Knowledge capital is unlike the physical factors of production. Knowledge capital is a term used to describe the intangible part of a business’s value. Knowledge capital may also be referred to as intellectual capital. Knowledge capital is the intangible value of an organization made up of its knowledge, learned techniques, and innovations. Knowledge capital is the full body of knowledge an organization possesses. Knowledge capital can be categorized into three categories: Human Capital, Structural Capital, and Relational Capital. Knowledge Economy uses knowledge capital or the body of knowledge possessed by an organization. Knowledge capital is very much dependent on the skills and mental capability of its workers. knowledge capital protects and ads value to the products and services produced by the physical capital.
Knowledge capital increases with experience, skills, and knowledge within an organization. Organizations with high knowledge capital may be more profitable or productive compared to organizations with lower knowledge capital. Businesses develop knowledge capital by encouraging employees to share information through white papers, seminars, and person-to-person communication. Employees with skills and access to knowledge capital put a company at an advantage vis-a-vis its competitors.
Knowledge capital is about creativity, problem solving, strategy, and decision making skills. Seeking and sharing of knowledge leads to better outcomes. Knowledge capital is an asset which is fundamental to the efficient and effective delivery of public services.