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 Assessing Intellectual Capital


See the concepts of intellectual capital, human capital and social capital, all of which are intangible assets that a company such as eBay needs to have in order to compete successfully. Intellectual capital is a measure of the value of a firm’s intangible assets, its reputation, employee loyalty and commitment, customer relationships, company values, brand names, and the experience and skills of employees. Human capital involves the individual capabilities, knowledge, skills, and experience of the company’s employees and managers. Social capital is a function of the network of relationships that individuals have throughout the organization. If employees are working effectively in teams, across business divisions, and sharing their knowledge and learning from each other, not only will they be more likely to add value to the firm, but they also will be less likely to leave the organization. This applies to strategic alliance partners as well.


Both Meg Whitman and John Donahoe were examples of the dedication, experience and skills of eBay’s intellectual capital. Since eBay was in the knowledge business, the capabilities of its employees and managers were essential assets. However, especially in Asia, social capital was critical. Think of social networks like marketing by word-of-mouth. As eBay founder Omidyar said, eBay was envisioned as a community built on commerce, but sustained by trust, and inspired by opportunity. The social network of buyers, sellers, browsers, technical support gurus, managers, corporate employees, local partners, all had to see the same opportunity, and trust that commerce would happen.


It appeared possible that eBay had not yet understood how to leverage social capital in Asia. A telling comment was rival Alibaba.com’s CEO Jack Ma’s observation that eBay moved too quickly to replace local management with foreigners, and tried to create a market through spending rather than through a ground up process of networked local involvement.


Contrasting eBay with Yahoo, when Yahoo chose to partner with Taobao and Gmarket, both Taobao and GMarket had an in-depth understanding of the Asian culture and local market needs. They allowed users to conveniently interact with each other by offering alternate communication channels such as instant messaging and voice-over-IP (VOP).  This enabled sellers to respond to buyer questions more quickly, completing the transaction in a timelier manner. Both companies also offered fixed pricing at an early stage which allowed buyers to purchase items without having to spend time on negotiations. Despite Yahoo’s involvement with both companies, local management control was retained allowing Taobao and GMarket to meet local market needs.

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