Using intellectual capital as a strategic tool for non-profit organisations

Abstract

Despite the ongoing development of strategic management research over the last few decades, there is a relative shortfall in the state of knowledge on strategy in the nonprofit sector. Non-profit organisations (NPOs) are distinct from for-profit organisations as they invest in people rather than in profits. For-profit strategic management techniques that are brought to NPOs are often criticised for being ineffective in the sector. Consequently, the need for competent strategic management in NPOs is urgently needed. One way of addressing this shortfall is to examine strategic management in NPOs through the lens of intellectual capital (IC). Encompassing three primary interrelated components named as human capital, structural capital and relational capital, IC promotes the creativity possessed by all organisational members to account for an organisation’s future non-financial prospects. This paper argues that IC allows NPOs to keep their values, identity and distinctiveness in the non-profit sector. Consequently, value would be added to strategic decision-making processes in NPOs.