The conceptual connections between intellectual capital, strategic human resource management and human resource management

Abstract

Through an analysis of the current literature of intellectual capital (IC) and linking it to strategic human resource management (SHRM) and human resource management (HRM), this paper offers a viewpoint of how IC can contribute to SHRM processes and HRM practices. IC represents the collective knowledge that is embedded in the personnel, organisational routines and network relationships of an organisation. When the level of IC is increased, an organisation likely enhances its ability to make better decisions for outstanding organisational performance. Thus, IC is an important resource that organisations need to develop to gain sustained competitive advantage. Very little research has investigated the link between IC, SHRM and HRM. This paper takes the first step to develop a theoretical connection between the three concepts. It demonstrates that IC can be conceptualised as a holistic partner to both HRM and SHRM. A model illustrates the theoretical connections between IC, SHRM and HRM. This paper outlines how IC affects the SHRM processes and HRM practices and suggests directions for future research. Through a thorough understanding of the effect of IC on an organisation’s decision making process in particular SHRM, an organisation can better situate themselves to take advantage of the knowledge-based economy.