Valuing IT-Related Intangible Assets

MIS Quarterly, Forthcoming

63 Pages Posted: 26 Oct 2013 Last revised: 22 Oct 2015

See all articles by Adam Saunders

Adam Saunders

University of British Columbia (UBC) - Sauder School of Business

Erik Brynjolfsson

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Date Written: August 4, 2015


We assess the value of IT-related intangible assets and then use data on business practices and management capabilities to understand how this value is distributed across firms. Using a panel of 127 firms over the period 2003-2006, we replicate and extend the Brynjolfsson, Hitt and Yang (2002) finding that $1 of computer hardware is correlated with more than $10 of market value. We account for the “missing $9” by broadening the definition of IT to include capitalized software, and then include all purchased and internally developed software, other internal IT services, IT consulting, and IT-related training (whether or not it is capitalized by the firm). In addition, we use data on IT-related business practices in order to analyze the distribution of IT-related intangibles within the sample. Our results suggest that the “invisible” IT not accounted for on balance sheets is being priced into the market value of firms. We also estimate that there is a 45%-76% premium in market value for the firms with the highest organizational IT capabilities (based on separate measures of human resource practices, management practices, internal IT use, external IT use, and Internet capabilities), as compared to those with the lowest organizational IT capabilities. Our results thus suggest that contributions of IT to value depend heavily on other factors, and are not a “rising tide that lifts all boats.”

Keywords: IT value, market value, IT-related intangibles, IT capabilities, intangible assets, R&D value, brand value

Suggested Citation

Saunders, Adam and Brynjolfsson, Erik, Valuing IT-Related Intangible Assets (August 4, 2015). MIS Quarterly, Forthcoming. Available at SSRN: or

Adam Saunders (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

673 Henry Angus
2053 Main Mall
Vancouver, British Columbia V6T 1Z2
604-822-9956 (Phone)


Erik Brynjolfsson

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Cambridge, MA 02142
United States
617-253-4319 (Phone)


National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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