In defining Intellectual Capital as Knowledge that produces value or Knowledge that can be converted into profit, we assume that not all knowledge can be termed "Intellectual Capital". Rather, we understand Intellectual Capital to be selective, essential and strategic knowledge that is closely linked with the generation of profit or value. And what is "Knowledge"? By "Knowledge", we mean intellectual-based assets.
Putting all of this together, we understand "Intellectual Capital" to be "Knowledge assets or intellectual assets that can be converted into value".
The world has entered the "knowledge era"-an era in which knowledge and intellectual capital play fundamental roles in securing sustained viability and success for modern enterprises. In this new era, knowledge management and intellectual capital management have become fundamental management functions.
Although there is considerable overlap in the scope of intellectual capital management and that of knowledge management, there are significant differences between the two in their foci and perspectives. In summary, these major differences can be explained as follows.
Intellectual Capital Management (ICM) focuses on building and governing intellectual assets from the overall perspective of strategic and enterprise governance, with some focus on tactics. Its function is to renew and maximise the value of the enterprise's intellectual assets.
Knowledge Management (KM) has tactical and operational perspectives. KM is thus more detailed, and focuses on facilitating and managing knowledge-related activities-such as the creation, capture, transformation, and use of knowledge. Its function is to plan, implement, operate, and monitor all knowledge-related activities and programs that are required for effective intellectual capital management.
Sullivan, Partick H.(2000) Value Driven Intellectual Capital. John Wiley and Sons Inc. Toronto Canada.
Wiig Karl M.(1997) "Long Range Planning". Vol 30 Nº3 pp.399-405. Elsevier Science Ltd. Great Britain.