Tangible−Intangible resource composition and firm success

Abstract

Firm resources are important drivers of firm success, and both tangible and intangible resources have been suggested to have a positive linear effect on firm success when studied independently. In this study, we focus on a firm's entire resource portfolio composition, and posit that bundling dissimilar types of resources is a complex process that involves trade-offs. Drawing on complexity theory, we propose that firm success may be influenced by resource composition, as represented by relative intangibility—that is, a firm's share of intangible resources relative to the sum of both types of resources. Curvilinear hypotheses with environmental moderators are developed and tested using Computer-Assisted-Text-Analysis (CATA) methodology on a 5-year longitudinal sample of 2,245 S&P 500 firms. The results suggest that relative intangibility exhibits a U-shaped relationship with productivity, a key indicator of firm success. However, shape-flips are observed when environmental moderators are introduced, as the relationship becomes inverted U-shaped in less complex environments characterized by low instability and high munificence.