Project Outline

In the last decades, China has experienced rapid economic growth and is nowadays among the world’s largest recipients of foreign direct investment. The country is presently transforming from a mere manufacturing base to a knowledge based economy. In this context, the competitive advantage of Chinese and foreign companies alike increasingly stems from intangible capital.

Intangible capital comprises non-physical sources of future economic benefit. In order to develop and increase the value of intangible capital, knowledge flows and exchanges are essential. In terms of the management of intangible capital, a knowledge trade-off unfolds. On the one hand knowledge has to be exchanged to increase the company’s competitive advantage, on the other hand knowledge should be protected in order to sustain this competitive advantage. This general tension particularly manifests in the contemporary Chinese context with the fast growing importance of intangible capital and, at the same time, the numerous cases of intellectual property rights infringements.

As intangible capital not only consists of intellectual property, it is advisable to differentiate into the three categories of intellectual, human, and social capital. Intellectual capital includes all immaterial resources that can be considered as assets with some kind of assignable capitalized value, with intellectual property in its most familiar form. In contrast, human capital is embodied in the skills and experience of employees. Whereas human capital is still assignable to specific employees or groups of employees, social capital is embodied in relationships and networks of people with shared norms, values and understandings.     

Furthermore, intangible capital is not confined to explicit knowledge, which can be objectified via articulation and codification, but consists of implicit knowledge to a large extent. Implicit knowledge is strongly subjective and difficult to articulate or codify. Although – for instance – intellectual property is rather explicit, the human capital needed for the application of sensitive technical data is largely implicit and might develop within groups of experts, thereby forming interpersonal networks which in turn enhance social capital. Also, in the course of closer cooperation with suppliers and customers, boundaries between organizations are blurring, which leads to increased exchanges and development of explicit and implicit knowledge. As such, different categories and types of intangible capital are strongly interlinked and embedded in a specific organizational, social and cultural context. This unique combination might constitute a company’s competitive advantage which is rather difficult to transfer or imitate.

Since July 2008 the three-year research project “Intellectual property in Sino-German cooperation“, funded by the Federal Ministry of Education and Research, scrutinizes the management of intellectual property and knowledge in German companies in China. In the first research phase, the management of company secrets and other valuable information predominantly in terms of protection measures has been explored. In short, the findings revealed a two-fold strategy generally pursued by the interviewed companies: 1) controlled handling of explicit knowledge, and 2) development of implicit knowledge (for further information please refer to Müller, Constanze; Schädler, Monika: “Restriktion und Entwicklung wertvollen Wissens: Umgang mit Unternehmensgeheimnissen in China”, in: ChinaContact 11/2009, pp. 46-48; www.ip-china.de/resources). As these initial findings indicate the interrelation and importance of both explicit and implicit knowledge, in the current research phase, the knowledge of a company is put into the broader perspective of intangible capital. Thereby, the project aims at providing practice-oriented suggestions for balancing the protection and exchange of different, largely intertwined types and categories of intangible capital. In the academic field, this research contributes in an integrative manner to the – to date – rather separately conducted debates on the topic of intellectual property on the one hand and knowledge management on the other hand.

In addition to the review of relevant literature, research in the form of in-depth interviews and discussions in Germany and China in different companies and institutions like the German Chamber of Commerce in Beijing as well as academic partners – the University of Cologne and the Shanghai Academy of Social Sciences – have been conducted. The research process is continuously reported on www.ip-china.de as well as by regular newsletters. Apart from the above mentioned article in ChinaContact, the initial findings will be published in an upcoming collection of essays, edited and partly authored by the project team, and supplemented by contributions of external authors. Future results will be presented at various events in Germany and China and published in reviewed journals. Bremen University of Applied Sciences presents the findings in relevant lectures. Bachelor theses in cooperation with interested companies are assigned and a doctoral thesis in cooperation with the Department of Modern China Studies at University of Cologne is integrated in the research project.