This study explores corporate strategies regarding intangibles. We argue that companies consciously or unconsciously follow particular investment strategies in intangibles by allocating resources among intangible assets. The key contribution of our research is a new way to classify companies according to intangibles employed. The research question is if intangible-intensive profile exists. For the purpose of our each profile is identified on the intersection of the relevant theory of intellectual capital and empirical investigation. The intellectual capital concept enables elaboration of the framework of each company’s profile. The empirical analysis provides us with the clusters matched with the theoretical framework. The database consists of about 1700 listed European companies observed from 2004 till 2011. The database includes figures from annual statistics and financial reports. The information about intangibles was collected from publicly available sources like company websites, patent and information bureaus, and rating agencies. As a result more than 20 indicators are involved in the analysis. K-means clustering allows us distinguishing four major profiles of intangible-intensive companies.
The empirical analysis allows identification of three profiles of companies: two of them (innovative and conservative) represent intangible intensive strategy. The third profile that doesn’t have clear priorities in intangibles was called in this study moderate (low) and was used as a benchmark to examine if intangible-intensive profiles enable better performance.
Purpose: This study explores the strategies adopted by companies during the economic crisis of 2008-2009. It investigates whether it is reasonable for companies to intensify their investment in intangibles during recession periods. The purpose of this paper is to find empirical evidence that companies with clear intangible-intensive profiles are likely to outperform those without a clear strategy. Design/methodology/approach: This paper explores the intangible-intensive strategies of companies in terms of their dynamics during the pre-crisis, crisis and post-crisis periods. Through dummy regression applied to data from more than 1,600 European companies involved in the empirical analysis, the paper aims to show moderating effects from intangible-intensive strategies on company performance, expressed in terms of economic value added and market value added. Findings: The results established in this study shed some light on the global economic crisis in 2008-2009. The findings of this study demonstrate that companies with a conservative profile towards intangibles outperform both those without a defined profile and those with an innovative one. However, an innovative profile enables faster recovery after a crisis. Originality/value: This paper contributes to the literature on the strategic management of companies, and highlights the particular importance of intangible-intensiveness when markets experience systematic distresses. It is emphasized that lessons learned during the recent global economic crisis must be taken into account in the strategic vision of any company.
Purpose: the paper aims to theoretically justify the link between the endowment of intellectual capital and product novelty, and to find empirical evidence for such a link for SMEs in the Russian business environment.
Design/methodology/approach: the study implements an intellectual capital based view and the concept of novelty proposed by Schumpeter to highlight the crucial role of knowledge for transition to a higher level of competition. Drawing on a literature review, the authors determine three specific components of intellectual capital: foreign human capital, ICT capital developed at an international level and cooperation with foreign partners in order to pinpoint a premier position on the next level of the market. For empirical testing of the proposed model, a dataset comprising more than 1400 Russian manufacturing SMEs was used. Estimations were performed with the help of a principal component analysis and ordinal logistic regression.
Findings: the findings reveal that higher intellectual capital endowment promotes the level of product novelty. For Russian manufacturing SMEs, the most important is R&D capital. At the same time, ICT capital developed at an international level and cooperation with foreign partners contribute significantly to the probability of transition to a new market level.
Research limitations/implications: the study employs cross sectional data that restrict the analysis of innovation dynamics.
Practical implications: the study appears to have policy implications for the development of governmental programmes for Russian SMEs such as the creation of IC awareness, training for IC management, special programmes for R&D support and ICT capital accumulation.
Originality/value: this paper proposes a new approach for investigating the “knowledge-innovation” link, shifting the focus from a general analysis of product innovation to a level of novelty for product innovation. This is the first empirical study of the relationship between intellectual capital components and the level of product novelty for SMEs in the context of the Russian business environment.
Purpose. Investments in intellectual capital (IC) are often linked to competitive advantages that improve economic profit and increase the value of a company. However, this effect is reciprocal: Companies that generate higher cash flow can invest more in intellectual capital. The aim of this study is to analyze a dynamic relationship between IC components and economic profit, with a special emphasis on industry specific effects in pharmaceutical, retail, steel, telecommunications, and service sectors.
Design/methodology/approach. Panel vector autoregression (VAR) was used to deal with the mutual influence of intellectual capital components, the lag effect, and heterogeneity. The data was taken from Compustat database and covers the period from 2001 to 2010.
Findings. This research proves that there is interaction between investments in the IC components and company performance. However there are sectoral differences: there is a positive impact of economic profit on human capital in retail; in the steel industry a mutual influence is revealed. Moreover, interaction between different IC components is detected in telecommunication and steel industries.
Originality/value. This is the first study to present clear evidence of the effects of performance on IC investment decisions. The time lag in the effects of IC investments was estimated and compared for different industries. On the methodological side, the paper presents a rather simple method capable of yielding results consistent with other studies and yet rich enough to be applied to an analysis of sectoral differences in dynamic IC investment decisions.
Purpose - This paper presents a framework that is developed for analysis of intellectual capital transformation into companies’ value, including an identification of the key factors of this process.
Design/methodology/approach - The paper employs intellectual capital on the intersection of value-based management (VBM) and the resource-based view (RBV). Starting from a review of the results provided in the literature regarding intellectual capital (IC) evaluation and its link with firm performance, a system of proxy indicators related to IC transformation in both concepts has been designed. The evaluation ability of the developed model was justified using regression analyses.
Findings - A detailed algorithm for intellectual capital evaluation in terms of input–outcome transformation. The Intellectual Capital Transformation Evaluating Model (ICTEM) provides a holistic view of intellectual resources as companies’ strategic investments.
Research limitations/implications - The paper emphasizes that the ICTEM framework could be mostly applied for the analysis of a firm as a typical representative of the industry or the country. In that sense it is not applicable for specific feature analysis of a company.
Practical implications - The paper highlights the ICTEM as a tool of investment decisions, mostly taking into account common trends, the prospects of industries, and economies’ development.
Originality/value - The ICTEM provides the ostensive framework of intellectual capital transformation analysis using a statistical approach.
Purpose – The purpose of this paper is to explore the plausibility of six elements of IC and justify the measurement ability of a set of indicators based on publicly available data for each of the proposed element in order to provide tools to managers for their decision-making process in knowledge management (KM). Design/methodology/approach – Core company's intangibles are combined into six intellectual capital (IC) elements that appear after the division of each of the traditional components (human, structural and relational capital (RC)). The human capital includes management and human resources capabilities (HRC). Structural capital is divided into innovation and internal process capabilities (IPC). RC contains networking capabilities and customer loyalty. In drawing on the relevant literature each element is described through a set of indicators collected from publicly available data. The validity of proposed IC model is justified through structural equation modeling. Each element is tested on a sample of more than 1,650 listed European companies over the period of 2004-2011. Findings – The study gives empirical support of three component IC structure and its decomposition into second level. The findings reveal that implementation of KM plays a significant role for HRC as well as for IPC.
Purpose – The purpose of this paper is to present a framework that helps to analyze the dependence between personal welfare and individual (personal) intellectual capital (IIC). The authors also introduce the system of proxy indicator for personal intellectual capital (IC) of football coaches. Design/methodology/approach – This paper employs the idea that personal welfare depends on personal IC, particularly, talent. That is why initially the literature analysis of welfare phenomenon was provided. Then the system of available proxy indicators of football coaches’ IC was designed. To achieve the purpose a linear function is estimated with the help of ordinary least squares method. Findings – The chosen set of IC proxy indicators explain the significant part of coaches’ salary. Such proxies as improvement in the championship table and coach’s image in media have a significant and positive influence on coach’s salary. Whereas, lowering the position of the club does not considerably affect the coach’s wealth. A clubs’ financial capacities and budget also influences coaches’ salaries. Research limitations/implications – Traditional limitation of proxy indicators-based studies is connected with their eligibility and complexity. Practical implications – The possibility to codify IC of a person enables to analyze core competencies necessary in a particular activity or profession for success achievement. Moreover a policy of inequality reduction should take into account that intangible assets are at the base of those persons wealth. Originality/value – This is the first paper that employs IC concept to people wealth while previous literature is dedicated to companies’ or countries’ IC.
The purpose of this study is to present a tool to categorize companies as potentially profitable on the basis of an intellectual capital (IC) analysis. The paper distinguishes two crucial attributions for picking shares: IC and capitalization of IC-based growth potential. Using these two attributions, the author creates a portfolio from a sample of European companies and annually rebalances it. To test its attractiveness, the author then compares the portfolio with benchmarks and random portfolios during the period from 2006 to 2013 using a Sharpe coefficient. The comparison of the constructed portfolio with the benchmarks demonstrates the importance of IC for market investors and the validity of the proposed tool. The Sharpe ratio of the portfolio is significantly higher than the mean and median Sharpe ratios of random portfolios. In addition, the importance of IC for choosing proper investment goal increases in crisis.
The purpose of this paper is to present a comparative analysis of the contribution made by intellectual capital (IC) to company performance at company and industry levels in the Russian context. It examines the performance effect of IC using a multilevel approach.
Purpose The purpose of this paper is to address the issue of efficiency of corporate universities. An efficiency is defined in relative terms: as having relatively better performance in comparison to other companies. Different indicators of performance were employed in order to analyze short-term and long-term efficiency. A comparative analysis of European companies and emerging Russian companies is performed in order to understand if there are country differences in the efficiency of corporate universities. Design/methodology/approach To avoid potential omitted variable bias, fixed effect within estimator is employed. This estimator enables controlling for a firm-specific time-constant effect which conditions company’s performance and is responsible for other individual traits. The rest of the characteristics are controlled with a proxy, which are traditional for corporate finance studies. Findings There are contradictory results for the efficiency of a corporate university; for the European companies, a corporate university brings positive effect for the short-term performance, nevertheless, as the authors have found that it destructs value in long term. A company with a corporate university has 70 percent less market value added than an average company. There is a negative short-term synergy while the long-term synergy is positive. The results for the Russian sample are very consistent: corporate universities have negative or neutral effect on the performance. Originality/value This study contributes to the literature about strategic management and human resources management. It addresses the issue on efficiency of corporate universities in companies considering this as one of the key strategic investment in human resource policy. It appears that the corporate university is not a panacea for all companies to develop their human development policy.