Value Creation Through Intellectual Capital in Developed European Markets
Journal of Economic Studies, Vol. 41, No. 2, 2014
18 Pages Posted: 10 Jul 2013
Date Written: August 29, 2012
This paper investigates the production function of firms based on the use of intellectual capital. We come up with this problem since believe that the new economy conditions require an adjustment and a development of classical firm theory. The research question addressed in this study is mainly related to the empirical validation of the function based on companies’ intangibles in the Cobb-Douglas framework. This model enables us to advocate the idea of the complementarity of intellectual resources as well as simplifies the analysis of intellectual capital features. To accomplish the purpose of our research we design a log-linear model and estimate it on a sample of more than 400 European and American companies. Application of Cobb-Douglas framework allowed designing a production function based on intellectual capital. The complementarity of intellectual capital components is justified on the empirical results obtained in this research. The increasing return to scale for intellectual capital was established for the sample examined in this study.
Keywords: Production function, Complementarity of intellectual resources, Returns to scale, Intangibles, Intellectual Capital, Cobb-Douglas
JEL Classification: O12, O15, O16, O34, O57
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