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Measuring organisation capital at the firm level: A production function approach

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  • Rammer, Christian
  • Roth, Felix
  • Trunschke, Markus

Abstract

Organisation capital is one of the key intangible assets of firms, driving innovation and firm performance. Measuring this asset has been notoriously difficult, however. Differently to other intangible assets, firms do not build up organisation capital primarily by monetary investment but rather through establishing new organisational routines and building up trust, which often do not coincide with any financial expenditure. Quantifying such efforts at the firm level has largely failed so far. This paper takes up a traditional production function approach which includes, in addition to labour and tangible assets, investment in all measurable intangible assets (technological and non-technological knowledge, software and databases, firm-specific human capital, brand equity), but excluding organisation capital. The residuum of the estimation is considered as a measure of a firm' organisation capital. Using panel data from the German innovation survey, we find higher organisation capital in young and small firms. Our measure tends to show a u-shaped link to qualitative indicators such as organisational innovation.

Suggested Citation

  • Rammer, Christian & Roth, Felix & Trunschke, Markus, 2020. "Measuring organisation capital at the firm level: A production function approach," ZEW Discussion Papers 20-021, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:20021
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    References listed on IDEAS

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    Cited by:

    1. Roth, Felix & Sen, Ali & Rammer, Christian, 2021. "Intangible Capital and Firm-Level Productivity – Evidence from Germany," Hamburg Discussion Papers in International Economics 9, University of Hamburg, Chair of International Economics.
    2. Breithaupt, Patrick & Kesler, Reinhold & Niebel, Thomas & Rammer, Christian, 2020. "Intangible capital indicators based on web scraping of social media," ZEW Discussion Papers 20-046, ZEW - Leibniz Centre for European Economic Research.
    3. Rammer, Christian, 2020. "Dokumentation zur Innovationserhebung 2019," ZEW Dokumentationen 20-01, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    Keywords

    Organisation Capital; Production Function; CIS;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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