Organizational capital is the ability of an organization to mobilize and sustain the process of change required to execute strategy. Working practices such as Just In Time, accounts payable processes and Total Quality Management contribute to organizational capital. Buildings, equipment and vehicles are considered as capital assets which businesses buy to receive a financial return on the investment. Similarly, if a business implements new working practices or administrative procedures, its aim is to increase efficiency to receive a financial return.
Organizational capital can be thought of as any procedures according to which cooperating individuals perform tasks; it can include work techniques, accounting practices, and management procedures.
Read more about Organizational Capital: Adam Smith and The Division of Labor, Breaking Bottlenecks, Determining The Value of Organizational Capital, Research
Famous quotes containing the word capital:
“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”
—Abraham Lincoln (1809–1865)