Abstract
Numerous intangibles can affect corporate value; for example, human assets, organizational assets, information assets, and corporate reputation. As discussions about intangibles have intensified, the number of empirical studies focused on the relationship between intangibles and corporate value has increased. Previous studies have demonstrated the relationship between intangibles and corporate value as individual or combined elements; however, no previous empirical study has incorporated strategies into the analysis of the relationship between intangibles and corporate value. The present study analyzes how different strategies and management control systems impact intangibles, the source of corporate value. Three discoveries were made. The first reveals that intangibles consist of corporate reputation, innovation, information assets, and organizational assets, but not human assets, which turn out to be linked to innovation. This result indicates that the skills and creativity of employees play a major role in innovation. The second discovery shows that corporate value consists of economic value, social value, and organizational value. This result agrees with the view of others who have asserted that all stakeholders are in an equal relationship. Therefore, it can be said that companies take various stakeholders into consideration when creating value. The third discovery shows that when different strategies and management control systems are adopted, different intangibles affect corporate values. For instance, in prospector companies, reputation does not impact corporate value; these firms aim to create new markets through innovation, and are less concerned with reducing reputational risk. By contrast, in defender companies, innovation does not affect corporate value; these firms place emphasis on preserving their reputation to retain existing markets and customers.
Highlights
As the economic environment shifted from an industry-led society to a knowledge-led society, intangibles, as a contributor to corporate value, became increasingly more important
Because intangibles are closely related to strategies, we review the study conducted by Miles & Snow (1978), who proposed four categories of strategies, and the management control system proposed by Simons
Considering that product brand, customer assets, and relational assets are deeply connected to the company’s reputation with stakeholders, we placed them within corporate reputation, and set Hypothesis 1: H1: Intangibles consist of corporate reputation, innovation, human assets, organizational assets, and information assets
Summary
As the economic environment shifted from an industry-led society to a knowledge-led society, intangibles, as a contributor to corporate value, became increasingly more important. This finding prompted Ito & Sekiya (2016) to propose a new framework that incorporated strategies and management control systems into the relationship model between intangibles and corporate value; no previous empirical study had incorporated strategies into this relationship. The present study elucidates how differences in strategy and management control systems impact intangibles, the source of corporate value. The remainder of this paper is organized as follows: Section 2 clarifies the definition of intangibles and outlines the strategy theory by Miles & Snow (1978), the management control system by Simons (1987), and the concept of organizational ambidexterity proposed by O’Reilly & Tushman (2004). We will outline the concept of organizational ambidexterity, which has been gaining attention in recent years
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