Abstract
While many studies have examined the relationship between investment in intangibles assets and performance in large corporations, current research is lacking in regard to intangible investments in small and medium enterprises (SMEs). This study looks at SMEs in which intangible investments would usually be minor because they tend to consider intangible investment as an inefficient cost and concentrate on investments in tangible assets. This paper aims to contribute to the current literature and suggests that investment in the intangible assets of (human capital, advertising, R&D) is essential for SMEs pursuing superior firm performance. Actual data collected from 173 SMEs in Korea were analyzed employing hierarchical regression methodology. Results indicate that all three intangible resources have a positive effect on a firm’s profitability and value. Interestingly, this research finds that investment in advertising has the most influential impact on a firm’s profitability and value. This study has implications for SMEs in achieving their profitability and value. The results in this study highlight that intangible investment is not a waste of money for SMEs, and that business managers could strategically utilize these three key contributors (human capital, advertising, R&D) and adopt investment in intangible assets to accomplish their managerial goals.
Highlights
In the rapidly changing and competitive modern business environments, firms strive to acquire strategic assets that can be the foundation for generating and preserving the competitive advantage of companies
This paper explores opportunities for investment in intangible assets such as human capital, advertising and R&D as valuable sources for better firm performance
It is fundamental for small and medium enterprises (SMEs) to weigh the advantages and disadvantages of investing in intangible assets – as opposed to investing in tangibles assets
Summary
In the rapidly changing and competitive modern business environments, firms strive to acquire strategic assets that can be the foundation for generating and preserving the competitive advantage of companies. A firm’s strategic assets can come in many forms. One of the fundamental strategic assets is arguably intangible because intangible assets can provide a firm with vital and valuable competitive advantages. Org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Kim. Intangible assets investment and firms’ performance: evidence from small and
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