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Intangibles and business performance – a technical efficiency approach

Author

Listed:
  • Olli-Pekka Hilmola
  • Marko Torkkeli
  • Ville-Veikko Savolainen

Abstract

This research focuses on the efficiency performance measurement challenge of two groups of technological companies: 1 those with a history of three to five years; 2 those with a history of longer than five years. Data envelopment analysis (DEA) models are used in the evaluation of 431 different technological companies financed by a Finnish venture capital company. As the companies were from three to five years old, roughly one third of the companies showed on average negative profitability, and therefore these companies could not be managed solely with revenue generating innovations. Companies having more than five years of financial history seemed to be generating revenues as well as profits, and revenue as well as profit oriented DEA models seemed to produce similar results. Interestingly, our research also shows that each of the analysed groups and different DEA models have average efficiency below 50%. This observation leaves space for the development of operational management methods as well as venture capital funding decisions in the future.

Suggested Citation

  • Olli-Pekka Hilmola & Marko Torkkeli & Ville-Veikko Savolainen, 2009. "Intangibles and business performance – a technical efficiency approach," International Journal of Entrepreneurship and Innovation Management, Inderscience Enterprises Ltd, vol. 9(4), pages 364-379.
    • Handle: RePEc:ids:ijeima:v:9:y:2009:i:4:p:364-379
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