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Determinants and impacts of intangible investment: Evidence from Chinese private manufacturing firms

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  • Shenglang Yang
  • Yixiao Zhou

Abstract

Determinants of investment in intangibles by firms and the effects of intangible investment on firm productivity have been documented for developed economies. Evidence on these issues in emerging economies, however, is scarce. Using data from China Enterprise Survey 2012 conducted by the World Bank, this study examines the determinants and impacts of intangible investment by private manufacturing firms in China, thus shedding light on recent development of intangibles in one of the largest emerging economies in the world. It is found that more human capital, larger firm size and better institutional quality generally increase the propensity and the amount of intangible investment, and yet fiercer market competition decreases both the propensity and the amount to invest in intangibles. We also provide evidence that the three components of intangibles including research and development (R&D) investment, software investment and organization investment as well as ICT investment are positively correlated with firm productivity. Furthermore there is complementarity between software investment and organization investment. Implications for policies to enhance investment in intangibles are identified from the empirical results.

Suggested Citation

  • Shenglang Yang & Yixiao Zhou, 2017. "Determinants and impacts of intangible investment: Evidence from Chinese private manufacturing firms," ANU Working Papers in Economics and Econometrics 2017-649, Australian National University, College of Business and Economics, School of Economics.
  • Handle: RePEc:acb:cbeeco:2017-649
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    File URL: https://www.cbe.anu.edu.au/researchpapers/econ/wp649.pdf
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    Keywords

    intangible investment; firm productivity; Chinese manufacturing firms; firm-level data;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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