Intellectual capital and technology strategy

In the new economy, exploiting the traditional factors of production is no longer sufficient. The key to success is huge investment flows into human capital as well as information technology and, stunningly, neither of these appear as positive values in traditional accounting. Rather, it is often just the opposite. Consequently, knowledge-based companies are undervalued by traditional accounting methods, sometimes this is by a relatively small percentage, but Market:book ratios are more commonly in single figures, however there is enough here to suggest that focusing too intently on financial data might be missing the point. This is the reason for the popularity of new concepts such as Intellectual Capital and the Balanced Scorecard. This paper reviews current issues concerned with Intellectual Capital as an essential ingredient of the knowledge economy, and through illustration, embeds these issues into a strategic framework that takes into account both tangible and intellectual assets in formulating a Technology Strategy for hi-tech companies.