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Valuing corporate knowledge and intangible assets: some general principles
Author(s) -
Contractor Farok J.
Publication year - 2000
Publication title -
knowledge and process management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.341
H-Index - 44
eISSN - 1099-1441
pISSN - 1092-4604
DOI - 10.1002/1099-1441(200010/12)7:4<242::aid-kpm101>3.0.co;2-1
Subject(s) - licensee , valuation (finance) , business , usable , intellectual property , intangible good , book value , industrial organization , knowledge management , outsourcing , marketing , license , economics , microeconomics , computer science , accounting , earnings , world wide web , operating system
This paper provides a general set of principles, organized into a usable framework, for the valuation of intangible assets as well as corporate knowledge, in the act of transferring, sharing, selling, or licensing it from one company to another. It provides benchmarks for valuation to both seller and acquirer, to licensor and licensee, and to both partners in a corporate alliance. Part I of the paper classifies the nature and attributes of different kinds of corporate knowledge. Part II focuses on the valuation framework. Intangible assets, whether registered intellectual property such as brands, patents, copyrights, or whether they be ‘knowhow’, or general corporate expertise, are increasingly separable from their organizational context, and can be sold or shared with another firm—for compensation. As such activity increases—as part of a general trend towards outsourcing and modularization of business functions, aided by codification of previously tacit or intuitive knowledge—placing a money value on a ‘knowledge package’ is a crucial managerial function. Many of the principles presented in this paper can also be used when the same firm makes its own investments in other markets, by transferring corporate knowledge to its own subsidiary. The various benchmarks and criteria found in the literature are here, for the first time, presented in a comprehensive valuation framework, eminently usable by managers and negotiators. Copyright © 2000 John Wiley & Sons, Ltd.