Chen and Chen, 2021; Kumar at al., 2021; Onufrey, and Bergek, 2021; Rokhayati et al., 2021; Sohl et al., 2020). Researchers are interested in how organizations and nations generate profits from innovation through the commercialization of knowledge increasingly focus on intellectual capital, which is roughly described as a diversified set of knowledge-related resources that may be turned into value (Ghlichlee and Goodarzi, 2022: Hayaeian et al., 2022; Pigola et al., 2022; Paoloni et al., 2022; Alvino, 2021; Temouri et al. 2021; Latif et al., 2021; Pflugfelder, 2021).

Intellectual capital is the whole of an organization's intangible knowledge assets that have been formalised, captured, and used to develop higher-valued assets and gain a competitive advantage ((Ghlichlee and Goodarzi, 2022: Hayaeian et al., 2022; Pigola et al., 2022; Paoloni et al., 2022; Temouri et al. 2021; Latif et al., 2021; Pflugfelder, 2021). Businesses can perform better when they develop their intellectual capital and derive value from it, especially in today’s information and knowledge age (Trinugroho et al., 2022; Friesenbichler and Reinstaller, 2022; Heraud, 2021; Chen and Chen, 2021). However, because of its intangibility and the variety of forms it might take, managers, have trouble identifying and managing intellectual capital. In addition to the corpus of knowledge, intellectual capital includes the instruments and methods that organisations use to instruct and motivate their members to act in specific ways to promote flow. Along with the amount of knowledge, intellectual capital also refers to the methods and techniques used by organisations to influence and motivate the behaviour of its members to promote the flow of knowledge (Friesenbichler and Reinstaller, 2022; Alvino, 2021; Latif et al., 2021; Pflugfelder, 2021).

Two kinds of knowledge implicit and explicit, and the ideas, expertise, abilities held by employees and partners that are considered tacit knowledge cannot simply be explained or communicated. However, once transmitted, it is challenging for the knowledge's original owner to claim ownership (Schmidt, 2022). On the other hand, because it is simple to duplicate and spread, codified knowledge like news, market data, patents, and copyrights can be legally protected. The management of tacit and codified knowledge requires the use of tools (such as databases, information technology systems, etc.) and control mechanisms (such as business procedures, communication cultures, etc.). Authors have combined technology and market perspectives in their development of theoretical models of innovation (Frascati, 2004; Pedersen and Dalum, 2004; McDermott and O’Connor, 2002; Garcia and Calantone, 2002; Fischer, 2001; Afuah 1998; Rogers, 1995; Dewar and Dutton 1986; Rowe and Boise 1974). Given the significant value of innovation and knowledge resources as a source of competitive advantage and long-term economic sustainability, numerous academic disciplines have proposed intellectual capital have offered various perspectives (Trinugroho et al., 2022; Friesenbichler and Reinstaller, 2022; Alvino, 2021; Heraud, 2021; Chen and Chen, 2021).

Due to the distinctive features of the definition of the intellectual capital components, each of the organization's innovation program approaches to knowledge resources can be distinctive. The distinctiveness does not necessarily come from actual resources, but rather from immaterial resources that its rivals could find difficult to duplicate. The intangible resources: human skills and expertise, databases, information technology, operational procedures, customer relationships, brands, and cultures, have received attention from academics to explain how businesses might survive. Capitalists used to emphasis on physical resources like factories, factories, and land however, as competition became more global and fiercer a company needed to be distinctive (Trinugroho et al., 2022; Friesenbichler and Reinstaller, 2022; Heraud, 2021; Chen and Chen, 2021). The essential intangible resource required for establishing and maintaining competitive advantage, according to knowledge-based theories, is knowledge since it is non-replaceable, path-dependent, and challenging to replicate (Mohammad, 2022; Guo and Chen, 2022; Villanueva, 2022).

Although scholars agree that it is an extension of the traditional capital notion that advances the ideas of material and immaterial capital and naturally unifies physical and digital capital. Accounting statistics have revealed that there is a decreasing trend in the link between a firm's book value and market value (Laghi et al., 2022). The importance of residuals and intangible assets, which conventional accounting procedures find difficult to account for, is highlighted by this. Based on its innovative human capital theory, the idea of intellectual capital is a significant development of the notion of general concepts (Carvache et al., 2022; Alvino, 2021; Kuzmin et al., 2020). Several intellectual capital measurement and reporting models were developed to access the measurement e.g., Kaplan and Norton’s Balanced Scorecard (Kaplan and Norton, 1992); Karl-Erik Sveiby’s Intangible Assets Monitor (Sveiby, 1997); Skandia’s Value Scheme (Edvinsson and Malone, 1997); Sullivan’s Model (Van den Berg 2002); The Skandia Intellectual Capital Value Scheme (Roos and Roos, Draonetti and Edvinsson 1997); The Brooking’s Model (Brooking, 1996); Roos and Roos Categorisation (Roos and Roos 1997); St Onge’s Model (Westberg and Sullivan, 1998); Sveiby’s Model (Sveiby, 1997); and Wig’s Model (Wig 1997). A more in-depth discussion on how to manage different intellectual assets, however, is challenging because the analyzed constructs are defined and quantified in general terms.

Research reveals that many organizations prioritize psychological safety without realizing that the social cohesion it promotes can undermine intellectual honesty and therefore hamper innovation. Balancing psychological safety with intellectual honesty significantly increases a team’s ability to innovate particularly breakthrough innovations because it unleashes the knowledge of team members (Dyer et al., 2023). To accurately define the idea, three intellectual capitals serve as illustration: (i) human capital, the collective knowledge of employees including talent, experience, skills, and expertise; (ii) structural capital, the specialised knowledge possessed by a corporation such as technologies, processes, and data; and (iii) relational capital, the knowledge ingrained in relationships with external partners.

The three intellectual capital’s subdimensions suggest knowledge resource that gather and used through people, structures, cultures, and outside partners (Trinugroho et al., 2022; Friesenbichler and Reinstaller, 2022; Heraud, 2021; Chen and Chen, 2021). Second, the frequency with which each component of intellectual capital is considered varies. Relational capital is mentioned less frequently in the literature than human capital and structural capital. Most fields have concentrated on their own most interesting variables. For instance, the study of finance and accounting has exclusively focused on quantifiable assets, ignoring relational capital. The most crucial intangible asset for generating profit in the marketing industry has been client connections. In terms of the different forms of information technology systems to support knowledge management, the information system area has given great attention to structural capital. The first observation, this finding reveals the need to integrate all the specialised arguments from each field. If not, the disparate discussions on intellectual capital will fall short of providing practitioners with a thorough and useful understanding of where to discover and utilise a firm's most valuable knowledge-related resources (Friesenbichler and Reinstaller, 2022; Heraud, 2021; Chen and Chen, 2021). By adopting the multidimensional perspective, several recent empirical investigations demonstrate a more rigorous method for studying intellectual capital (e.g., Ghlichlee and Goodarzi, 2022: Hayaeian et al., 2022; Pigola et al., 2022; Paoloni et al., 2022; Alvino, 2021; Temouri et al. 2021; Latif et al., 2021; Pflugfelder, 2021).

It is a widely held notion that knowledge-related resources play a crucial role to economic sustainability. Investing in intellectual capital (IC) is a strategic way to enhance the innovation and competitiveness of organisations and territories. IC refers to the intangible assets that create value for the stakeholders, such as human capital, structural capital, and relational capital. IC is closely related to knowledge management, which can foster organisational sustainability in different dimensions (social, economic, and environmental). Consequently, it leads to the development of production systems that respect the natural and social balance of the global ecosystem. This summary provides an overview of the literature on IC and sustainability, highlighting the main concepts, frameworks, and challenges in this field. It also discusses how IC can influence the creation of economic sustainability which aligned with the Sustainable Development Goals (SDGs) 2030 agenda. This study provides an optimistic knowledge-related resources that lead to economic sustainability for developing nations.