BUS497ABH Spring 2010 Chapter 4 Review Questions There is only ONE correct answer for each question. True/False: 1. Tacit knowledge can only be shared and used with the consent of the individual with the knowledge. 2. The more reliance a firm has on intellectual capital the closer its book value will be to its market value. 3. Social capital is a better source of sustainable competitive advantage than human capital. 4. Explicit knowledge is codified, documented, easily reproduced, and widely distributed. 5. The market value of a firm is equal to its total revenue generated by providing goods and services to the market. 6. Technology can increase intellectual capital by codifying knowledge. 7. The text suggests that talented professionals are typically most concerned about financial rewards. Money is the top reason why such employees take and leave jobs. 8. Core competencies form the basis of a company's competitive advantage. 9. Social capital is found in the knowledge, skills, and abilities of individual employees. 10. The first step in the process of building superior human capital is input control: attracting and selecting the right people. Multiple Choice. 11. Employees will be able to obtain a higher level of profits they generate (relative to the firm) if ______ A. suppliers are loyal to the firm. B. the cost to the firm of replacing them is high. C. their expertise is firm-specific. D. the firm's resources are path dependent. E. the firm has a highly differentiated strategy. 12. The use of information technology (e.g., e-mail) has increased in recent years in many organizations. This has helped to ______. A. increase social capital. B. decrease social capital. C. restrict social network growth. D. create smaller social networks. E. All of the above. 13. When firms invest in individual employee's abilities and skills, they are developing ____ within the firm. A) physical capital B) human capital C) trust D) social capital E) emotional intelligence 14. To create sustainable competitive advantage, strategy should be based on ______. A) tangible resources and assets. B) intangible resources and organizational capabilities. C) inputs and outputs. D) control and inertia. E) tacit knowledge and tangible rewards. 15. The text discusses three areas a firm must be concerned with in order to keep their best and brightest employees from leaving. These include all of the following except_____. A) hiring/selecting. B) sorting/absorbing. C) developing. D) retaining. E) rewarding 16. Firms retain their human capital _____. A) by hiring for attitude and training for skills B) through leadership development programs. C) by using 3600 evaluation methods. D) by codifying tacit knowledge. F) with tangible and intangible rewards. 17. Which of the following provides evidence that intellectual capital is an important source of value? A) Market value exceeds book value B) Book value exceeds market value C) The mobility of labor D) The mobility of capital E) The rapid pace of technology development 18. The most important factors in determining the success of a firm’s strategy are ______ A. the alignment of the strategy with its operating environment. B. its ability to satisfy its stakeholders. C. the effectiveness of its analytical and decision processes. D. a good corporate governance process. E. the willingness and ability of its employees to support the strategy. 19. Management has to meet organizational goals through employees. The tension between the individual and the organization can be resolved through _____ A. shared values. B. high salaries. C. core competencies. D. human capital. E. management challenges. 20. Which of the following provides evidence that intellectual capital is an important source of value? A. Market value exceeds book value B. Book value exceeds market value C. The mobility of labor D. The mobility of capital E. The rapid pace of technology development 21. As the competitive environment changes, strategic management must focus on different aspects of the organization. In the modern economy, management has moved from focusing on _____. A. intangible resources to tangible resources. B. tangible resources to intangible resources. C. working capital to fixed capital. D. fixed capital to working capital. 22. Human capital includes _____. A. the individual capabilities, knowledge, and skills of employees. B. the relationships between people in an organization. C. organizational culture. D. the collective tacit and explicit knowledge in the firm. E. All of the above. 23. Social capital is a source of strength to many firms. Firms leverage their social capital in an effort to create competitive advantages. A firm's social capital is based on ______. A. individual employee's skills and abilities. B. the relationships among a firm's employees. C. a firm's allocation of financial resources. D. core competencies. E. the skills of management. 24. Generally, knowledge workers are most likely to stay with an organization if _______. A. the employer provides high salaries to its technology professionals. B. the organization's values align with the employee's values. C. the firm is in a high tech industry. D. the mission and values of the organization change often. E. employees work harder, work longer, and get paid less. 25. Among the downsides of social capital is/are: _____. A. high social capital may breed a tendency to not question shared beliefs. B. socialization processes may become expensive. C. individuals may become less willing to collaborate on joint projects. D. A and B E. All of the above 26. Strategy should be based on ______ to create sustainable competitive advantage. A. tangible resources and assets B. intangible resources and organizational capabilities C. inputs and outputs D. control and inertia E. the vision and mission 27. In the modern corporation, intellectual capital is created through _____. A. vision, mission, and values. B. culture C. effective leadership D. employee diversity E. All of the above.