Developing a framework for measuring the intellectual capital of a higher education institution

It is widely accepted that organizations possess tangible and intangible assets. For a long time the emphasis had been on acquisition, maintenance and the growth of the tangible assets, perhaps because they are concrete and thus measurable and the way of managing them created in the end the competitive advantage. However, as we moved towards globalization it became apparent that only a very small percentage of the organization's assets are made from tangible assets. This led to changing the management style of the assets as the world economy was starting to become an information or knowledge economy rather than an industrial one. The management became one of information or knowledge management, which concentrates on three primary activities: integration, generation and sharing of knowledge (Bontis & Fitz-enz, 2002) or as Edvinsson (2000) puts it, in converting human capital to structural capital. However, it can be argued that something that cannot be measured cannot be managed which has its root in the industrial area where tangibles were the only ones that counted. With the rise of intellectual capital (IC, the intangibles) tangibles begun to loose their top priority and became secondary to intellectual capital. It has also been accepted that measuring IC is not a straight forward case as it is more of a qualitative nature than a quantitative one. But what does one do with an institution, like a university, which creates, integrates, shares (to a greater or a lesser extent) knowledge (the three main pillars of Knowledge Management (KM), but does not apply any of the principle of KM? However when a university does apply such principles and is serious about its IC growth careful planning is necessary. This paper will show that in a higher learning institution, like a university, accurate measurement of IC does not lead to the growth of learners of high caliber and thus greater learner throughput which in the end, contributes to the increase in value of the institution.