Intangible Resources in Business
Intangible resources (IRs) are non-physical resources that provide future economic benefits to an organisation. Examples can include things like intellectual property, computer software and strategic alliances with other companies. They are increasingly seen as the source of a firm’s competitive advantage, and are therefore the focus of corporate strategy.
IRs are often difficult to measure and value, as they are often non-marketable and hard to quantify. Most of the time, organisations rely on qualitative assessments of intangible resources to assess their value, often considering factors such as the history of the company and the strength of the management team.
Intangible resources are often not fully understood within an organisation, as they are intangible and thus hard to assess. However, understanding what intangible resources the organisation has, and how it can be used to create value, is essential for any business.
An organisation’s intangible resources can be divided into two main categories, organisational capital and human capital. Organisational capital typically refers to the business’s organisational knowledge and resources such as brand recognition, patents, trademarks, copyrights and contracts. Human capital typically refers to the skills, abilities and knowledge of the workforce, as well as employee loyalty.
Organisational capital can be an important source of competitive advantage, particularly in dynamic and rapidly changing industries. By protecting and exploiting individual resources, such as patents, organisations can gain a strategic advantage over their competitors. Furthermore, with the increasing importance of brand recognition, organisations can ensure the loyalty of customers, creating additional value.
Human capital is increasingly seen as an important source of competitive advantage, as organisations turn to their workforce to introduce new services and products. Employees who have the right skills, abilities and knowledge are more likely to provide ideas and ways of working that give the organisation a competitive edge. Furthermore, employee loyalty creates a sense of commitment to the organisation, and benefits the firm in terms of reputation.
Organisations can benefit from investing in and managing their intangible resources. It is important to note that intangible resources are not easy to replicate and are therefore seen as sustainable sources of competitive advantage. By understanding their intangible resources, organisations can not only protect them from their competitors, but also exploit them to create value and gain a competitive advantage.
