UNIVERSITI TUNKU ABDUL RAHMAN FACULTY OF ACCOUNTANCY AND MANAGEMENT Bachelor of Accounting (Hons) UKAM1033 Management Accounting 1 MAY 2018 Tutor Name Puan Nurazwani Binti Mat Radzi Tutorial Group T8 Submitted by NoRegistered Name (Alphabetical order)Registration NumberEmail AddressContact Number1Lim Kui [email protected] Jing [email protected] Pei [email protected] Yi [email protected] Kah [email protected] Ruo [email protected] Date of Submissions 13 July 2018 UNIVERSITI TUNKU ABDUL RAHMAN FACULTY OF ACCOUNTANCY MANAGEMENT Bachelor of Accounting (Hons) UKAM1033 Management Accounting I Assignment Marking scheme NoGuideline criteriaGradingcomments1. 2. 3.Discuss the role played by Intellectual capital and why there is a need to measure intellectual capital in a higher education institution (at least 3 points each) (24 marks) Discuss how do we measure intellectual capital for a higher education institution (12 marks) Explain how intellectual capital will improve performance in a higher education institution (14 marks) /50 marks 2.Originality, depth of research, readability 3.References and attachments 4.Deduction due to late submission or othersTotal /50 marks General comments ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Table of Content ContentNo of PagesRole Played by Intellectual Capital4-5Classification of Intellectual Capital5-6Reason to measure Intellectual Capital in a Higher Education Institution7-8Ways to Measure Intellectual Capital for a Higher Education Institution9-12How Intellectual Capital will Improve Performance in a Higher Education Institution13-15Conclusion15References16-18Appendixes19 Role Played by Intellectual Capital There are no longer just physical employees rather there is knowledge employees. This is because nowadays societies and organizations get more interest in intellectual capital. Intellectual capital can be defined as collective knowledge of individuals in organization or society. Intellectual capital is an important fundamental of factors of production as it can be used to produce wealth and multiply output of physical assets. Significance for businesses to invest in knowledge through educations or trainings is equivalent to invest in machines and plants. Therefore, there are a few important roles played by intellectual capital which are innovation, performance impact and competitive advantage. The main role of the intellectual capital is the ability to innovate (Edvinsson and Malone, 1997). Innovation means implementing new ideas that create value which refers to one of the sources of companys wealth. This included output of in-house researches, development researches, products or services adjustment, commercialization of new technologies and new sales or marketing techniques. For instances, intellectual capital aids for innovation in new technologies. The development of new technologies will increase the effectiveness and efficiency of production. Amount of cost, time and money can be reduced distinctly. To cope with the strong threaten from other competitors and at the same time to deliver customers needs and requirements, company needs to be eager in continuous improvements and creativeness. In this hand, intellectual capital does play an important role in the development process. Therefore, this achieves the company objective of maximizing the profits. Besides that, the other role plays by intellectual capital is to gain competitive advantage (Velkjo, Barbara, Snezana, 2017). In the 21st century, the society aware the importance of intellectual capital which it becomes the main resources for an organization to gain competitive advantage in the market. For example, in higher education institution, lecturers are known as the main human capital. The lecturers should have longer teaching experiences and higher qualification which represent their ability in teaching. As a result of improvement in students performances, this will increase the reputation of the particular higher education institution. Therefore, it can attract students attention and increase the possibilities for students to choose studying in that university. Eventually, this will become one of the competitive advantages for the institution to compete with other competitors, colleagues and universities. The role plays by intellectual capital not only to innovate and to gain competitive advantage, but also to bring big impact in organization performance (Vladimir, Chadi, Nasser, Nick, 2017). There is a positive relationship between the intellectual capital and the organization performance. The impact of intellectual capital on firm can be seen directly from the performance of employees and the management of operations. A company is more willing to hire employees that are qualify and educated with professional knowledge. This is because these employees are ready and confident in solving problems, they can help the company by voicing out their suggestions and carrying out solutions that can lead the firm to success. Also, intellectual capital can affect an individual while carrying out tasks. Smart employees help to solve problems but not creating more problems. Therefore, it is very important to aware the direct impact of intellectual capital to the performances. In conclusion, innovation, performance impact and competitive advantage are the important role of intellectual capital. Every type of resources in an organization need to be analyzed, monitored and allocated wisely in every department. This is to make sure the organization is efficient and effective and operates under the best condition. Classification of Intellectual Capital SHAPE MERGEFORMAT Diagram 1 Three Classifications of Intellectual Capital Intellectual capital is classified into three main types which are the human capital, structural capital and relationship capital. Human Capital The first type of intellectual capital is human capital. Human capital contains the resources such as knowledge, talents, skills, abilities, experiences and intelligences. The value delivered by human capital consists personal knowledge, creativities and skills. This reflected by employees performances and need to be considered as main source of intellectual capital in all organizations. For example, human capitals in higher education institution is lecturers with high qualifications and also many years of teaching experiences. However, there are challenges for organizations to manage all human capital carry out effectively. This is because in the operational institution employees need to innovate, implement and adapt to the constant change of environment. Therefore, human capital is the most dynamic form of intellectual capital because it allows companies to be flexible and could make immediate respond to the new challenges. Structural Capital Next, structural capital also considered as components of intellectual capital. Structural capital is referred as the intangible assets of a company. It is important in higher education institutes which provides the supportive infrastructure, databases and processes for coordinating work and transforming the knowledge into product services. This included leaderships, strategies and cultures, brand images of an organization, unique capabilities, proprietary tools and data of an organization. Also, structural capital will provide a better working and learning conditions. It helps to increase an individuals knowledge in the higher education environment. In fact, structural capital will still remain although old staffs, lecturers and students left and the new one join in from time to time. Relational Capital Furthermore, relational capital is a valuable asset that represent own and develop relationship by organization through the business with their clients, potential customers, partners, suppliers and staffs. The institution constantly exchange knowledge with each other through the marketing channels and develop awareness on clients needs and wants. In higher education institution, lectures and staffs also required to build good relationship with others which exchange teaching methods and ideas. Thus, relational capital is one of the significant intellectual capital that cannot be left out. Reason to Measure Intellectual Capital in a Higher Education Institution Intellectual capital is a need to measure in a higher education institution. This is because of the transparency of education institution should be increased, the pressure of ranking lists between universities, and the strengthening of links between universities and industries (Amir. n.d). The first reason of intellectual capital should be measure in higher education institution is to increase transparency of higher educations structures. In a knowledge-based society, information is easily to be collected through our fingertips by serving internet. Students which are the main stakeholders of universities do refer information about the courses that they are interested in. Gather it, analyze it, compare it and make the best decision. They compare the facilities, fees, campus, course structures and more. This is because a huge amount of funds is required to allocate by students for their further education. Therefore, it is important for universities or collages to have intellectual capital in increasing transparency for attracting funds in the competitive market. Furthermore, the pressure of ranking lists between universities is also one of the reason that intellectual capital should be measured in higher education institution. Ranking brings big value to universities that will greatly affect the demand of a university. A universitys reputation is based on it is how well known in the public and it is respected by the society or not. The reputation is built on the agreement of the universities performances, students results, social contributions, and services delivered. All these can be observed by public with the use of social media, news, official websites and more. Also, to maintain the high ranking, high educational institution should constant improve and apply new methods of learning and teaching. For instance, more and more education delivered through e-learning instead of physical textbooks. This will cause greater impact and it is a more interesting learning style. Therefore, the higher the ranking will represent a professional management and utilize effectively of their intellectual capitals. In addition, intellectual capital is important in strengthening of links between high education institutions and industries. High education institutions should deliver knowledge that is useful for students while entering their workplace. Common language should be created to facilitate a mutual relationship between academics and businesses. This is to increase students adaptability, and to decrease possible of culture shock. Lacking of skills and knowledge will be difficult for new graduates to merge into working environment, also might get phrase out by society. Some companies will give first choice to recruit graduates who are fully prepared with knowledge by looking at their certificate. Universities are similar to different airplanes which fly us to different careers, and certificates are like flight tickets which give us opportunities to enter famous companies for a better future. Thus, high education institutions should wisely allocate intellectual capital to add more value to their airplanes and flight tickets. In conclusion, intellectual capital should be measured in a higher education institution because it is important in increasing transparency of education institution, facing pressure of ranking lists between universities, and the strengthening of links between universities and industries. Universities and colleagues should be aware the importance of intellectual capital and constant measure the performances. INTELLECTUAL MEASUREMENTHUMAN CAPITALSTRUCTURAL CAPITALRELATIONAL CAPITAL EDUCATIONNumber of Experiences Lecturer and Tutor Lecturer and Tutors Level of Education Staff SkillsNumber of Classroom Quality of Facilities System and Program Cooperation with Other Institution Education Award from External RESEARCHNumber of Senior Researches Number of Research Produced by Lecturers Articles Published in Academic Extensions Journal Published Research Laboratories Bibliography ResourcesMembership in SocietyWays to Measure Intellectual Capital for a Higher Education Institution Table 1 Measurement of Intellectual Capital in Higher Education Institutes Intellectual Capital has now become a most importance assets in institutions which included higher education institution, this mainly because knowledge is their primary output and input that they provided to customer. Higher education institutes produce knowledge either through teaching or research. Intellectual capital in higher education institutes is formed from three main components which included human capital, structural capital and relational capital. Human Capital Measurement of human capital to institution is to have a good and better position to the future. There explain the achievements of research and training to inspire and benefit them. In the operation of the institution need to innovate, implement and adapt staff to charging the condition of the institution. Human capital in higher education institutes can be measured into two parts which is education part and research part. Education Human capital is the most dynamic form of intellectual capital because it allows institution to flexibly and quickly respond and easily to solve the new challenges. This is difficulties to manage and solve the problem because it depends retain lecturers or staffs and use personal institution administrative part such as lectures and staffs of the organization include their activities at the formal and informal. To show an institution is in good quality of educational field, the lecturers should have a good result in knowledge, teaching or graduated in a high level of education such as master. Management staffs by setting new rules and regulations to maintain the quality and attitudes of the institution. The institution inbreeding research from the staffs who were graduates of the institution and research spending per staff. For employees, they may have training per each employee in the institution to improve the services to the students. The institution should organize an attendance at seminars every 3 years once. This is to make sure all the workers of the institution (lectures, employees and presidents) to get the difference observation from the students and having some educational counter plans to make better performance. Research For the research part, human capital can be measured by number of research in a university. Universities are often keen to talk about their research, especially universities that have a higher ranked in the area. So, various number of researchers in a higher education institutes are necessarily important for producing research paper and report for the outsider. Researchers are combining their knowledge to come out with journals and articles for other people to get the knowledge. Therefore, universities that have experience researcher will improve the rank in the particular area. Structural capital Structural capital is the value created within the organization and it will remain in the institutes even if the employees had leave. According to Dian Indiyati, structural capital is an invisible knowledge correlative with the Tacit Knowledge that embraced the organization. Therefore, a higher education institutes should always measure the structural capital to ensure that they have provided a higher knowledge for the internal and external users. Education Structural capital of higher education institutes in term of education can be measured by few proceedings. The first measurement of structural capital is based on the number of lecture room and tutorial room. University should provide a good environment for students to study therefore, provided enough classrooms for students to study must be. Moreover, the capacity of lecturer room minimum should be accommodating 200 people. As for the capacity of tutorial room, it should at least accommodate 50 people in a room. The second measurement of structural capital would be the quality and number of the facilities and system program and technology that used by the university. The facilities of a higher education institutes included chair, table, air cone and more. For example, providing facilities by the university such as place tables and chairs around the corner of university so that students could study and discussion. Besides, advance system program and technology will improve teaching process and learning environment. For example, architectural students can draw their blue print by using universitys computer that exist blueprint software. Hence, it is important that structural capital must be measure in the higher education institution. Research Higher education institutes will get a higher grade and standard if lecturer or tutor were producing a number of qualities research finding and journal to the public. The numbers of journal and research that published will raise the personal reputation of the lecturer and university. While through publication of journal and research finding, the outsider can judge the quality and standard of the lecturer or university whether their performance and education are good or poor. Secondly, a higher education institutes should provide enough research laboratories and material for researchers to do research. As some of the higher education institution do not have their own research laboratories for their students and researchers. This will become impede for them to possess intellectual capital. Moreover, a university that have own bibliography research will help students to increases their knowledge while students facing problem. Relational Capital Relationship capital develops relationship by institution through the class with their students or staffs. Relational capital in higher education institutes can be measured into two parts which is education part and research part. Education The institution needs to constantly exchange their knowledge in the education channels with each other and to develop knowledge or awareness to their students needs. Lecturers and staffs of the higher education institution need to have a good relationship with other institution to exchange idea about education such as how to make students absorb information more easily, to perform better and to get good result in the examination. Furthermore, the relationship capital should be emphasized by institution among the students and staffs due to the satisfaction of the potential students will lead to the institution to perform in good or worse condition. Research Relational capital in research part can be measured by membership in the society. If the university is a membership in some society, they can obtain latest information and news about the society easily. It is a good source of information for researchers and students while they are doing their research and assignment. For example, if the university is the member of Health Physics Society membership, the students who study medical department such as doctor or nurse of the particular university might obtain the medicine information easily. How Intellectual Capital will Improve Performance in a Higher Education Institution After understand the meaning of the intellectual capital and also how to measure intellectual capital for a higher education institution, let us now explore how the intellectual capital will improve performance in a higher education institution. Human Capital The first intellectual capital is human capital which played the most important role in intellectual capital. Human capital is an individual who able skills and knowledge which most needed by organization. In detailed, organization will use the human capital based on their education, skills, knowledge, and working experiences. Therefore, not only the firm used the human capital but also a higher education institution. According to Nick Bontis, human capital plays an important role in improving the performance of higher education institution because it encourages new idea of innovation. For an illustration, students from the architecture course has to the idea of innovation when constructing a drawing of a building with their own creativity and what benefit will be given by the building to the people and its surrounding. Moreover, human capital also contains the intelligence of the institution member which will bring great effort in improving institution performance. For example, members in the institution work together with each other to finish a job effectively and efficiently in a given period of time shows that human capital has the ability to remind members about the importance of cooperation. When students get service from the institution, they will feel more satisfied because they get what they expect after paying for the institution fees. In addition, Wen-Min Lu had suggested that the main force, full-time teachers in higher education institution should engaged in research within an institution (Wen-Men Lu, 2012). This is said so because, a teacher with new external knowledge from research can help students to be more understanding with the specific subject when lecturer is explaining a chapter of a particular subject. Therefore, the lecturer must be an Ph. D. who have ability to teach students respect to the tutors. Structural Capital Structural capital, the intangible asset which supportive the human capital to function. Structural capital includes processes, HYPERLINK https//en.wikipedia.org/wiki/Patent o Patent patents, and HYPERLINK https//en.wikipedia.org/wiki/Trademark o Trademark trademarks, as well as the organizations image, HYPERLINK https//en.wikipedia.org/wiki/Organizational_structure o Organizational structure organization, HYPERLINK https//en.wikipedia.org/wiki/Information_system o Information system information system, and proprietary HYPERLINK https//en.wikipedia.org/wiki/Software o Software softwareand databases (Wikipedia). Firstly, structural capital will build capacity among students to solve the practical problems such as the topic that students dont understand. They can use the structural capital such as computer, proprietary HYPERLINK https//en.wikipedia.org/wiki/Software o Software software, databases and more to search data and knowledge. For instance, students will use the e-databases which belong to the library to objective accomplish their assignment. After research, they will obtain additional knowledgeable maybe useful when work in organization. Therefore, the higher education institution must improve their own capital for more effectively and efficiency. In fact, structural capital also has divided into three capital and one of the capital called innovation capital. Innovation capital includes protected commercial rights such as patents, copyrights and trademarks. Therefore in secondly, structural capital will create of patents and trademarks which will protecting brand of institution. For example, UTAR trademarks will give a recognizing to public about the reputation and education services. Also, public will be easily recognizing the particular higher education institution and create positive impression in people minds. Therefore, students will be willing to choose the particular higher education institution to be their first choice. Last but not least, the improvement of structural capital will also improve the studying conditions. If students study at the area with poor light, tables, and chairs, it will make students feel uncomfortable and cant focus to study. In opposition, if the higher education institution provided a high-quality studying conditions, not only students will focus but also improve student achievements because study at the cosying area. Hence, it shows the loyalty and satisfaction of the students and faculty member in connection with higher education institution performance. In conclusion, higher education institution must improve the structural capital so that can improve the performance of the higher education institution. In my opinion, higher education institution not just need to improve the structural capital and also must popularize the uses of structural capital. Relational Capital Relational capital meaning relation between the internal and external. Company develop relationships with external customers, vendors, and other important constituencies. For higher education institution, it develops relationships includes knowledge with organization, students, faculty member and researcher. Chen et al. (2005) defines relational capital as the main component of intellectual capital which help organization in creating market value. Firstly, relational capital will improve reputation of the higher education institution. Through cooperation with other international institution, there are more things can be solving. For example, students of University Tunku Abdul Rahman cooperation with students of Sunway University to discuss the social issues to solve the problem and to share the knowledge. Moreover, through this opportunity, both relational of higher education institution can be more closer and more opportunity to cooperate in the future. Kaplan and Norton (1996) argued that the relational capital emphasized the relationships among employees and customer. Thus, improving the relational between students and faculty member also will improve performances in a higher education institution. The good relation between students and faculty member will causes students more willing to learn and to study. Hence, it shows the loyalty and satisfaction of the students and lecturer in connection with higher education institution performance. According to Niti Chatterji and Ravi Kiran (2017), higher education institution should purpose new policies such as short-term and long-term international strategy to offer courses for international student. This is because it can keep competitive advantage feasibly and effectively. With this strategy, institution of higher education could cooperate with foreign university for student exchange opportunities and can adopt foreign universities culture to improve own institution operation. For example, hire world-class foreign researchers, and train international talent and their ability. Conclusion In overall, we knew that it is the impact of intellectual capital in education, economy and social. We hope that all the higher education institutions can spread the concept of intellectual capital that fully fulfil the mind and their though which usefully. References Alessandra, C., Cludio, R.G., and Roberto, L.R., (2016) et al. Redefining the Relationship between Intellectual Capital and Innovation The Mediating Role of Absorptive Capacity. BAR – Brazilian Administration Review, vol. 13, no. 4, 2016, doi10.1590/1807-7692bar2016150067. Antti, L., Harri, L., Yuzhuo, L., Kirsi, H., (2018). Re-Framing Education Export from the Perspective of Intellectual Capital Transfer. Journal of Studies in International Education. DOI 10.1177/1028315318773141. Atefeh, G., Fatemeh, K.E., Abbas, A.H., Zahra, R.G.N. Elaheh F., (2015). Identifying and ranking indicators of intellectual capital in higher educational institutions from perspective of faculty members a case study University of S and B. Journal of Scientific Research and Development 2 (3) 169-176, 2015. Chatterji, N., Kiran, R., (2017). Role of human and relational capital of universities as underpinnings of a knowledge economy A structural modelling perspective from north Indian universities.International Journal of Educational Development,56, 52-61. doi10.1016/j.ijedudev.2017.06.004 Dr. Ali A.A.Z. Suhaila, M.A., (2015). The Indicators of Measuring Intellectual Capital in Higher Education Institutions. Vol. 2, 83-97. Retrieved from file///C/Users/User/Documents/Assignment20Management20Accounting/ecf609ccba2715675d6fdc69ec301763cc39.pdf Fazlagic, A. Measuring the intellectual capital in a University. Retrieved from HYPERLINK http//www.oecd.org/education/imhe/35322785.pdf http//www.oecd.org/education/imhe/35322785.pdf Gonzalez-Loureiro, M. Antonio, M.T. Intellectual Capital in Public Universities The Performance – Oriented Approach. SSRN Electronic Journal, 2011, doi10.2139/ssrn.1896306. Indiyati, D., (2015). Intellectual Capital Development in Higher Education in Indonesia, IJABER, Vol. 13, No. 7 (2015) 6033-6051. Retrieved from file///C/Users/User/Documents/Assignment20Management20Accounting/81e2cf9f82c0e782dd35e26249fc0239ae90.pdf J. Augusto Felcio, Eduardo Couto Jorge Caiado, (2014). Human capital, social capital and organizational performance, Management Decision, Vol. 52 Issue 2, pp.350-364. Retrieved from HYPERLINK https//doi.org/10.1108/MD-04-2013-0260 https//doi.org/10.1108/MD-04-2013-0260 Prof. Dr. Abdul Ghafoor Awan and Kashif Saeed, (2015). Relationship between Intellectual Capital and Organizational Performance A case Study of Public Sector Universities in Southern Punjab-Pakistan. Journal of Resources Development and Management, Vol.9, no. 37, 38 and 39, 2015, doi Soraia B., Jos V., Vera T.V. Manuel C.B. (2016). Intellectual Capital and Performance in Higher Education Organizations. Retrieved from file///C/Users/User/Documents/Assignment20Management20Accounting/Intellectual20Capital20and20Performance20in20Higher20Education20Organizations.pdf International Journal of Theoretical and Applied Papers on Economic Modelling. doi10.1016/j.econmod.2012.03.021 Yolanda, R., Angel, T., Silvia, G. Recognition of intellectual capital importance in the university sector. International Journal of Business and Social Research (IJBSR), Volume -3, No.-4, April, 2013. Retrieved from file///C/Users/User/Documents/Assignment20Management20Accounting/document202.pdf Yolanda, R., Montserrat, M. Alba, M. (2017). Formulating and elaborating a model for the measurement of intellectual capital in Spanish public universities. International Review of Administrative Sciences. DOI 10.1177/0020852315575168. Appendixes INTELLECTUAL MEASUREMENTHUMAN CAPITALSTRUCTURAL CAPITALRELATIONAL CAPITAL EDUCATIONNumber of Experiences Lecturer and Tutor Lecturer and Tutors Level of Education Staff SkillsNumber of Classroom Quality of Facilities System and Program Cooperation with Other Institution Education Award from External RESEARCHNumber of Senior Researches Number of Research Produced by Lecturers Articles Published in Academic Extensions Journal Published Research Laboratories Bibliography ResourcesMembership in Society Table 1 Measurement of Intellectual Capital in Higher Education Institutes PAGE MERGEFORMAT 2 Intellectual Capital Human Capital Structural Capital Relational Capital IXgw7HYjOat2FZn O d y


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