Accounting standards prohibit internally created knowledge and organizational capital from being disclosed on firm balance sheets. As a result, balance sheets exhibit downward biases that have become ...exacerbated by increasing levels of intangible investments. To offset these biases, researchers must estimate the value of these off-balance sheet intangibles by capitalizing prior flows of research and development (R&D) and selling, general, and administrative (SG&A). In doing so, a set of capitalization parameters must be assumed (i.e., the R&D depreciation rate and the fraction of SG&A that represents a long-lived asset). We estimate these parameters using market prices from firm exits and use them to capitalize intangibles for a comprehensive panel of firms from 1978 to 2017. We then use a series of validation tests to examine the performance of our intangible capital stocks versus those developed from commonly used parameters. On average, our estimates of intangible capital are 15% smaller than estimates from status quo parameters while exhibiting larger variation across industry. Intangible capital stocks derived from exit price parameters outperform existing measures when explaining market enterprise values and identifying human capital risk. Adjusting book values with exit-based intangible capital stocks markedly attenuates well-documented biases in market-to-book and return on equity ratios while increasing the precision of the high-minus-low asset pricing factor. We conclude that our capitalization parameters create intangible stocks that perform equal to or better than status quo measures in various applications. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2021.02058 .
Research summary: A firm's strategic investments in knowledge-based assets through research and development (R&D) can generate economic rents for the firm, and thus are expected to affect positively ...a firm's financial performance. However, weak protection of minority shareholders, weak property rights, and ineffective law enforcement can allow those rents to be appropriated disproportionately by a firm's powerful insiders such as large owners and top managers. Recent data on Chinese publicly listed firms during 2007-2012 were used to demonstrate that the expected positive relationship between knowledge assets and performance is weaker in transition economies when a firm fs ownership is highly concentrated and its managers have wide discretion. Moreover, rent appropriation by insiders was shown to vary with the levels of institutional development in which a firm operates. Managerial summary: Investing in knowledge-based intangible assets (e.g., R&D) is an important value-creation activity for the firm. Such value creation process can be facilitated by large shareholders and powerful managers, who can then take an advantageous position with critical insider information on these valuable intangible assets and therefore enjoy more opportunities to appropriate more value from them, leaving less value for other minority shareholders. The value distribution becomes increasingly skewed against minority shareholders when the institutional protection for them is weak. Indeed, in a large sample of Chinese publicly listed firms, we found that R&D investment becomes less positively associated with firm financial performance with the presence of large shareholders, high managerial equity, or CEO/Chairman duality, especially in Chinese provinces with weak institutional development.
Based on intellectual capital models and reports, companies identify and define Organizational Identity and Corporate Reputation as strategic intangible assets capable of generating sustainable ...competitive advantages. From an interpretative perspective, Organizational Identity is the result of a social process of self-description and it reflects internal stakeholders' general agreement on who they are as an organization. From a perceptive paradigm, Corporate Reputation is the result of a social process that occurs on the external stakeholders' level and it reflects their perception on what the organization assumes to be. The authors propose a theoretical and empirical analysis, based on the case study strategy, of the relationships and differences between these two concepts. They aim to highlight the variables that are critical for managing a company's Intellectual Capital focusing on the social processes of developing the Organizational Identity. The result is the identification of cultural intangible assets that practically represent the memes, that is, ideas, style or behavior that spread from person to person in an organization.
There is widespread agreement in the literature that intangible assets, particularly those of a relational nature, are key determinants of firm performance. Scholars also acknowledge that stakeholder ...relationships and innovation are inextricably connected. Conceptual support for these linkages is found in established management theories and evidence from empirical research. However, this research has been handicapped by various data limitations. The purpose of this study is to introduce and evaluate a new dataset that overcomes many of those limitations, allowing for a more comprehensive examination of the complex interplay of relationship-based assets, innovation, and financial performance. Based on this review, we conclude that the Drucker system of measuring customer satisfaction, employee satisfaction/engagement, innovation, and corporate social performance exhibits sufficient content and other types of validity to be suitable for academic research involving this set of intangibles.
Understanding of the value and economic contribution of intangible assets is hampered by measurement challenges, which stem from the characteristics of intangibles and weaknesses in survey design. We ...characterize these challenges with four “F words”—forgotten, fuzzy, framing, and frequency. We establish these characteristics theoretically, with reference to the survey design literature. We then provide a summary of a range of official business surveys that capture data on intangible assets in the UK. Using these sources, we test the (in)consistency and quality of data on intangibles collected through business surveys in the UK, using a range of data sources and microdata linkage. We draw on this research to propose modifications to surveys on intangible investment that might yield superior data in future.
This paper draws on the social and behavioral sciences in an endeavor to specify the nature and microfoundations of the capabilities necessary to sustain superior enterprise performance in an open ...economy with rapid innovation and globally dispersed sources of invention, innovation, and manufacturing capability. Dynamic capabilities enable business enterprises to create, deploy, and protect the intangible assets that support superior long- run business performance. The microfoundations of dynamic capabilities--the distinct skills, processes, procedures, organizational structures, decision rules, and disciplines--which undergird enterprise-level sensing, seizing, and reconfiguring capacities are difficult to develop and deploy. Enterprises with strong dynamic capabilities are intensely entrepreneurial. They not only adapt to business ecosystems, but also shape them through innovation and through collaboration with other enterprises, entities, and institutions. The framework advanced can help scholars understand the foundations of long-run enterprise success while helping managers delineate relevant strategic considerations and the priorities they must adopt to enhance enterprise performance and escape the zero profit tendency associated with operating in markets open to global competition.
•Firms’ agility is a function of county/industry level of digitalization and investments in intangible assets.•Family firms are more agile in relation to non-family firms.•Private and public policy ...support must be coordinated to national/industry digital capacity building.•Family firms must invest in own-organizational capital and human capital to increase agility.•Non-family firms must invest in human capital and desing, creation of new product development to raise agility.
Firm agility today is not a factor of competitiveness or success but a survival instrument on the market. Disruptive innovations and technological advancement, together with digitalization, change the role of firm agility. We show that the link between the national/industry level of digitalization and firm agility is statistically robust and essential. We study the link on data from 2009 to 2018 in fifteen EU advanced economies using dynamic panel data modeling. The digitalization impact level differs across firms by ownership type (family to non-family firms). Agility in family firms is strongly influenced by the national/industry level of digitization and investments in intangible assets (particularly the creation of own-organizational capital). Non-family firms' agility depends on investment in human capital, design, and creation of new products and minorly on national/industry digitalization level. Digitalization and gross investments in intangible assets can increase family firm agility exponentially (elasticity coefficient of 85 for-profit margins). Policymakers using policy supporting national/industry digitalization can boost economic growth significantly. Managers and practitioners targeting specific investments in intangible assets can improve and increase firm agility to large extents.
In this study, we examine whether investments in fixed (identifiable) intangible assets and tangible assets are sensitive to cash flow and the extent to which this sensitivity differs for firms with ...different levels of financial constraints. Using both UK private and public firms' data, our overall analysis shows strong positive (negative) effects of cash flow on intangible assets (tangible assets) investments. When we split the data on the basis of listing status, we observe that cash flow is positively (negatively) and significantly related to intangible assets (tangible assets) investments for private firms but not so for public firms. In addition, we further observe that both public and private firms' investments follow a similar pattern when we split our data based on the availability of internal funds. Moreover, we also find that the sensitivity of investment (identifiable intangible assets) to cash flow is higher for young and large private firms but lower for small and old ones. Our results remain similar to other econometric specifications, which account for possible endogeneity issues.
Objective: This paper presents a systematic bibliometric analysis of the literature on intangible valuation, especially environmental intangibles, to analyze the relevance of the subject, the state ...of scientific knowledge, and research opportunities. Theoretical Framework: Intangible assets are relevant for companies because they can contribute to higher company valuation. Some research studies have successfully classified the different types of intangible assets and developed models to value companies that include them. However, diverse results have not allowed reaching a consensus on their use in company valuation. Method: The Knowledge Development Process-Constructivist (ProKnow-C) methodology was used; articles on intangible assets were analyzed with the VOSViewer® software, while an analysis of the articles for environmental assets was performed with the lens.org platform. Results and Discussion: It was determined that most intangible asset valuation models are empirical and use regressions to perform the valuation. Intellectual capital is one of the intangible assets that has been proposed by more models. Research Implications: Some opportunities for future research on this topic are identified; these are adjusted to models that consider the main environmental assets and are easily applied by companies.
Objetivo: Este trabajo presenta un análisis bibliométrico sistemático de la literatura sobre valoración de intangibles, especialmente intangibles medioambientales, para analizar la relevancia del tema, el estado del conocimiento científico y las oportunidades de investigación. Marco Teórico: Los activos intangibles son relevantes para las empresas porque pueden contribuir a aumentar su valoración. Algunas investigaciones han clasificado con éxito los distintos tipos de activos intangibles y han desarrollado modelos para valorar empresas que los incluyen. Sin embargo, la diversidad de resultados no ha permitido alcanzar un consenso sobre su utilización en la valoración de empresas. Método: Se utilizó la metodología del Proceso de Desarrollo del Conocimiento-Constructivista (ProKnow-C); los artículos sobre activos intangibles se analizaron con el software VOSViewer®, mientras que el análisis de los artículos sobre activos medioambientales se realizó con la plataforma lens.org. Resultados y Discusión: Se determinó que la mayoría de los modelos de valoración de activos intangibles son empíricos y utilizan regresiones para realizar la valoración. El capital intelectual es uno de los activos intangibles que ha sido propuesto por más modelos. Implicaciones de la investigación: Se identifican algunas oportunidades para futuras investigaciones sobre este tema, que se ajustan a modelos que consideren los principales activos del entorno y sean de fácil aplicación por las empresas.
Objetivo: Este artigo apresenta uma análise bibliométrica sistemática da literatura sobre a valorização dos intangíveis, em especial os intangíveis ambientais, para analisar a relevância do tema, o estado do conhecimento científico e as oportunidades de investigação. Referencial Teórico: Os activos intangíveis são relevantes para as empresas porque podem contribuir para uma maior valorização da empresa. Alguns estudos classificaram com sucesso os diferentes tipos de activos intangíveis e desenvolveram modelos de avaliação de empresas que os incluem. No entanto, a diversidade de resultados não tem permitido chegar a um consenso sobre a sua utilização na avaliação de empresas. Método: Foi utilizada a metodologia Knowledge Development Process-Constructivist (ProKnow-C); os artigos sobre ativos intangíveis foram analisados com o software VOSViewer®, enquanto a análise dos artigos sobre ativos ambientais foi realizada com a plataforma lens.org. Resultados e Discussão: Verificou-se que a maioria dos modelos de avaliação de activos intangíveis são empíricos e utilizam regressões para efetuar a avaliação. O capital intelectual é um dos activos intangíveis que tem sido proposto por mais modelos. Implicações da Pesquisa: Por fim, identificam-se algumas oportunidades de investigação futura sobre esta temática, ajustadas a modelos que considerem os principais activos ambientais e que sejam de fácil aplicação pelas empresas.
Intellectual monopoly in global value chains Durand, Cédric; Milberg, Wiliiam
Review of international political economy : RIPE,
03/2020, Letnik:
27, Številka:
2
Journal Article
Recenzirano
Odprti dostop
This paper analyses the role of intangibles in global value chains (GVCs). We find that the intensification of the use of intangible assets within these chains has created new sources of market ...power. The analysis builds the notion of Intellectual Monopoly Capitalism, where government protections of intellectual property have the effect of locking in the monopoly power from intangible asset creation. We extend it to 'information rents' arising from the presence of scale economies and network externalities associated with the production of intangible assets. GVC integration requires a dense circulation of information flows to communicate specifications, standards, technical know-how in addition to costs and other operational details. The expansion of GVC trade is thus linked to a rising mobilization and circulation of intangibles and the monopoly dynamics arising from intangibles need to be assessed in this context.
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