Intellectual Capital in Context of Knowledge Management

2.1. Intellectual capital as a part of market value of organization

Present market economy is orientated mainly to the expressing of direct financial revenues, but there is growing more and more force to the expressing of not tangible capital, since it is also part of the market value of the subject. In present time expressing of organization’s value must be more orientated to the maintenance of key employees and to use their knowledge and innovation abilities as for emphasizing of image, brand as well as for basic equity growing. Very soon such organizations that are using ability to find and develop human capital necessary for obtaining of competition advantage, will have better position.

Manager’s demand in present times more and more information about investment profitability not only to the material provision and Technologies, but also to the human capital. Investment in technology is very easy to report and evaluate then investment to the human source. Such problems exist and they cannot be without recognizing. But in present time employers are not identifying enough with philosophy of human capital investment, many times investment to the employees are expressed by the cost that are comparable (sometimes higher) with cost to the physical capital.

Improving of market position of organization presents very sophisticated process from the view of time and intellect. Figure 1 shows connection between market value creation and individual capital in organization.

Market value of organization creates financial and intellectual capital:

• Financial capitalpresents monetary assets by the way of cash and securities,

• Intellectual capitalis presented by organization knowledge using for creation of organization wealth. According Armstrong (2002) it can be stocks and flow of knowledge disposal in organization. Such knowledge can be considered as not tangible sources that contribute to the quality of internal processes and create value added. Moreover such sources content value of relationships in the frame of organization and external relationships. Intellectual capital is then combination of human, society and organization capital.

• Human capitalis created by employees, by their inherent and obtained knowledge, skills, abilities, talents and competences. Human capital can be considered as dynamic index and very important factor for organization prosperity relating to the present time. From the view of future success, perspective and development of organization, quality and development of such aspects of human capital is very important, and they must be used effectively, and they must help to go ahead. In this case it means human potential, as file of dispositions and assumptions of people, orientated to the performance of such activities that enable organization to go ahead and increase its competitiveness. That means ability of man to produce products and services and to transform himself. Also human capital contents elements of dynamics and it is related more and more to the future time. (Differences between human capital and human potential is not so significant, in practice these concepts are replacing and differed not so consistently.)

• Society capitalpresents stocks and flow of knowledge, resulting from the relationships in the frame of organization and outside it. They are such characteristics of society life (relationships, norms, expectations, liabilities) that enable participants to work common effectively on goals achieving. It is relating to the institutions, relationships and norms that create quality and quantity of social interactions in the society. Not only stock, but also flow of knowledge is decisive for intellectual capital, therefore in organization such processes, during which people work and act mutually are important.

• Organization capitalpresents institution knowledge created and owned by organization that is stored in databases, manuals, etc. Here are also working processes, organization norms, technological processes, know-how, brand, etc. It is marked many times also as structural capital.

Human capitalcan be considered as an important part of market value of organization from the view of employee’s ability to make such things that will secure success. Theory of human capital put accent to the value added by which people contribute to the organization development. In present time there is more and more accent to the idea that considers people as a wealth, assets, not as a cost. Human capital is defining in expert literature from various points of view, we can mention following definitions:

• Davenport (1999) – it is summary of inherent and obtained abilities, skills, knowledge, habits, motivation and energy, which people dispose and which can be used for production during certain period. Ownership of human capital is related to the person that disposes mentioned characteristics.

• Bontis (1996, 1998) – it is production factor in organization, that means combination of intelligence, knowledge and skills, that gives every organization its special character. People are such elements in organization that are able to learn, innovate, think creatively, initiates and realize changes. At the same time this is necessary assumption for long term successful acting on the market. Bontis defines not tangible sources as factors that are different from financial and material property and contribute to the firm’s processes that create value and that are under firm’s control.

• G. S. Becker (1993) divided human capital as follows:

• general,that can be used in various types of employment and

• special,used only in given organization or firm.

Such division of human capital is basis for debate about motivation and need of firm´ investment to the education for mentioned human capital types.

Managing of human capital means obtaining, analyzing and reporting of information about strategic investment and decision in area of human sources management, how it is giving value in organization. Characteristics of the definition of human sources capital is according Armstrong (2007) using of tools for measurement of certain leads for people managing that is considered as a wealth, as organization assets, and it underlines that competition convenience can be obtained by strategic investment to such wealth by the way of employees obtaining and stabilization, by managing of talents and programs for their education, development and career.

2.2. Investment to the human capital and access to further professional education of employees

Basis of the creation, or increasing of human capital value means investing of monetary as well as not monetary tools in present time with goal to achieve monetary or not monetary revenues in the future, that means not only satisfying of present needs. Theory of human capital management supports idea of tools investing to its creation as an investment, not as consumption. Every cost connected with spreading of the content and increasing of effectiveness is considered as investment to the human capital. Thy can be unrepeated, or they can be realized as long term activities, but their result are always expressing in long time period. Human capital is source of revenue and it presents by this way stock of the economy wealth.

Investment to the human capital is divided according Vodák – Kucharčíková (2007) to three basic aspects:

1.Forms, that means for example school (formal) education, further Professional education, training at working place, education outside the working place, etc.,

2.Effects to the volume of income and consumption,

3.Level of investment part, measure of revenue, as well as intensity of connection between investment and revenue.

According Becker (1993) individual’s fortune plays during process of human capital creation also very important task that is connected with environment where individual had been born and where he lives. During investment to the human capital abilities of individuals have also their importance. More able people obtain commonly more education and training then less able people.

According Kamenička (2003) by investment to the human potential individuals are improving their knowledge and abilities, they increase quality of their human sources and consequently their personal and monetary incomes. State and creation of human capital is significantly influenced also by inherited disposition, as well as family environment, social background and environment in which individual is living and developing.

Investment to the human capital – as a production input – can be realized in organization by various ways. They can be orientated to the following:

1. increasing of quality and improving of working abilities, skills and increasing of knowledge of employeesthrough firm’s education,

2. improving of working conditions, when firms secure for their employees still modern equipments and still more effective protection working tolls by which they can prevent health damaging of their employees or rising of work injury,

3. improving of health state of employees, that means regular preventive health care, recondition bath residence, offer for fitness centre, swimming pools or other sport’s activities, with regard to the social program of employer.

With regard to the analysis of human capital investment they are in economic theory mostly evaluated investment to the education. Qualification investment profitability can be compared with investment to the tangible (material, physical) capital.

Investment to the education leads to the investing of financial tools, and at the same time they bring various effects. Representative of new theory of economical growth – Lucas says that investment to the human capital bring so-called internal and external effects:

• internal effectsare rising when mentioned investment contribute to the increasing of expert and Professional abilities of people and secure by this way growth of employees productivity,

• external effectsthat are rising in case when by the increasing of abilities, knowledge, skills and knowledge of people there is increasing also productivity of other employees and firm’s profitability as well as total effectiveness of the whole economy.

Such external effects are considered as a positive externality and they are becoming very important factor of long – term growth of every economy.

Human capital topic has very big importance in economical theory, as well as theory of human sources management that means during searching and analyzing of job market, during statement of wages level, during analysis of factors that influence economic growth speed and economic abundance of the country, etc. In present time that is characterized by speed and extend installing of technical and technological innovation, most important factor of technical development and production factors productivity growth is increasing of human capital value as well as total economic growth that is important for further education that brings knowledge growing. New obtained knowledge is necessary to adapt innovatively and creatively to the present needs and possibilities of concrete organizations and whole economy.

Therefore support of profession education organized by employer’s subjects is basic assumption for further development of organizations. It is necessary to involve to further education in organization every profession categories of employees that means laborer career, technical and economical profession as well as managers. Participant of firm’s education need to see purpose of his task, therefore he must be ahead informed about conveniences resulting and by this way he is motivated to the education. Firm’s education can be distinguished as three basic accesses:

• learning running in the firm by education activities –that react to the moment needs of the individuals or firm and they lead to the removing of differences between real and demanded qualification and that cannot have education or developing effect because of their casualty,

• systematical access to the education –it connects firm’s strategy and personal strategy with system of firm’s education as one of the personal processes. Firm’s education is from the view of such Access considered as systematic process in which there is change in working behavior by the way of structure change of knowledge and skills of employees

• conception of learning organization -it is complex model of people development in the frame of various type organizations (it is also as following process: learning firm → learning organization → learning society). In such organization employees are learning continually at every opportunity from everyday experiences. That is target managed process that enables learning to be done rapidly then changes forced by environment. Through learning of its employees firm is becoming able to create, collect, transfer, improve and apply knowledge in broad internal and external environment and according a need to modify its behavior. By this way we can consider also in this area with rising conception „knowledge management“, that means Access to the obtaining, change and application of knowledge in the firm, improving of human capital as one of the intellectual capital element.

Practice of successful firms proved theoretical idea that most effective education is good organized systematic educationthat is orientated to the forming of working abilities in larger sense, including forming of individuals characteristics and values necessary for creating of healthy interpersonal relationships at working place, etc. among people that are working in the firm and it is running as a cycle. Profession education is becoming part of human sources management, through organizing and supporting of firm’s employees education firm proves their value and importance. By this way firm gives employees perspective and enables them at its own cost to increase their competitiveness at job market. By support of employee’s development it contributes also to the increasing of quality and effectiveness of internal processes, as well as to the development of the whole firm.

With regard to the effective education that will provide organization with invested Money profitability, it must be systematic and it must result from total firm’s strategy, which demands support of this idea by every managers. According Koubek (2001) it is still repeated cycle, resulting from principles of firm’s education policy, following goals of the education strategy and based on the carefully created organization assumptions. Assumption is existence of experts group with initiative leading to the securing of expert and organization side of profession education. Existence of education program properly equipped training place or properly created conditions for education and development at working place is also very important.

Own cycle of education has four basic steps, illustrated at Figure 2, and each of the steps has its own importance and process of realization which is still improving by the practice. Most sensible and complex step in this cycle is evaluation of education results and answers to the question „To which measure had firm’s education achieved its goals? “

Theory of intellectual capital (that is unthinkable part of human capital) directs its attention to the practical activities connected with obtaining, choice and stabilization of employees, their remuneration and social development, measuring of people values, learning in organization and knowledge management. In spite of the fact, that such theory can be viewed as philosophy of human sources management, considering employees as a wealth (assets), it underlines that this wealth is not ownership of the employer. People – employees themselves decide about investment to their future and they can choose how and where to invest.

We can see knowledge value at least from three points of view:

• individual point of view– man can have benefit from acknowledgement that by his knowledge he contributed to the firm’s success, and he can obtain Access to the knowledge that will help him in further work, and enable him to learn new things and to participate at the team activity, etc.

• from the view of whole firm– at the level of the firm contributions of knowledge management are documented by the way of numerical data as well as by collection of cases in which contributions of knowledge management are clearly expressed. One of the demonstrations is for example also changing system of human sources management (for example firm is more interesting about forming of own employees, their stabilization, decreasing of fluctuation, etc.).

• from the view of clients– business subject that is orientated to the client should deal with client’s opinion; it should take time to deal with problem solving in relation to the clients, satisfaction of the clients, etc.

When we consider human capital as one of the basic production inputs and at the same time as a key part of market value of organization, then it is necessary to put emphasis to the measuring of human capital value. Measurement can provide basis for strategy creation of management and human sources development and consequent monitoring and evaluation of personal work effectiveness. Moreover firm’s practice shows several other reasons why it is necessary to measure and evaluate intellectual capital.

2.3. Measurement and evaluation of profitability from human capital investment

Contribution of human capital to the economic growth and prosperity of the society is recognized long time by theory and practice. With afford to define optimal process form the view of its forming big attention is given to the quantification of human capital rate on economical growth. Mainly contribution of human capital to the economic growth of some economy is considered as most important social contribution brought by human capital for society as a whole. But from the view of theory measurement of effects and quantification of human capital rate of economic growth is still not solved item.

Knowledge, skills and abilities of a man are considered as special form of capital also due to the fact, that their development is in time very sophisticated and it demands rather notable material sources. At the same time similarly as physical capital they secure for the owner and user certain value (revenue). Human capital is specific by the fact, that whole time it is connected with its bearer and consequently it is not possible to sale or stole it. And since there is not existing special market with human capital, his bearer (individual) can rent his own capital on job market. In market economy every man can decide himself where, when and for whom he will work, that means how he will use his own human capital.

Complexity of this problem can be explained according following four reasons (Starovic a Marr, 2001):

1.historical reason– accounting rules have been created for tangible assets that have been main source in industrial area. Accounting reporting cannot react to the changed claims of the new economy flexibly. Some experts have the same opinion that implementation of intellectual capital to the accounting system is not possible due to the not tangible character and relative value of its individual elements.

2.without possibility to measure not tangible assets– it is not possible to measure them and to evaluate their influence. Many processes are not predictable and they have not expected consequences.

3.relatively important character –what is valuable for one organization (firm, society, company), it is not important for other one, that means changing importance.

4.reason due to the existence of both intellectual capital dimensions –static dimension means that individual parts of intellectual capital can be measured and evaluated, dynamic dimension lies in the fact that such components are acting in mutual interaction as a system and by this way their importance for the society is duplicated.

Measurement of human capital has been defined by British Incomes Data Services (IDS, 2004) as something „that is connecting with relation, correlation searching and in ideal case casual connections between various data files about human sources during using of statistics methods. “ Chartered Institute of Personnel and Development CIPD, 2004) underlines that measurement of human capital „is dealing more with analysis of present skills of employer rather then declared programs and policy of human sources. “

Measurement and evaluation of human capital is very important part of its management, it is becoming also assumption for effective management of whole organization. Management of human capital is becoming according Kearns (2005) expression of organization value through people, according „development philosophy, when development of people means everything that change value for organization. “

Managers should be interested about methods for human capital evaluation, since they means help for decision due to the following reasons:

• human capital is key part of market value of organization (research of CFO Research Studies in 2003 found out the value of human capital presents more than 35%of total sales of organization),

• people in organization are source of value added (it is reason for estimation of such value as basis for following of personal policy effectiveness),

• process of identification for measurement ways and process of finding and analyzing of information is orientated to the organization attention to the changes during obtaining, stabilization, development and optimal using of human sources, etc.

It means also to know decisive driving power of people management and to model effect of their possible change. One of the views is also afford to increase job performance, in case when managers and personalists can see area of human sources as a part of the system for realization of the firm’s strategy.

2.4. What are possibilities of measurement and pricing of human capital?

Evaluation of intellectual capital can be realized by measuring and pricing of its individual elements through following:

• measurements methods– that means finding of quantitative or qualitative marks. Result is evaluation by number, that means index of intellectual capital elements that can be expressed also as complex index of intellectual capital,

• pricing methods– that means expression of monetary value estimation that is linked to the utility of evaluated object.

There are several accesses to the human capital value measurements, but till this time there has not been accepted unified methodology (neither in academic area, neither in practice). Basis for installment of system for human capital measurement is to know that people and their development do not present cost for organization, but investment to the future. Without measuring of human capital employer does not need to realize neither its human potential nor the fact if he invested effectively to his own employees. Without measurement effective management is not possible.

For example Anderson created tool for evaluation of human capital based on the three key factors, namely harmony, cost and value:

• harmony– it will show, if management of human sources is in connection with organization goals,

• cost– they measure real expenses invested to the human sources and personal work,

• value– it estimates results from human sources.

When we admit importance of achieving of human capital conveniences, it will lead to the fact that in expert groups there is great interest about methods for evaluation of its value, rising approximately in 60-ties in 20.century, but these ones had not been then accepted by organization. For example Bontis (1998) suggested for the need to measure human capital three models resulting from accounting of human sources, namely: Cost model of measurement, Models of human sources value and monetary models.

Further we will mention three methods from the list of known and published accesses to the human capital measurement:

• Models of organization performance(Nalbantian, 2004) created by Mercer Hunan Resources Consulting, based on the following elements: people, working processes, structure, and profile of management, information, knowledge, decision and remuneration. Every one of these elements is acting in organization by various ways, and they create commonly so – called unique DNA of organization. When individual elements are created gradually, or they are not properly linked, there is not harmony and it is probable that human capital will not be optimalized and there will not be created possibilities for permanent improving of organization revenues. Identifying of such possibilities demands careful measurement of human capital value in organization and process in management that influence organization performance. As a statistical tool „analysis of internal job market“is used, that demands permanent reporting of data about employees and job market with aim to analyze real skills of employees. By this way we can make differences between the fact what is in area of human sources demanded with interest of personal policy and support of firm’s goals and by the fact what is already acting in the organization.

• Model Sears Roebuck(Rucci, 1998) defines chain: „laborer – client - profit“(it uses also name „model of liability and commitment). Basis of the model is to maintain in organization high level of employees satisfaction with regard to their attitude to the organization and job. That means that employer creates „attractive environment“in the organization that will influence positively stabilization of employees, and lead to the providing of useful services and enforcing of demanded values with consequent satisfaction of clients, as well as extension of organization image in public. By this way there will be created „attractive purchase place“, that will create conditions for „attractive investment place“, since all this will influence asset growth, service profitability and income increasing. Model recommends making research of attitudes for measurement of employee’s satisfaction with work and sense of commitment.

• Methodology Balanced Scorecard(Kaplan – Norton, 1992, 1996) called also „Card for balanced score“ has been formerly created as strategic managerial system for management, stated for management of long term strategy, but also as a system for measurement used for improving of critical processes. Goal of the authors was to oppose tendencies of managers in organization to concentrate only to the short term financial profit. They came to the conclusion that none of the economic indexes can orientate attention individually to the critical areas of business. Managers’ demands balanced offer of financial and service indexes. Their card of score demands from managers’ answer to four following questions, or to view organization from four different points of view:

1.Internal point of view(Where organization can excel?)

2.Financial point of view(How stakeholders view the organization?)

3.From the view of client(How client see organization?)

4.Innovation and learning point of view(Can organization continue to create value added and make it perfect?)

By this way organization is orientated to the several critical key elements in the important target areas. In other words organization must manage and monitor everyday operations influencing its future development. Conception is based on three time dimension: yesterday (how it was yesterday), today (what we will do today) and tomorrow (what will be impact tomorrow – in the future).

Individual measurement of human capital still does not mean securing of effective management. Measurement is tool for goal achieving, not single goal. Gaining of data serves for managers to decision and business of further steps that can effectively manage intellectual capital of organization.

Measurement of human capital is therefore basis for its evaluation. In present time methods of intellectual capital evaluation can be divided to three categories:

• Direct Intellectual Capital Methods(DICM) –they identify structure of intellectual capital and they are pricing capital according its value by the help of some simple or single composed index in monetary expression.

• Market Capitalization Methods(MCM) – they express intellectual capital as difference between market and accounting value of the firm, for example VAIC.

• Return on Assets Methods(ROAM) – during measurement of intellectual capital they results from assets profitability, that is compared with average assets profitability in given branch. Average incomes of the organization that are not under taxation are divided through average value of tangible assets; result is compared with average in given branch. Obtained result is duplicated by average value of tangible assets, expressing annual average incomes of not tangible assets. Division of such incomes through average cost of capital is expressing value of intellectual capital, for example ROI method (Return on Investment).

Conveniences and disadvantages of mentioned methods using:

• ROAM and MCM method results from accounting data and rules, they are easily comprehensible mainly for financial managers, but they do not provide detail information about intellectual capital elements and therefore they do not have direct influence to its measurement and consequent management. But results of this method provide managers possibility to compare obtained data with other firms in the branch.

• DICM method provides more detail evaluation of intellectual capital, therefore it is more exact then ROAM and MCM. But they have also disadvantage that measured elements of intellectual capital have different importance for various firms and also definition of individual elements can be different in every firm. This causes that comparison of such indexes in the branch is complex and not accurate. Disadvantage is also low interconnection with financial reports of the firm.

In following text we will mention process of human capital evaluation according three chosen methods, mainly ROI, VAIC and Scandia Navigator:

2.5. Method of profitability (ROI – return on investment)

Other method used for calculation of investment profitability from tangible assets is for example (Return on Investment). Basically there is relation:

For evaluation of investment profitability from education this relation can improve and compare financial contribution of concrete education activity with its cost. ROI of education activity is expressed in % or as a rate of cost on the education activity contributions. Evaluation on such level is realized at high cost education activities. Investment profitability from education activity is calculated according following relation:

Many firms apply this method ROI in practice, mainly at high cost education activities. Reasons for using of ROI method are today in practice obvious. Managers are interested mostly about investment profitability from every program and projects, including management and development of human sources.

2.6. Method VAIC

One of the possibilities for evaluation of investment from intellectual potential using is VAIC method that means calculation of value added intellectual coefficient with regard to the difference between market and accounting value of the firm. Such process can be used also in the subjects that are on the filed on the bourse. Idea of such method is to not include personal or other expenses on employees to the cost due to the active task of intellectual potential.

Calculation of VAIC index consists from four steps:

1.Stating of ability to create value,that means value added as difference between total incomes and total cost of the firm, except cost for employees.

2.Calculation of effectiveness of value added creation by physical capital:

Where: VACA - coefficient of value added of physical capital

VA - value added

CA - stock of physical capital in the firm

3.Calculation of effectiveness of value added creation by intellectual capital:

Where:VAIP - coefficient of value added from intellectual potential

VA - value added

IP - intellectual potential

4.Coefficient of intellectual value addedis sum of both higher mentioned coefficients:

Calculated coefficient shows effectiveness of intellectual and financial potential using in the firm. It is very simple tool for calculation and it is easy for using during management of physical capital as well as intellectual capital. VAIC method enables broad using either on the level of one subject or at broader extend, during analysis of various economical units in the frame of individual branches of economy. At the level of the firm it is possible to use index for operative management, it is necessary only properly performed system of accounting that will secure Access to final data in short time interval.

From the results of foreign research made by this method we can see significant differences in effectiveness of intellectual potential using in various branches of economy. There are branches that do not create big value during using of enormous physical capital, but also such branches that achieve extraordinary results with low volume of stocks. For example low VAIC coefficient is usually in civil engineering and traditional industry, but also in medial branches and generally in area of services this index is higher.

Using of VAIC method brings positive results, but it has also negative:

• Convenienceis its simplicity, as well as cost for using. When evaluation of effectiveness of intellectual potential using will cost more then results of this potential, it is not necessary to install it. Using of universal index without its adaptation to the conditions, in which concrete given firm make its activity (as in case of other method), secure possibility to compare results.

• Disadvantage isthe fact that simple analysis of indexes does not regard many important facts influencing activity of spotted organizations and limits its usefulness. For example generally weak ones during comparison are subjects that invest big tools for investment to the physical capital – in this case there is significant variation of index value in consequent periods. Except mentioned this method does not deal at all with problem how to manage intellectual potential, it evaluates only effectiveness of yet existed practice.

2.7. Scandia navigator method

This method has been suggested by Swedish financial company Scandia that began to introduce in its annual report also report about intellectual capital (from 1994). It is using methodology Balance Scorecard and extends it with fifth area, human area and illustrates them as a house, as illustrated at Figure 3. This method has been used at first only for internal needs, lately it was adapted to the universal conditions and from 1997 it is used by various firms. Authors of mentioned method (Edvinsson – Malone, 2002) orientated to five area of organization (that means financial, client, process, human area and area of renovation and development) that are illustrated by the „house“. Basis of the house present renovation and development, walls of the house represent present time that means client and process area, roof means financial area of organization. In the middle of the house there is human area that means its inhabitants. Authors had stated 112 indexes for mentioned areas that are presented in % or financial value. After obtaining of every value intellectual capital of organization can be calculated according following relation:

Where: IC – intellectual capital

i – coefficient of effectiveness stated by percentage, expressing position or direction of organization

C – intellectual capital in financial expression

Due to the possibility to measure and evaluate human capital as a part of intellectual capital it can be achieved what is considerable in knowledge economy that means stating of effectiveness for value added creation. Mentioned methods are chosen from till now suggested and published processes for intellectual capital or its elements. Also here we see visible development of the access to this problem. Firstly first methods have been orientated only to several parts of intellectual capital and not tangible assets, but experts are gradually trying to express real picture about state and movement of elements of such more and more pricing capital. Still not solved task is to suggest method that would provide complex view to the intellectual capital. Development in this area is continuing and its final goal is to give managers most precious source for every firm or organization. But it is not enough to secure organization with qualitative material means and Technologies. Value added is created by people that are bearer of human capital, without them technical conveniences and solutions would be not used, or they would terminate.

3.1. How and when knowledge management originated?

With afford to penetrate to the basis of knowledge management it is useful to know roots, history, basis and collisions of knowledge management origin. Knowledge and work with knowledge is from old inherent for people. Roots can be found from Platon, approximately 400 years before our era, lately in Antique or in old Greece when medicine, logics, mathematics and philosophy started to develop. Further dramatic development of work with knowledge had been in 16th Century when attention had been given to the practical importance of knowledge. This is proved by experiments of representantives of so-called scientific society, for example René Descartes, Galileo Galilei, Isaac Newton and others. They started to collect, sort and systemize information, first encyclopedias originated that can be considered as first basis of knowledge. Lately in 18th and 19 Century there was classification of every available knowledge, academics and scientists stated what is scientific, new branches originated and former knowledge data changed its character.

Work with knowledge at the organization level can be seen still from 20th Century. When P.F.Drucker in 1993 predicted necessity to manage knowledge, he was not first one. Kenichi Ohmae stated before him that new originated economy will be based on knowledge. Till the end of 20th Century brings first clear limitation on which experts create practical conditions for it applying in the practice. Also here we can follow up three basic directions:

• American conceptionorientated to the artificial intelligence and technology, based on the knowledge knowing from the environment and also their providing to the environment;

• European conceptionorientated to the strategy with goal to obtain, maintain and using of knowledge in society and creation of knowledge culture;

• Japan conceptionorientated to the creativity and innovation.

We are living yet several years in third Millennium, it is time of society based on knowledge, and knowledge had become most important way of capital in every organization. That does not means that during product production there will not be necessary capital, work or technical development, but priorities had changed: first role today has knowledge.

3.2. Levels of work with knowledge

In present time organization know that traditional sources connected with industrial era are not just ones where is necessary to give attention at mutual present transition to knowledge society and knowledge economy. Strategic source for 21st Century is knowledge, they can secure stable tempo of performance growth and competition convenience. Therefore knowledge are more and more in attention, knowledge management had become more and more spoke about in theory and practice of organization management, without regard to their task or activity. Basic principles of knowledge management can be applied in production firm, business organization, education institution, health organization, and also in offices of state administration. Such new access means confusion of concepts borrowed from various area of human activities, where belongs for example artistic intelligence, creation of knowledge system, reengineering of firm’s processes, management of human sources or organization behavior.

Knowledge can have attention at some levels, their explanation is subject of expert discussions among theoreticians and practicians, but still in present time it is not clear. For example Bureš (2007) illustrated knowledge management at Figure 4 as a basis for further levels of knowledge management. Basis is therefore knowledge management where products and outputs have application at organization level. Organization level creates basis for knowledge economy at national level and also for knowledge society at over national level.

In expert literature we can find expressions as for example „knowledge managing“, „management of knowledge“or „knowledge management“. Also here such expressions are very similar, but in reality they are very different from the view of the content. We can see attention given to the knowledge at several levels:

• over national level (knowledge society),

• national level (knowledge economy),

• organization level (knowledge management),

• level of knowledge managing.

5.1. Is ICM – Intelectual Capital Management – a new notion ?

Approximately since 1950 managers of different majors have developped a whole row of management models and attitudes towards strategic management, e.g. in looking for a competitive advantage. Research and development of management, human resources management, ( HRM ), quality management, (TQM), just-in-time (JIT) a other discussions try to bring individual attitudes in this or that form of intellectual capital. In nowadays expressions ICM, human capital and process takes control of research and development, HRM regulates human capital and TQM a JIT manage process and structural capital. So what other things does ICM offer?

Nowadays ICM is viewed as a discipline divided among lawyers, business managers, consultants and auditors. Intellectual possession called IAM or IPM (often replaced) restricts the attention of specialists to knowledge assets which they can codify and legally protect. Lawyers and business managers focus mostly on business strategies and techniques which increase the doubts of commercial use of IP. Other experts focused on human resources with information technologies in the background, which they marked as knowledge management (KM), with the emphasis on collecting, sharing and transmitting the knowledge which an organization has in its people, generated in the procedures and saved in the databases. The research and development experts of new products focus mainly on innovation management, the research of a process in a production bringing the most effective results, whereas an accountant mainly experiments with a metrics design for measuring IC by which he allows better investment decision- making.

In present globalized business world, intellectual capital can be a base of doing business, which underlines the importance of intellectual equity or intellectual possession management (IAM/IPM). To this day, little is said or written about correlation between knowledge management (KM) and IAM/IPM and about the way an organization can use both attitudes to implement an integrated system for overall management of its intellectual capital and resources. Knowledge management and IAM/IPM aren´t one and the same although they are very similar in basic theorem. The difference is mostly in the fact that knowledge management relates to gaining knowledge, collection of ideas, creating values and knowledge transformation into explicit knowledge so that an organization could codify and transmit them, whereas IAM/IPM relates to value maximization, patent licensing, know – how and trademarks, as well as using intellectual possession for gaining competitive advantage, enter new markets, to arrange strategic alliances and create incomes.

Supporters of individual approaches in management hardly admit the advantages of the other approaches and they often do not see the connection between them as well as the fact they could work together. It is true that for some industries, one of the apporaches can be more important than the others, however, for every organization, if it wants to succeed in knowledge economics, it is inevitable to admit both approaches of management in certain constant, because each of them fills up strategic needs. The point some of the organizations can not see is the fact that knowledge management and IAM/IPM are the cardinal components of overall intellectual capital management in an organization.

The focus of an organization on only one approach and excluding the others would lead towards resource wasting by a management. Desynchronization between individual organs, as well as a conflict between supporters of different approaches can appear as an effect of it. Combining both approaches is not a solution either. At most, such an artificial connection might disorientate processes and malfunction the system. The reason is, that each of the management approaches has a different function and that is a production versus value revenue, when at their combination, an organization should impose a different approach negotiator towards management,e.g. innovation management.

The way how to work with intellectual capital in management (ICM) is to understand the ralationship among these three management approaches (KM, IM, IAM/IPM ) and distinguish how each of them affects and facilitates the management of the whole organization. It represents the approach developped for overall strategic organization management and its intellectual capital in every phase of its development. The complex approach of ICM should be suggested in a way to overcome restrictions of one discipline and at the same time exploit what every discipline has to offer in creating and maintaining competitive advantage of an organization.

It is necessary to start understanding ICM as a universal approach towards strategic management, not only using previous approaches. The aim is to manage administrative wealth of the whole company, 75% of which is intangible. The fact that intangible capital represents such a high percentage of companies' wealth e.g. in America and other developed economies, makes ICM a unique method, thus a complex approach towards a company's management.

Understanding ICM as a coherent discipline with all its heterogeneousness can seem impossible. It requires professional knowledge of participating disciplines: Economics, Marketing, Technology, Accounting, Psychology etc. Joining all these disciplines into one model is not the main challenge ICM faces. The task is to understand the interplay among them and thus to connect them into an effective way which will enable a company to implement, manage and use its intellectual capital effectively.

Successful managers and their companies have come accross intellectual capital management, either purposely or intuitively. It doesn't mean that they have ICM programe or its strategy. Intellectual capital management as a mater of common business is not enough for the ICM development. It will only happen when rational way of dealing will be used before intuitive one, when it will be a systematic process, further developed. Then it can be fundamentally changed from existing reality and become a science. As soon as it goes over into a science, it will be able to better anticipate, repeat and later measure. Organizations and managers hesitate in advance to apply ICM in practice, so this way, experts will have to take a long way of experiments, applied research and further ICM development for ICM to become a science.

Some organizations have changed a style of management, e.g. into a business model focusing on intellectual capital management and by this reaction they enabled economics dynamics based on knowledge. Many of these organizations are run without realising the fact they have admitted and applied the approach of intellectual capital management.

A complex ICM integrates three management approaches KM, IM, IAM / IPM when it acknowledges that each of them needs its own goals, procedures, strategy and tools. Higher attention has to be given to their theoretical definition as well as practical implementation. In near future, ICM is expected to represent evolutionary phase of a company strategic management in the conditions of knowledge management and knowledge society.