Proposing a method for gap analyzing and improving intellectual capital to achieve competitive advantage

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1 Technical Journal of Engineering and Applied Sciences Available online at TJEAS Journal S/ ISSN TJEAS Proposing a method for gap analyzing and improving intellectual to achieve competitive advantage Shiva Mehrabi Kandsar, Abbas Afrazeh *, Mohsen Akbarpurshirazi Department of Industrial Engineering, Amirkabir University of Technology, Tehran, Iran * Corresponding author afrazeh@aut.ac.ir ABSTRACT: Intellectual as a competitive advantage in today's knowledge-based economy is on the agenda of organizations. In this paper, a method to determine the existing of intellectual in the organization through measuring it with non-monetary approach, and gap analysis of intellectual by subtracting the existing from the ideal defined in the vision for the expression of right actions to achieve competitive advantage and improve or eliminate the gap, was provided. The procedure was performed in a manufacturer company of automotive parts. According to the results of the assessment of each of the intellectual dimensionsin the organization, relational had the most and structural has the lowest. Spearman correlations test indicated a significant relationship between the dimensions of intellectual and competitive advantage. The greatest gap was in structural and the lowest was in relational. Keywords: intellectual, intellectual measurement, competitive advantage, gap analysis INTRODUCTION In today's competitive world, the creation of value for the companies has changed from financial and physical assets towards intangible assets (intellectual ) [1]. Sustainable competitive advantage is achieved from intangible assets or valuable, rare and inimitable sources of organization [2]. Thus, the intellectual is a factor in creating competitive advantage. In this paper, the existing of intellectual is measured withnon-monetary approach andcompared with the ideal defined in organization, so that the gaps in the three dimensions of intellectual are calculated. Process of article is as follows: in section 2 the theoretical foundations of the research, section 3 intellectual dimensions and measurement methods, section 4 the proposed method and section 5 performance of method in a manufacturer company of automotive parts are discussed. Finally, actions to improve the gaps and results are offered. Literature Review In today's competitive business environment with rapid changes in technology, tangible assets do not create a competitive advantage for organizations and intellectual is the factor to create a sustainable competitive advantage in today's knowledge-based economy [1, 3, 4]. In resource-based approach, the focus is on the internal dimension (capabilities and resources) and to create a sustainable competitive advantage the valuable, rare and inimitable resources should be identified [2, 5]. Dynamic capabilities approach is the company's ability to integrate internal and external resources to meet the rapidly changing environment [4]. The various dimensions of intellectual and competitive advantage have a significant relationship[1, 3, 6]. Article [7, 8] measure the existing of intellectual with non-monetary approach in case studies. Gap analysis is done through the comparison between the existing and ideal by the organization's senior management and lead to solutions. The ideal is determined by the vision of company [9]. Dimensions and measurement methods of intellectual Intellectual is the company's ability to integrate, coordinate and create value in the future prospects [3]. Intellectual is divided into three categories: human, structural and relational. Human includes knowledge, skills, behavioral patterns and innovation of staff [11, 12]. StructureCapital

2 includes equipment, databases, processes, structure and organizational culture. Relational is the organization's ability to communicate with customers and suppliers [13]. Intellectual measurement methods are classified into four groups: direct measurement methods (DIC) which the monetary value and intellectual is directly measured by identifying and evaluating its components. Market Capitalization Methods (MCM) that the difference between book value and market value of intellectual is calculated as the company's shares. The return on assets methods (ROA)that company's average revenue is divided by average intangible assets compared with the industry average. In the methods based on score cards (SC), the different components of intellectual are identified. Indicators are produced for each of themor are shown in graphs and tables [7, 8]. The proposed method Intellectual as a source of competitive advantage in today's knowledge-based economy is important. So in this paper, a method to analyze gaps between existing and ideal of intellectual in order to express the appropriate actions to achieve competitive advantage and improve gaps is proposed in Figure 1. Step 1)measuring the existing state ofintellectual in the organization Step 2) Analysis of the gap betweenexisting and idealof intellectual and Determine theactions toimprove gaps Figure.1 Proposed method Measure the existing of intellectual In this study the measurement of intellectual is based on non-monetary approach. Comparing approaches of the measurement of intellectual are in Table 1. Table 1. Comparing measurement approaches weak points Strengths Type Method Difficult for comparison Allows separately measurement of the components of intellectual Monetary A purely economic focus limits prospect For comparisonis appropriate Monetary MCM A purely economic focus limits prospect For comparisonin the same department is appropriate Monetary ROA Difficult tocalculate thenumerical results Provides a comprehensive review of the intellectual Nonmonetary DIC SC According to Table 1, approaches of measuring intellectual can be classified in two groups of monetary and non-monetary. Non-monetary approach provides comprehensive implementation of intellectual and shows a more real, accurate and faster report and broader view of company while purely economic focus in monetary approach limits the prospect[7, 8]. Thus, non-monetary approach provides a broad context for gap analysis and it is as a percentage expressed by calculating the average of each of the parameters and dimensions of intellectual. If the average position of each of the intellectual dimensions is 50% the is below the average and if it is more than 50% the is above the average. Gap analysis between existing and ideal of intellectual Ideal is determined through vision. In order to analyze the gap, the difference between the existing and the ideal of intellectual is calculated and actions to improve gaps are provided. 151

3 Case study The population of this study is experts and managers in a manufacturer company of automotive parts and to collect data,90 questionnaire with 48 questions based on the 5-point Likert-scale (from strongly disagree {1} to strongly agree {5}) was distributed and results were examined. For data analysis EXCEL, SPSS software was used. The method used in the study is as follows: Measurement of the existing of intellectual To measure the intellectual in the organization, non-monetary approach is used. Questions (indexes) have been chosen according to the definitions in the section 3 of intellectual and the factors influencing competitive advantage in resources [1, 3] based on the source and dynamic capabilities approach according to this industry. There are 13questions of human, 11questions of structural, 9 questions of relational, and 15 question of competitive advantage. Cronbach's alpha values of human is 0.91, structural 0.85, relational 0.92 and competitive advantage So numbers are greater than 0.7 and the questionnaire is reliable. To investigate the correlation between the 3 dimensions of intellectual and competitive advantage, the Spearman correlation coefficient was used. H0: there is no significant linear relationship between the three dimensions of intellectual and competitive advantage. H1: there is a significant linear relationship between the three dimensions of intellectual and competitive advantage. Thedecision criterion (significance level)between relational and competitive advantage is 0.000, less than The significance level between human and competitive advantage is and between structural and competitive advantage is So, they are less than 0.01.There is a significant relationship between the three dimensions of intellectual and competitive advantage. Competitive advantage includes timely products, suitable cost, convenient, flexible service, differentiation, quality and brand of products, best business practices, satisfying and lasting relationship with customers, a key position and leading in the market. Gap analysis between existing and ideal of intellectual Ideal of organization are determined according to the vision. The company in its vision until 2020 for the ideal three dimensions of intellectual, by comparison with the leading organizations in industry has considered quantitative amounts that are mentioned in Table 2 of ideal along with gaps in the field of intellectual. According to Table 2 among indices of human, staff expertise isthe most equal to 71.55% and the pursuit of knowledgeis the lowest amount of 49.11%.Among indices of structural, quality of products has highest value of 65.33% and updated Systems of management and maintenance knowledge has lowest value of 41%. Among indices of relational, comprehensive communication networkwith customers has the greatest amount of71.55% and attracting customers by customers has the lowest value of 57.55%. The results for each of the two dimensions of intellectual (relational and human ) are upperthan 50%, so the of each dimension in company is more than average and structural is lower than intermediate, so the statue is lower-intermediate. These results can be seen in Figure 1.The gap between existing and ideal in structural was the highest and relational is the lowest. Human existent ideal Structural Relational Figure 1. The existing and the ideal of three dimensions of intellectual 152

4 Gaps Ideal Table 2. existing and ideal values and gaps of intellectual dimensions existing 11% % 64% 9% % 66% 18% % 57% existing Indicators 71.55% Staff expertise 66.88% Innovation of Staff 70% Professional competencies 64.88% Hiring efficient staff 61.33% Appropriate educational program 62.66% Career Awareness 68.44% Tolerance 66% diligence Commitment to work 59.11% Work Difficulty understanding 64.66% Behavioral Competencies 63.55% Participation in Research 49.11% The pursuit of knowledge 65.33% Express opinions by customers 71.55% Comprehensivecommunication network 69.33% Customer commitment 67.55% Successful communication with customers 66% Getting business ideas from customers 63.22% Customer participation in decision-making 70.22% Good relationship of staff with customers 57.55% Attracting customers by customers 63.44% Improved service by costumers 60.22% Up-to-date technology 62.89% Innovation in enterprise 59.22% Fast Internal processes 55.55% Easy access to relevant information 61.33% Efficient and up-to-date information systems 63.33% Teamwork 52.44% Flexible structure 63.55% Culture of teamwork 65.33% Quality of products 41% Updated Systems of management and maintenance knowledge 42.22% Cost-effective production Intellectual Human Relational Structural Determine theactions toimprove gaps To improve the gap between existing and ideal of structural, utilization and updating requirements on each of the components of structural, can be consideredas the outlines. Including the continuous updating of databases and documentation of information, updating technologies required in internal processes, using the flexibility of timely and informed policy are overview of optimal solutions for organizational structure. Also with a view to leading competitors in knowledge-based economy we can check the reasons for their success and move towards elimination of gaps in each dimensions of intellectual by taking advantage of their victory and ideas. In order to provide actions to eliminate gaps between existing and idealor an extension of the proposed method, road is still open. DISCUSSION AND RESULTS Articles [1, 3, 6] show that there is a significant relationship between three dimensions of intellectual and competitive advantage. In papers [7, 8] intellectual is measured based on non-monetary approach in the case studies. It is clear that the development of competitive advantage in today's knowledgebased economy is based on the exploitation of intellectual. Therefore proposed method in this study, measures the existing of intellectual based on non-monetary approach and compared it with the ideal in the vision. Then gap analysis was done by 153

5 subtracting the existing fromideal conditions for the expression of appropriate strategies to gain competitive advantage and improve gaps in intellectual dimensions. The procedure was performed in a manufacturer company of automotive parts. CONCLUSION Intellectual is a competitive advantage in today's knowledge-based economy. Therefore, in this study, to determine the existingof intellectual through non-monetary approach and analyze the gaps in intellectual by subtracting the existingfromideal was provided to express appropriate actions to achieve competitive advantage and improve gaps. The procedure was performed in a manufacturer company of automotive parts. The results of the assessment of intellectual dimensions showed that the average amount calculated for all dimensions of intellectual is above the average. Spearman correlation coefficient referred to the correlation between the dimensions of intellectual and competitive advantage. Relational had the highest and structural had the lowest. According to the results of the gap analysis, structural had the greatest gap and relational had the smallest gap. Finally, the proper operation and updating of data bases, internal technologies and using smart flexible policy was introduced as actions to improve the structural gap. Monitoring competitors and applying new ideas were offered as solutions to improve the gaps caused by the dimensions of intellectual. REFERENCES Afrazeh, Abbas. (2010). Knowledge management, concepts, models, measurement and implementation, third edition: AUT. Barney, Jay. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), Bontis, Nick, Bart, Christopher K, Tovstiga, George, & Tulugurova, Ekaterina. (2007). Intellectual practices and performance in Russian enterprises. Journal of Intellectual Capital, 8(4), David, Fred R. (2013). Strategic Management, twenty-third Edition, the Cultural Research Bureau in Tehran. Gogan, Luminita-Maria, & Draghici, Anca. (2013). A model to evaluate the intellectual. Procedia Technology, 9, Halawi, Leila A, McCarthy, Richard V, & Aronson, Jay E. (2006). Knowledge management and the competitive strategy of the firm. The learning organization, 13(4), Kamukama, Nixon. (2013). Intellectual : company's invisible source of competitive advantage. Competitiveness Review: An International Business Journal, 23(3), Kargar, Ali, Mehrabi, Shiva. (2014)Offering a model to support intellectual and its impact on the performance of the organization, The first International Conference on Accounting and Management: Conference Center of Tehran University. Kocoglu,Ipek, imamoglu, SalihZeki, &Ince,Huseyin. (2009). The relationship between firm intellectual and the competitive advantage. Journal of Global Strategic Management, 6, Ranayi, Habibullah, Ghafarnya, Ahmed, &Davari Ali, (2001). Measuring and reporting of intellectual (Case Study: Pars Special Economic Energy Zone Organization), International Conference on Oil, Gas and Petrochemical. Sydler, Renato, Haefliger, Stefan, & Pruksa, Robert. (2014). Measuring intellectual with financial figures: Can we predict firm profitability? European Management Journal, 32(2), Taie, Eman Salman. (2014). The Effect of Intellectual Capital Management on Organizational Competitive Advantage in Egyptian Hospitals. International Journal of Business and Social Science, 5(2), Zack, Michael H. (2009). Knowledge and strategy: Routledge. 154