Intangible Investment and Firm Performance

Motu Working Paper 16-14, Motu Economic and Public Policy Research, September 2016

52 Pages Posted: 26 Sep 2016

See all articles by Nathan Chappell

Nathan Chappell

Motu Economic and Public Policy Research Trust

Adam B. Jaffe

Brandeis University; Motu Economic and Public Policy Research; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: September 26, 2016

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.

Keywords: intangible investment, productivity, firm performance, industrial policy

JEL Classification: D22, D24, L21

Suggested Citation

Chappell, Nathan and Jaffe, Adam B., Intangible Investment and Firm Performance (September 26, 2016). Motu Working Paper 16-14, Motu Economic and Public Policy Research, September 2016, Available at SSRN: https://ssrn.com/abstract=2843294 or http://dx.doi.org/10.2139/ssrn.2843294

Nathan Chappell

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
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New Zealand

Adam B. Jaffe (Contact Author)

Brandeis University ( email )

Waltham, MA 02454-9110
United States
781-736-2251 (Phone)
781-736-2263 (Fax)

HOME PAGE: http://www.brandeis.edu/global/people/faculty/jaff

Motu Economic and Public Policy Research ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

HOME PAGE: http://motu.org.nz

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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