I. Executive Summary:
For the past several decades, due to myriad factors, the economy has transformed in such a way that competitive advantage and, in turn, the sustainability of that advantage is increasingly derived from intellectual capital rather than from the control or deployment of physical and financial assets. It has become difficult for firms to gauge how their human capital translates to intellectual capital. Moreover, the global nature of business today has resulted in the decentralization and diversification of firms into smaller units that make it more difficult for knowledge workers to “climb the corporate ladder” within a single organization. A consequence of this shift in organizational structure is the emergence of the “Boundaryless-career.” The Boundaryless career is one in which individuals validate their career success based upon factors such as personal satisfaction and marketability rather than traditional metrics for professional success such as promotions and pay raises. The convergence of the “knowledge economy” and the “Boundaryless-career” has created new challenges for organizations as they must attract, retain and develop employees who are less likely to invest their own time and effort into cultivating a traditional “organizational career”, making the cultivation of intellectual capital progressively more challenging.
In order for firms to remain successful, managers and Human Resource professionals must learn to adapt to these emerging conditions by proactively managing human capital within the context of the “Boundaryless-career.” Despite the challenges that this new paradigm poses, relatively minor organizational changes may provide an avenue for firms to thrive despite the growing fluidity with which workers move between roles and firms.
II. The Knowledge Economy: The knowledge economy, as defined by Powell and Snellman is composed of “…production and services based on knowledge-intensive activities that contribute to an accelerated pace of technological and scientific advance as well as equally rapid obsolescence.”1 During the latter half of the twentieth century, developed nations began to shift towards service and information driven economies, largely leaving manufacturing behind.2 Additionally, over time, manufactured products and even services themselves have become embedded with “knowledge.” For example, “A new car today is less and less the product of metal fabrication and more a smart machine that uses computer technology to integrate safety, emissions, entertainment, and performance.”3 Products and services that were once simply functions of manufacturing capacity are now just as much functions of the knowledge that went into their development, delivery to consumers and eventual service. This is the basis of the “knowledge economy.”
Thus, even as firms outsource and offshore the very activities that were once the basis of developed economies the world over, those processes are nonetheless still functions of knowledge and information. That knowledge and information represents a firm’s “intellectual capital.” Intellectual capital is the collective knowledge accumulated by a firm from which value is created. More and more, intellectual capital is the source competitive advantage. This growing importance of intellectual capital throughout the latter half of the twentieth century is evident in the following chart, which shows the rapid increase in the number of patents (a proxy measure of the degree to which firms are seeking to protect their intellectual assets) beginning in the 1960’s. 4
The implications of this paradigm shift on worker’s behavior with respect to firm-loyalty are profound. In an environment such as this, not only is it important for firms to develop and protect their intellectual capital, it is necessary for workers to focus on developing their own human and social capital as a means to