Globalization and the ICT revolution of the 1990s have forced many firms to reorganize in order tosurvive in a more competitive market. There are several approaches that can be used to assess themeasurement of organization capital since it is unobservable. Using an optimizing firm model andassuming that a firm holds multiple assets as suggested by Yang and Brynjolfsson (2001) andCummins (2005), we examined whether organization capital is accumulated with investment inseveral types of assets. In contrast to Cummins's (2005) results, we found that the accumulation oforganization capital is associated with investment in R&D assets and marketing assets. Using theseresults and following Basu, Fernald, Oulton, and Srinivasan (2003), we measured the contribution oforganization capital to the conventional TFP growth. The estimation results implied that the growth oforganization capital did not have significant effects on productivity growth.
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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number
dp0817.