Relational capital

Relational capital is one of the three primary components of intellectual capital, and is the value inherent in a company's relationships with its customers, vendors, and other important constituencies.

Overview

Relational capital is defined as all relationships - market relationships, power relationships and cooperation - established between firms, institutions and people, which stem from a strong sense of belonging and a highly developed capacity of cooperation typical of culturally similar people and institutions. There are major conceptual differences between industrial and regional economists in their views towards relational capital. There have been research studies applying quantitative, empirical, and econometric techniques in an effort to verify the existence of relational capital and its importance to the innovation activity in firms. Proxies are found to represent the channels through which knowledge develops at the local level and therefore indirectly of relational capital.[1]

Relational Capital is defined as all relationships - market relationships, power relationships and cooperation - established between firms, institutions and people, which stem from a strong sense of belonging and a highly developed capacity of cooperation typical of culturally similar people and institutions. The main aims of the paper are twofold. The first is to underline the major conceptual differences between industrial and regional economists. The second is to provide a quantitative empirical approach, using econometric techniques, to verify the existence and importance of relational capital on the innovation activity of firms. Proxies are found to represent the channels through which local knowledge develops at the local level and therefore indirectly of relational capital. The different regional, sectoral and firm characteristics are also analysed to understand whether they influence the role relational capital has on innovation. It is indeed reasonable to expect that relational capital will play a different role in different regional, sectoral and firm's contexts.[2]

Leif Edvinsson, Director of Intellectual capital at Skandia,[3] may be considered the father of current thought on Intellectual Capital. Edvinsson and Malone (1997) and Brooking (1996) are pioneers in working with intellectual capital.[4] Customer capital is the strength and loyalty of customer relations. Customer satisfaction, repeat business, financial well-being, and price sensitivity may be used as indicators of customer capital.[5] The notion that customer capital is separate from human and structural capital indicates its central importance to an organization’s worth. The relationship with customers is distinct from other relationships either within or outside an organization. Relational Capital or Customer Capital is the strength and loyalty of customer relationships.[6][7]

See also

References

  1. ↑ Capello, Roberta; Alessandra Faggian (2005), "Collective learning and relational capital in local innovation processes", Regional studies 39 (1): 75–87 Cite uses deprecated parameter |coauthor= (help)
  2. ↑ Capello, Roberta, and Alessandra Faggian. "Collective learning and relational capital in local innovation processes." Regional studies 39.1 (2005): 75-87.M
  3. ↑ Skandia (1994), "Visualizing Intellectual capital in Skandia", Supplement to Skandia’s 1994 Annual Report.
  4. ↑ Luthy, David H. "Intellectual capital and its measurement." Proceedings of the Asian Pacific Interdisciplinary Research in Accounting Conference (APIRA), Osaka, Japan. Cambridge University Press, 1998. p. 4
  5. ↑ Luthy, David H. "Intellectual capital and its measurement." Proceedings of the Asian Pacific Interdisciplinary Research in Accounting Conference (APIRA), Osaka, Japan. Cambridge University Press, 1998., p. 5
  6. ↑ Edvinsson, Leif and Michael S. Malone (1997), Intellectual Capital: Realizing Your Company’s True Value by Finding Its Hidden Roots, HarperCollins Publishers, Inc., New York.
  7. ↑ Luthy, David H. "Intellectual capital and its measurement." Proceedings of the Asian Pacific Interdisciplinary Research in Accounting Conference (APIRA), Osaka, Japan. Cambridge University Press, 1998.
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