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Intangible capital and firms productivity

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  • R. Paci
  • M. Pontis
  • E. Marrocu

Abstract

Firms competitive strategies and performances in industrialised countries is increasingly based on assets, labelled as "intangible capital", such as the inventions of new processes and products, the improvements of the employees skill, the creation of a reputation for company's products. The aim of this paper is to evaluate the role of internal intangible capital on firms productivity in addition to the well-known one played by traditional inputs. Moreover, firms productivity is crucially affected by the external socio-economic conditions; thus, we control for the availability of intangible assets specific to the region (human, technological and social capital) as well as for the regional infrastructural endowments. In our empirical application we analyse a large panel of European companies belonging to 116 regions of six countries, considered over the period 2002-2006. The estimation results - robust to various ways of disaggregating the sample data (by country, macro-sector and firms dimension) and to different econometric methodologies (IV, Olley-Pakes, Levinsohn-Petrin) - show the positive influence of the internal intangible capital on firms productivity levels and also the crucial role played by the intangible assets at the regional level. These results remark the importance of policies designed to stimulate the accumulation of intangible capital stocks internal to the firms through appropriate fiscal policies and to create a favourable external environment based on high endowments of human, social and technological capital.

Suggested Citation

  • R. Paci & M. Pontis & E. Marrocu, 2009. "Intangible capital and firms productivity," Working Paper CRENoS 200916, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  • Handle: RePEc:cns:cnscwp:200916
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    More about this item

    Keywords

    local externalities; intangible capital; firms productivity;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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