Green Intellectual Capital
It has been recognized that intangible assets and intellectual capital are the keys to knowledge firms gaining a competitive advantage (Segelod, 1998). Klein and Prusak (1994) defined intellectual capital as “packaged useful information” that has been formalized, captured, and leveraged to produce a higher-valued asset. Hall (1992) distinguished intellectual capital as assets and intellectual capital as skills. Stewart (1997) defined skilled intellectual capital as knowledge gained, practical experience, organizational techniques, customer relationships, and professional skills with which firms can enjoy a competitive advantage in the market.
The definition of green intellectual capital proposed by Chen (2008) incorporates environmental concepts into intellectual capital to compensate for previous insufficiencies on environmental issues. Green intellectual capital represents a firm’s intangible assets, including its knowledge, wisdom, capabilities, experience, and innovation in environmental protection (Chen, 2008). Green intellectual capital enables firms to comply with strict international environmental regulations and satisfy ever-increasing environmental awareness among consumers, and it also creates value for the firm. This study drew references from the Johnson (1999) and Bontis (1999) classifications of intellectual capital to divide the concept of green intellectual capital into green human capital, green structural capital, and green relational capital. Because human resources are a critical factor in a firm’s ability to develop and sustain competitive advantage, green human capital can play a critical role in attaining the goal of sustainability. Green human capital can be divided into two aspects:
- Environmental competence; and
- Commitment to related activities.
All employees and managers must have the knowledge, skills, abilities, experiences, attitudes, wisdom, creativity, and communication skills required to deal with environmental issues (Klein and Prusak, 1994). Sustainability involves human resource management (HRM), such as the development of leadership, employee engagement, and organizational learning and inquiry (Katzenbach, 2000; Ehnert, 2009). Employee commitment refers to decision-making and allocating resources based on long-term perspectives, relying on vital social and environmental awareness on the part of corporate leaders, coupled with the support of high-level managers, encouraging employees to act. Management exhibits a more progressive approach to environmental strategies when environmental issues are perceived as opportunities. The environmental competence of employees can be acquired through the development of leadership, training, talent management, and workforce engagement (Wirtenberg et al., 2007). Chen (2008) suggested that education and the promotion of green human capital could be conducted top-down to facilitate implementation. Concerning the challenges firms face in pursuing environmental goals, green HRM helps direct employees’ attention and behavior toward realizing the firm’s sustainability goals (Ramus and Steger, 2000).
Structural capital consists of innovation capital and process capital (Edvinsson and Malone, 1997), encompassing organizational capacity, commitment, knowledge management systems, incentives, IT systems, databases, management systems, operational processes, management philosophy, organizational culture, corporate images, patents, copyrights, and trademarks (Edvinsson and Sullivan, 1996; Stewart, 1997; Bontis, 1999; Johnson, 1999). Green structural capital refers to the specification, empowerment, and support infrastructure associated with environmental protection or the development of sustainability strategies. A well-engineered and well-run environmental management system within a firm reduces the consumption of unnecessary energy and material and helps to boost productivity. In addition, environmental products allow firms to demand a premium price for their products and services and establish a positive corporate image (Porter and van der Linde, 1995; Berry and Rondinelli, 1998).
Relational capital captures the knowledge of market channels, customer and supplier relationships, and governmental or industry networks (Stewart, 1997; Edvinsson and Sullivan, 1996; Edvinsson and Malone, 1997; Roos et al., 1997; Bontis, 1999). Green relational capital refers to the customers, suppliers, and business partners associated with environmental management and green innovation. About customers, firms must commit to increasing customer loyalty and satisfaction through increased spending on green products or services to boost sales. Firms must also ensure the quality of green products and services offered by their suppliers and maintain healthy interactions with suppliers to increase the number and value of supplier alliances.
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