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Determinants of Intangible Investment and Its Impacts on Firms' Productivity: Evidence from Chinese Private Manufacturing Firms

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  • Shenglang Yang
  • Yixiao Zhou
  • Ligang Song

Abstract

Using data from the 2012 China Enterprise Survey conducted by the World Bank, this study examines the determinants of intangible investment by private manufacturing firms and its impacts on firms' productivity in China, thus shedding light on the recent development of intangibles in one of the largest emerging economies in the world. Higher human capital, larger firm size and better institutional quality are found to increase the propensity and the amount of intangible investment, yet fiercer market competition generally decreases both the propensity and the amount invested in intangibles. We provide evidence that the disaggregated components of intangibles are positively correlated with firm productivity and there is complementarity between software and organization investment. Implications for policies to enhance investment in intangibles are identified from the empirical results.

Suggested Citation

  • Shenglang Yang & Yixiao Zhou & Ligang Song, 2018. "Determinants of Intangible Investment and Its Impacts on Firms' Productivity: Evidence from Chinese Private Manufacturing Firms," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 26(6), pages 1-26, November.
  • Handle: RePEc:bla:chinae:v:26:y:2018:i:6:p:1-26
    DOI: 10.1111/cwe.12259
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    File URL: https://doi.org/10.1111/cwe.12259
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    3. Roth, Felix, 2019. "Intangible Capital and Labour Productivity Growth: A Review of the Literature," Hamburg Discussion Papers in International Economics 4, University of Hamburg, Chair of International Economics.
    4. Schubert, Torben & Jäger, Angela & Türkeli, Serdar & Visentin, Fabiana, 2020. "Addressing the productivity paradox with big data: A literature review and adaptation of the CDM econometric model," MERIT Working Papers 2020-050, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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