IDEAS home Printed from https://ideas.repec.org/p/mtu/wpaper/16_14.html
   My bibliography  Save this paper

Intangible Investment and Firm Performance

Author

Listed:
  • Nathan Chappell

    () (Motu Economic and Public Policy Research)

  • Adam Jaffe

    () (Motu Economic and Public Policy Research)

Abstract

We combine survey and administrative data for about 13,000 firms from 2005 to 2013 to study the inter-relationships among firm characteristics, intangible investment and firm performance. We find that firm size is associated with higher intangible investment, while firm age, very low competition (‘captive market’) and very high competition (‘many competitors, none dominant’) are associated with lower intangible investment. Relating intangible investment to subsequent firm performance, we find that higher investment is associated with higher labour and capital input and higher revenue, relative to what would otherwise have been predicted. We also find that higher investment is associated with higher firm-reported employee and customer satisfaction, but is not associated with higher productivity or profitability. While we cannot estimate a causal model, the evidence suggests that intangible investment is associated with firm strategies related to growth and possibly to ‘soft’ performance objectives, but not to productivity or profitability.

Suggested Citation

  • Nathan Chappell & Adam Jaffe, 2016. "Intangible Investment and Firm Performance," Working Papers 16_14, Motu Economic and Public Policy Research.
  • Handle: RePEc:mtu:wpaper:16_14
    as

    Download full text from publisher

    File URL: http://motu-www.motu.org.nz/wpapers/16_14.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. F. M. Scherer, 1986. "Innovation and Growth: Schumpeterian Perspectives," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691027, September.
    2. Crepon, B. & Duguet, E. & Mairesse, J., 1998. "Research Investment, Innovation and Productivity: An Econometric Analysis at the Firm Level," Papiers d'Economie Mathématique et Applications 98.15, Université Panthéon-Sorbonne (Paris 1).
    3. Richard Fabling & David C Maré, 2015. "Addressing the absence of hours information in linked employer-employee data," Working Papers 15_17, Motu Economic and Public Policy Research.
    4. Richard Fabling, 2009. "A Rough Guide to New Zealand's Longitudinal Business Database," Global COE Hi-Stat Discussion Paper Series gd09-103, Institute of Economic Research, Hitotsubashi University.
    5. Amani Elnasri & Kevin J. Fox, 2014. "The Contribution of Research and Innovation to Productivity and Economic Growth," Discussion Papers 2014-08, School of Economics, The University of New South Wales.
    6. Maria Elena Bontempi & Jacques Mairesse, 2015. "Intangible capital and productivity at the firm level: a panel data assessment," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 24(1-2), pages 22-51, March.
    7. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
    8. Webster, Elizabeth, 2000. "The growth of enterprise intangible investment in Australia," Information Economics and Policy, Elsevier, vol. 12(1), pages 1-25, March.
    9. Carol Corrado & John Haltiwanger & Daniel Sichel, 2005. "Measuring Capital in the New Economy," NBER Books, National Bureau of Economic Research, Inc, number corr05-1, March.
    10. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation And Productivity: An Econometric Analysis At The Firm Level," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(2), pages 115-158.
    11. Natarajan Balasubramanian & Jagadeesh Sivadasan, 2011. "What Happens When Firms Patent? New Evidence from U.S. Economic Census Data," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 126-146, February.
    12. Amani Elnasri & Kevin J. Fox, 2017. "The contribution of research and innovation to productivity," Journal of Productivity Analysis, Springer, vol. 47(3), pages 291-308, June.
    13. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45, National Bureau of Economic Research, Inc.
    14. Richard Fabling & David C Maré, 2015. "Production function estimation using New Zealand’s Longitudinal Business Database," Working Papers 15_15, Motu Economic and Public Policy Research.
    15. Corrado, Carol & Haltiwanger, John & Sichel, Daniel (ed.), 2005. "Measuring Capital in the New Economy," National Bureau of Economic Research Books, University of Chicago Press, number 9780226116129.
    16. Scherer, F. M., 1983. "The propensity to patent," International Journal of Industrial Organization, Elsevier, vol. 1(1), pages 107-128, March.
    17. Scherer, F M, 1982. "Inter-Industry Technology Flows and Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 627-634, November.
    18. Corrado, Carol & Haskel, Jonathan & Iommi, Massimiliano & Jona-Lasinio, Cecilia, 2012. "Intangible Capital and Growth in Advanced Economies: Measurement and Comparative Results," CEPR Discussion Papers 9061, C.E.P.R. Discussion Papers.
    19. Crass, Dirk & Peters, Bettina, 2014. "Intangible assets and firm-level productivity," ZEW Discussion Papers 14-120, ZEW - Leibniz Centre for European Economic Research.
    20. Carol Corrado & John Haltiwanger & Daniel Sichel, 2005. "Introduction to "Measuring Capital in the New Economy"," NBER Chapters, in: Measuring Capital in the New Economy, pages 1-10, National Bureau of Economic Research, Inc.
    21. J.A.F. Machado & P.M.D.C Parente & J.M.C. Santos Silva, 2011. "QREG2: Stata module to perform quantile regression with robust and clustered standard errors," Statistical Software Components S457369, Boston College Department of Economics, revised 02 Mar 2021.
    22. Richard Fabling, 2011. "Keeping it Together: Tracking Firms on New Zealand’s Longitudinal Business Database," Working Papers 11_01, Motu Economic and Public Policy Research.
    23. Pakes, Ariel & Griliches, Zvi, 1980. "Patents and R&D at the firm level: A first report," Economics Letters, Elsevier, vol. 5(4), pages 377-381.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Charlotte Emlinger & Sébastien Jean & Vincent Vicard, 2019. "L’étonnante atonie des exportations françaises : retour sur la compétitivité et ses déterminants," CEPII Policy Brief 2019-24, CEPII research center.
    2. Qing Li & Long Hai Vo, 2021. "Intangible Capital and Innovation: An Empirical Analysis of Vietnamese Enterprises," Economics Discussion / Working Papers 21-02, The University of Western Australia, Department of Economics.
    3. Ryota Nakatani, 2019. "Firm performance and corporate finance in New Zealand," Applied Economics Letters, Taylor & Francis Journals, vol. 26(13), pages 1118-1124, July.
    4. Marie Le Mouel & Alexander Schiersch, 2020. "Knowledge-Based Capital and Productivity Divergence," Discussion Papers of DIW Berlin 1868, DIW Berlin, German Institute for Economic Research.
    5. Mike Onder Kaymaz & Ilker Yilmaz & Ozgur Kaymaz, 2019. "The Impact Of Intangible Factors On Profitability: Evidence From Corporations Traded At Muscat Securities Market In Oman," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 8(2), pages 25-47.
    6. Hyuk Chung, 2021. "Adoption and Development of the Fourth Industrial Revolution Technology: Features and Determinants," Sustainability, MDPI, Open Access Journal, vol. 13(2), pages 1-16, January.
    7. Richard Fabling, 2021. "Living on the edge: An anatomy of New Zealand’s most productive firms," Working Papers 21_01, Motu Economic and Public Policy Research.
    8. 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.
    9. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Marie Le Mouel & Alexander Schiersch, 2020. "Knowledge-Based Capital and Productivity Divergence," Discussion Papers of DIW Berlin 1868, DIW Berlin, German Institute for Economic Research.
    3. Carol Corrado & Jonathan Haskel & Cecilia Jona-Lasinio, 2017. "Knowledge Spillovers, ICT and Productivity Growth," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(4), pages 592-618, August.
    4. Burcu Fazlıoğlu & Başak Dalgıç & Ahmet Burçin Yereli, 2019. "The effect of innovation on productivity: evidence from Turkish manufacturing firms," Industry and Innovation, Taylor & Francis Journals, vol. 26(4), pages 439-460, April.
    5. Peter Goodridge & Jonathan Haskel & Gavin Wallis, 2017. "Spillovers from R&D and Other Intangible Investment: Evidence from UK Industries," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63, pages 22-48, February.
    6. Georg Licht & Bettina Peters & Christian Köhler & Franz Schwiebacher, 2014. "The Potential Contribution of Innovation Systems to Socio-Ecological Transition. WWWforEurope Deliverable No. 4," WIFO Studies, WIFO, number 47502, December.
    7. Andrea, Bastianin & Paolo, Castelnuovo & Massimo, Florio & Anna, Giunta, 2019. "Technological Learning and Innovation Gestation Lags at the Frontier of Science: from CERN Procurement to Patents," Working Papers 405, University of Milano-Bicocca, Department of Economics, revised Apr 2019.
    8. Dziallas, Marisa & Blind, Knut, 2019. "Innovation indicators throughout the innovation process: An extensive literature analysis," Technovation, Elsevier, vol. 80, pages 3-29.
    9. Wladimir Raymond & Jacques Mairesse & Pierre Mohnen & Franz Palm, 2013. "Dynamic Models of R&D, Innovation and Productivity: Panel Data Evidence for Dutch and French Manufacturing," CESifo Working Paper Series 4290, CESifo.
    10. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna & Guidi, Francesco, 2016. "R&D and productivity in OECD firms and industries: A hierarchical meta-regression analysis," Research Policy, Elsevier, vol. 45(10), pages 2069-2086.
    11. Bettina Peters & Rebecca Riley & Iulia Siedschlag & Priit Vahter & John McQuinn, 2018. "Internationalisation, innovation and productivity in services: evidence from Germany, Ireland and the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(3), pages 585-615, August.
    12. Castelnovo, Paolo & Florio, Massimo & Forte, Stefano & Rossi, Lucio & Sirtori, Emanuela, 2018. "The economic impact of technological procurement for large-scale research infrastructures: Evidence from the Large Hadron Collider at CERN," Research Policy, Elsevier, vol. 47(9), pages 1853-1867.
    13. Morris, Diego M., 2018. "Innovation and productivity among heterogeneous firms," Research Policy, Elsevier, vol. 47(10), pages 1918-1932.
    14. de Rassenfosse, Gaétan & Jaffe, Adam B., 2018. "Econometric evidence on the depreciation of innovations," European Economic Review, Elsevier, vol. 101(C), pages 625-642.
    15. Richard Fabling & Lynda Sanderson, 2016. "A Rough Guide to New Zealand's Longitudinal Business Database (2nd edition)," Working Papers 16_03, Motu Economic and Public Policy Research.
    16. Janger, Jürgen & Schubert, Torben & Andries, Petra & Rammer, Christian & Hoskens, Machteld, 2017. "The EU 2020 innovation indicator: A step forward in measuring innovation outputs and outcomes?," Research Policy, Elsevier, vol. 46(1), pages 30-42.
    17. Raymond, Wladimir & Mairesse, Jacques & Mohnen, Pierre & Palm, Franz, 2015. "Dynamic models of R & D, innovation and productivity: Panel data evidence for Dutch and French manufacturing," European Economic Review, Elsevier, vol. 78(C), pages 285-306.
    18. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 1033-1082, Elsevier.
    19. David B. Audretsch & Alexander S. Kritikos & Alexander Schiersch, 2020. "Microfirms and innovation in the service sector," Small Business Economics, Springer, vol. 55(4), pages 997-1018, December.
    20. Felix Roth & Anna-Elisabeth Thum, 2013. "Intangible Capital and Labor Productivity Growth: Panel Evidence for the EU from 1998–2005," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(3), pages 486-508, September.

    More about this item

    Keywords

    Intangible investment; productivity; firm performance; industrial policy;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mtu:wpaper:16_14. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maxine Watene). General contact details of provider: https://edirc.repec.org/data/motuenz.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.