Intangible Capital Research Articles

Do related party transactions promote or depress a firm’s investment in organization capital?

ABSTRACT We examine whether related party transactions influence a firm’s investment in organization capital, using a sample of Korean firms from 2001 to 2020. Given that the high magnitude of related party transactions increases a firm’s dependence on the captive market within related parties, we hypothesize that a firm’s incentives to invest in intangible capital are low when there are heavy related party transactions. We find the negative relationship between related party transactions and a firm’s investment in organization capital, consistent with the notion that related party transactions significantly impact the firm’s operations. We also find that such a relationship is more pronounced for firms in the high-tech industry and those that are financially weak.

Intangible capital, the labour share and national ‘growth regimes’

This paper examines how far an increase in the intangible capital-to-output ratio contributes to changes in labour share. We focus on a selection of OECD countries using industry-level data from 1995 to 2017. We show that the relationship between intangible capital and labour share is heterogeneous, and whether it is positive or negative depends on the types of intangibles and the growth regime of the national economy. In the Nordic countries, whose growth regimes balance domestic demand and exports of high-value services, the net effect of intangible capital on the labour share is tiny but positive. In contrast, it is negative for countries with high-quality manufacturing exporting sectors, such as Germany, Belgium and Austria. The evidence suggests that there are counteracting impacts in the USA and the UK, although the net effect is positive. We examine the bidirectional causality between the labour share and intangibles, showing that those behave as gross complements in the Nordic countries and as gross substitutes in the high-quality manufacturing export-led regimes; in the rest of the regimes, it depends on the asset.

Intangible Capital, a creation of value for the company but how ?

Intangible Capital, a creation of value for the company but how ?

Special issue. Higher education: a Fundamental intangible capital towards a sustainable future

Education has become an intangible capital of vital importance in a changing context due to increasing complexity, uncertainty, accelerating globalisation and competitive rivalry. Likewise, the 2030 Agenda for Sustainable Development includes as one of its core goals (SDG 4) to "ensure inclusive and equitable quality education and promote lifelong learning opportunities for all". To this end, it focuses on the need to acquire a set of crucial transversal competencies applicable to different contexts and purposes throughout life, including not only formal (primary, secondary, University) but also non-formal education.Focusing on higher education, this special issue addresses in a multidisciplinary way the different theoretical and empirical approaches that bring together innovative topics such as teaching innovation, graduates and job expectations, competence acquisition, digitisation and technologies. The first three articles develop the importance of acquiring sustainable and intangible knowledge based on the acquisition of skills that helps students adapt to a changing and uncertain future of work while understanding and cooperating with their social environment to promote greater social justice. The last two articles are a clear example of the progress made in learning methodologies and the application of Technology to improve the academic performance of university students.

Impact of ICTs on knowledge transfer in Moroccan organizations: The case of the energy sector

In a short space of time, intangible capital has become the decisive driver of economic growth [1]. Indeed, sustainable competitive advantage is now linked to the capacity to innovate, based on the production of knowledge, the enrichment of knowledge, and the enhancement of skills. This is measured by three main indicators: research and development (R&D) expenditure, training, and the intensity of use of new information and communication technologies (ICTs). Aware of the importance of preserving and valorizing knowledge, and concerned about their competitiveness in a constantly changing environment, companies are increasingly opting to manage their intangible capital and invest in ICTs. The way the companies use these technologies facilitates the acquisition, conservation, and sharing of both explicit and tacit knowledge. Indeed, the results of the study carried out for this article, using a dual qualitative/quantitative approach, lead us to the following conclusion: because of the quasi-immediacy of their effects, organizations have a definite interest in adopting ICTs to benefit from their use in a knowledge management dynamic.

Unions and investment in intangible capital

Unions and investment in intangible capital

A retrospective study of knowledge management for integrated resorts (IRs) crisis preparedness

PurposeThis study aims to propose a systematic knowledge management model to explore the causal links leading to the organizational crisis preparedness (OCP) level of integrated resorts (IRs) during the COVID-19 pandemic based on the intangible capital of organizational climate, dynamic capability, substantive capability and commitment.Design/methodology/approachThe authors use data obtained from IRs in Macau. The Wuli–Shili–Renli (WSR) approach underpins the study. Structural equation modeling following fuzzy-set qualitative comparative analysis (fsQCA) was used for data processing.FindingsThe results showed that organizational climate has an essential role in IRs preparedness for crises and affects their dynamic capacity, substantive capacity and commitment. The fsQCA results revealed that the relationships between conditions with a higher level of dynamic and substantive capability lead to higher OCP scores.Practical implicationsExecutives should develop systemic thinking regarding organization preparedness in IRs for crisis management. A comprehensive understanding of the IRs’ business environment and crises is necessary, as they will require different factor constellations to allow the organization to perform well in a crisis. Financial support for employees could ensure their assistance when dealing with such situations. Rapid response teams should be set up for daily operations and marketing implementation of each level of the IRs management systems.Originality/valueThis study contributes to the extant literature on IRs crisis management in the OCP aspect. The authors constructed a systematic composite picture of organization executives’ knowledge management through the three layers of intangible capitals in WSR. Moreover, the authors explored causal links of WSR from symmetric and asymmetric perspectives.

Blockchain adoption and firm performance: The contingent roles of intangible capital and environmental dynamism

Despite the purported benefits of blockchain technology for business applications, it is unclear how blockchain adoption affects firm performance, and large-scale empirical evidence on this relationship remains scarce. Drawing on the dynamic capabilities perspective, we examine the relationship between blockchain adoption and firm performance using a sample of 4994 firm-year observations from 2017 to 2021. Using a dynamic System GMM approach, we show that blockchain adoption significantly increases Tobin's Q (a market-based measure of expected future earnings); however, it has no relation with the current accounting performance measured using return on equity (ROE) and return on assets (ROA). We find that a firm's intangible capital and environmental dynamism positively moderate the relationship between blockchain adoption and Tobin's Q. The former finding reflects market expectations that firms with high intangible capital are better equipped to benefit from blockchain adoption. The latter finding suggests that blockchain adoption strengthens firms' dynamic capabilities, and thus it enables firms to undertake proactive and innovative initiatives in response to an uncertain business environment.

Total Factor Productivity and Intangible Capital in Different Levels of Technology: A Case Study of Iranian Manufacturing Industries

This article tries to examine intangible investment in different levels of Iranian industrial technology by using a comprehensive measure of intangible capital costs in Iran. Previous studies in the study of intangible capital on total factor productivity (TFP), show that intangible investment has a positive and significant effect on this variable in Iran's manufacturing industry with a four-digit ISIC code. Also among the components, Information and Communication Technology (ICT) has a more prominent role on the TFP variable. This study examines all the factors (which play a role in measuring intangible investment) on the growth of TFP at different levels of technology (which are divided into four categories).Unlike previous studies, for all industries, apart from technology levels, ICT is very effective and other components are ignored,the results of this study show that other factors affect intangible investment except ICT in high-tech and medium / high industries have higher impact on TFP than ICT and vice versa. It is also suggested to achieve the highest optimal level of TFP, by separating different levels of technology, to focus on components such as research and development, brand, educational services, etc. for high levels and ICT factor for low levels.

The Impact of Intangible Capital on the Productivity of Small Firms

Despite the mounting evidence in support of the role of intangible capital on firm performance, some research gaps remain. This paper focuses on the link between intangible capital and firm performance with a particular focus on the effect firm size has on the relationship by studying the population of Slovene enterprises between 2007 and 2020. We find that while intangible assets are positively associated with productivity, the link is by no means linear. Furthermore, micro firms appear to benefit most from investing in intangible assets, while the effect is less robust for small and medium-size enterprises (SMEs) and large firms. Amongst different types of intangible assets, the strongest effect on productivity was found for investment in property rights and goodwill, while long-term deferred development costs had a weaker effect on firm productivity.

The Characteristics and Role of Intangible Capital in Central-Eastern Europe, the Balkans and in the Mediterranean

The Characteristics and Role of Intangible Capital in Central-Eastern Europe, the Balkans and in the Mediterranean

Does the enterprise’s choice of intangible capital help to promote its ESG score?

Digital transformation, as an important way to optimize the existing resources of enterprises, is a driving force to achieve their high-quality development. Intangible capital is used to reflect the status of digital transformation of enterprises, so as to explore the relationship between the decision of enterprises on digital transformation and the ESG scoring effect of enterprises under financing constraints. The results show that when enterprises are faced with strong financing constraints, the management’s decision on digital transformation tends to be conventional. Although maintaining the traditional business model is more beneficial, it is not conducive to the improvement of ESG score. To further analyze the digital transformation mechanism of enterprises, this paper examines the decision-making behavior of enterprises under financing constraints from the perspective of intermediary mechanism. The results show that the decision of increasing intangible capital of enterprises promotes the improvement of enterprise performance, and then drives the promotion of the enterprise ESG score. This study enriches the research achievements in the field of digital transformation of enterprises, and provides reference for heterogeneous enterprises to select digital transformation decisions.

Sustainable Development Pathways for Chinese Cities: An Assessment of the Advanced Inclusive Wealth Index

AbstractThe inclusive wealth index (IWI) is a stock metric proposed internationally in recent years to measure a region's sustainable development potential. To explore sustainability more comprehensively in this context, this paper improves the inclusive wealth (IW) system proposed by the United Nations Environment Programme by extending the definition of intangible capital and refining the classification of different types of capital. We then used the advanced IWI to investigate the changes in per capita IW and its capital composition in China's 10 National Sustainable Development Agenda Innovation Demonstration Zones from 2010 to 2019, and proposed sustainable development pathways for Chinese cities. Our results underline the fact that IW and capital structure across different types of cities is highly variable. The growth of IW per capita in Shenzhen, an international metropolis, mainly depends on advanced produced capital and intangible capital. For Ordos, however—a resource‐rich “energy city”—the per capita IW is driven by ordinary produced capital and restricted by non‐renewable natural capital, thus showing a low level of sustainability. Through its consideration of four kinds of capital, this study also points out the inequality of human capital between urban‐rural and male‐female groups, and demonstrates how increasing educational attainment helps to promote the transfer of human capital between regions and sectors. In general, a strong potential for sustainable development is linked to the promotion of highly educated human capital, advanced produced capital and intangible capital, while the ecosystem service value of natural capital is also key.

Rising Intangible Capital, Shrinking Debt Capacity, and the U.S. Corporate Savings Glut

ABSTRACTThis paper explores the connection between rising intangible capital and the secular upward trend in U.S. corporate cash holdings. We calibrate a dynamic model with two productive assets—tangible and intangible capital—in which only tangible capital can serve as collateral. We highlight the following points: (i) a shift toward intangible capital shrinks firms' debt capacity and leads them to hold more cash, (ii) the effect accounts for three‐quarters of the observed trend in average cash ratios, and (iii) it also accounts for the upward trend of cash ratios in the cross‐section of small and large firms and in the aggregate.

Firm Growth and Transformation: The Importance of Technological and Organizational Architecture (WITHDRAWN)

The benefits to data analytics and machine learning have been distributed unevenly across firms around the world. Research on IT productivity points to intangible capital as a key driver of value creation from innovation in computing. We argue that a crucial component of intangible capital is organization-wide technological architecture, which is idiosyncratic and difficult to measure. We use a novel survey instrument to quantify large corporations’ data architecture capabilities by their closeness to “best practices” of frontier digital companies. Using the prevalence of third-party maintenance as a proxy for legacy servers before 2016 and an instrument for data architecture coherence, we find that improving data architecture coherence leads to more intensive machine learning capabilities and substantially higher productivity growth in the subsequent three- year period. Legacy servers reduce data architecture coherence particularly at corporations with complex software systems, consistent with the hypothesis that costs of digital transformation are greater when workers need to develop more complicated co-invention processes to interact with technical systems.

Financial shocks and the relative dynamics of tangible and intangible investment: Evidence from the euro area

Abstract We develop an extended real business cycle model with financially constrained firms and non-pledgeable intangible capital. Based on a model-consistent series for firms’ borrowing conditions, we find, within a structural vector autoregression framework, that, in response to an adverse financial shock, tangible investment falls more than intangible investment. This positive co-movement between tangible and intangible investment as well as the relative resilience of intangible investment pose a challenge for the theoretical model. We show that investment-specific adjustment costs help in reconciling the model with the observed empirical evidence. The estimation of the theoretical model using a Bayesian limited information approach yields support for the presence of much larger adjustment costs for intangible investment than for tangible investment.

The Mediating Role of Innovation on The Relationship Between Intellectual Capital and Private Universities Performance of Pakistan

Universities are the hub of knowledge creation which totally based on their intellectual resources, currently the condition of Pakistan private sector universities are facing huge trouble. Universities are lacking from all their intangibles resource which can help them in successive performance, these resources normally based on the intellectual capital which is usually considered as an intangible capital of universities. Pakistan higher education is ranked at 150th spot out of 189 countries and also far behind in research productivity as compared to the neighbour countries. Therefore, current study will focus intellectual capital as a key determinant in the successive performance of private universities performance in Pakistan with mediating role of innovation in terms of speed and quality. The current study highlighted the important flaws in higher education institutions of Pakistan and provides possible solutions in the form of intellectual capital and innovation that can enhance the performance of HEI’s. Positivist paradigm and deductive approach has been used in current study, primary data collection shall be conducted through questionnaire and the target population would be considered full time faculty members of private universities operating in Pakistan.

Digital transformation, data architecture, and legacy systems

The benefits to data analytics and machine learning have been distributed unevenly across firms around the world. Research on IT productivity points to intangible capital as a key driver of value creation from innovation in computing. We argue that a crucial component of intangible capital is organization-wide technological architecture, which is idiosyncratic and difficult to measure. We use a novel survey instrument to quantify large corporations’ data architecture capabilities by their closeness to “best practices” of frontier digital companies. Using the prevalence of third-party maintenance as a proxy for legacy servers before 2016 and an instrument for data architecture coherence, we find that improving data architecture coherence increases machine learning capabilities. Legacy servers reduce data architecture coherence particularly at corporations with complex software systems, consistent with the hypothesis that costs of digital transformation are greater when workers need to develop more complicated co-invention processes to interact with technical systems.

The Impact of Intangible Capital on Factor Performance Efficacy

Prevalent accounting standards require the cost of internally created intangibles to be expensed, disproportionately affecting the book values of high and low intangible intensity (II) companies. We expect this to impact the performance efficacy of various factors contextually, depending on the extent to which intangible capital affects their computation. We compare return spreads for Book to Market, a measure of Value, and Momentum for companies belonging to low and high II industries and find that for Book to Market, they have declined significantly for companies in high II industries compared to spreads for companies in low II industries. We show that this decline is linked to the increasing intangible intensity of companies in high II industries. In contrast, Momentum spreads have increased for companies in high II industries. For investors who use multifactor strategies, the implication is that weighting Book to Market and Momentum according to the II of the company’s industry may be a useful technique for incorporating the effects of intangibles.

Does ESG Disclosure Help Improve Intangible Capital? Evidence From A-Share Listed Companies

With the disclosure of ESG, the investment related to ESG disclosure has increased, and the trend of changes in intangible capital has shown an “inverted S-shaped” curve. The research shows that, in the initial stage of investment in ESG construction, new ESG investments increase intangible capital. With the increase in ESG investment and the advancement of time, the positive effect of the increase in ESG scores on intangible capital begins to appear and gradually offsets the cost of ESG investment. However, when the ESG score of a company is raised to a certain level, the marginal effect of continuing to increase ESG investment will reduce the increase in intangible capital.