A Knowledge Management Framework to Manage Intellectual Capital for Corporate Sustainability

Knowledge Assets And Business Performance

The traditional view is that business performance is measured in terms of physical capital such as buildings, plant and equipment. They remain essential for the production of goods and services and the capital required (debt and equity) for financing business operations. Financial measures are normally incorporated in conventional balance sheets and accounting systems enabling managers to provide information on how much a company is worth in terms of cash in the bank, value of its land, plant and buildings, working capital and inventories. The dominance of financial indicators in measuring business performance such as sales and turnover, profit, market share, return on investment, and number of new customers is a reflection of traditional business and accounting practices. However, the emergence of the knowledge intensive organisations such as professional services firms in accounting, engineering, architecture, surveying, law and management consulting has seen intellectual capital replace physical capital. Samuel DiPiazza Jr, Global Chief Executive Officer of PricewaterhouseCoopers, and Robert Eccles, former professor at Harvard Business School, in their book titled 'Building Public Trust: The Future of Corporate Reporting' recognised the need for organisations to provide a broader range of information than financial reporting regulations require (DiPiazza & Eccles, 2002).