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value for the owners of the firm. The valuation and choice of new investments for a

firm is more complicated than the capital market since within the firm there is no market for

assets. With no market to provide a “fair” estimate, managers must estimate value (Phelan,

1997).According to Simon (Beaver, 2002):

- We do not have perfect knowledge about all future states of the world;

- We do not possess the cognitive skill to determine appropriate actions for the states which

- We can perceive; and We cannot foresee all the possible consequences of actions we do

eventually choose to take.

The use of real option theory provides one solution to our human inability to forecast complex

or distant future events accurately (Phelan, 1997). The real options approach recognizes that the

boundaries of firms are fluid with respect to adopting different kinds of projects, and attempts to

value the consequences of their possible adoption (Johnson et al., 2001).

4.2 Dimensions of Intellectual Capital Measuring

Intangible resources (static notion) are the stock or current value of a given intangible

at a certain moment in time. They may or may not be expressed in financial terms.
Intangible activities (dynamic notion) imply an allocation of resources aimed at:

a) Developing internally or acquiring new intangible resources,

b) Increasing the value of existing ones,

c) Evaluating and monitoring the results of the former two activities.

At the top of the breakdown, we find a set of critical intangibles that might help maintain or
enhance a firm’s competitive advantage or attain its strategic objectives. These critical intangibles

are abilities the firm has or needs to develop.

By : Enas Mekki Managing Intellectual & Human Capital