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This study investigates and measures the impact of intangibles on firm growth. We distinguish between internally and externally generated intangible assets and analyse the role played by firm size, measuring if it can alter the relationship between intangibles and performance. In doing so, we combine the resource-based view of the firm – as a corne...
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... Intellectual Capital (IC) emerges as an approach oriented toward intangible assets, such as knowledge, patents, trademarks, customers, and distribution channels. It represents an alternative to traditional accounting, which historically focuses on tangible assets such as machinery and physical facilities (Stewart, 1997;Edvinsson & Malone, 1997;Roos et al., 1997;Bontis, 1998;Guthrie, 2001;Cikrikci & Dastan, 2002;Bozzolan et al., 2003;Ricceri, 2008;Curado, 2008;Denicolai et al., 2015;Morris, 2015). ...
Intellectual Capital provides an alternative to conventional accounting, tackling the hurdle of dealing with intangible assets. Over the past few decades, various measurement methods have been developed. However, these methods are primarily tailored to specific types of companies and are often unsuitable for micro and small businesses. Based on this context, the objective of this study is to propose a novel framework to assist readers, academics, and managers identifying the most suitable method for measuring Intellectual Capital by articulating the following traits: purpose, economic sector, and business size. This study adopts an exploratory-descriptive approach with a qualitative methodology, employing a Systematic Literature Review, Content Analysis, and Design Science to achieve its objectives. To determine the goals and methods of measuring Intellectual Capital, this study employed content analysis in the mixed category, with descriptors defined and adjusted as the research progressed. As a result, seven purposes, fifty-eight methods for measuring Intellectual Capital, four economic sectors, and five business sizes were identified, categorized, and incorporated into the proposed framework. Thus, the novel framework proposed by this study is primarily intended to guide stakeholders through the various possibilities for measuring and disseminating Intellectual Capital across corporations, cities, and even nations. As a final recommendation for future research, applying the framework to real-world situations in both the public and private sectors is encouraged.
... The positive effect of BM innovation is higher for firms that also invest in intangibles. Denicolai et al (2015) 294 European (UK, Germany, France, and Italy) firms, 2010-13 ...
... European firms were tested for the impact of IA on firm performance and firm value. The study found that investment in IA increased firm performance and growth (Denicolai et al.,2015;Amin & Aslam, 2017). Bubic and Susak (2015) examined the relationship between IA and the financial performances of listed firms in Turkey and found that increased investment in IA positively affects financial performance. ...
This study examines the effects of intangible assets and all components of intangible assets on Thai-listed companies’ firm value and performance. The aggregate value of intangible assets and three components of intangible assets, namely identifiable intangible assets (IIA), goodwill (GW), and research and development (R&D), were used as test variables. Firm value, measured by Tobin’s Q, and two measurements of firm performance, return on assets (ROA) and return on equity (ROE), were used as dependent variables. The final sample includes 3,701 observations for ten years from 2012 to 2021 in Thailand. Ordinary least square (OLS) was employed to test the hypotheses. Estimated results show that the aggregate value of intangible assets affects firm value positively. When the aggregate value of intangible assets was classified into three components, IIA positively impacted firm value. In contrast, GW and R&D positively impacted both firm value and performance. We further separated our observations into two groups based on the intangible-intensive profile (IIP). We confirmed that the positive impacts of IIA, GW, and R&D on firm value and performance were higher for IIP firms than for non-IIP firms.
... According to empirical data, intangibles are critical to fostering corporate performance. This indicates that strategic resources must be available regardless of a company's asset portfolio size (Denicolai et al., 2015). As a result, strategic management of these intangible assets is an important focus of our research. ...
Intellectual capital is a vital element in strategic resources and enhances the productivity of companies in the knowledge-based economy. However, during the COVID-19 pandemic, most of the sectors in Malaysia are affected by staff and apply knowledge-based processes and procedures. The study aims to assess the influence of intellectual capital (IC) efficiency on financial performance in Malaysia's healthcare system during the COVID-19 pandemic. The VAIC technique was used in the study, as well as panel data analysis with STATA 14. The sample was drawn from three (3) years of healthcare annual reports, spanning 2019 to 2021. Eleven (11) healthcare companies were chosen because they have the capacity to develop public healthcare services and provide high-quality medical facilities. The findings for VAIC ranking show Hartalega, the main producer of disposable gloves marked as the highest ranking of efficiency and the least efficient is TMC Life. For panel data analysis, the results exhibit value-added human capital (VAHU) and value-added capital employed (VACA) are observed to have a significant and positive relationship with the dependent variable; Return on Equity (ROE). Human capital and capital employed are considered the most efficient resources to generate profit and the vital elements in the Malaysian healthcare sector to combat the COVID-19 pandemic. This study contributed to the body of knowledge in the Malaysian healthcare sector about intellectual capital literature. Malaysian healthcare organizations can benefit from incorporating more intellectual capital into their operations to preserve long-term development progress.
... IC and its component's relation with financial performance has previously been investigated across various countries and industries. Most of them found a significant positive impact of IC on performance (Ahangar, 2011;Bontis, 1998;Denicolai et al., 2015;Dzenopoljac et al., 2016;Nimtrakoon, 2015;Tseng et al., 2013;ul Rehman et al., 2011). IC is significantly linked with the firm's performance, and this association differs by the industry. ...
This study investigates the contribution of intellectual capital in enhancing firms' financial vulnerability and performance in Pakistan's emerging economy. This research considered ten years of data from 2011 to 2020 of non-financial firms listed on the stock exchange of Pakistan (PSX) and falls in the KSE-100 index. This research successfully applied a previously defined regression methodology to test the hypothesis investigating the significance of intellectual capital. Empirical investigation successfully reveals IC's significance in improving firms' financial vulnerability and performance using an aggregate measure of IC called value-added intellectual coefficient (VAIC) and its components human capital, structural capital, and capital employed efficiency. Financial Vulnerability mediates between intellectual capital and financial performance. The results of this study prove VAIC significance in developing countries like Pakistan. The study also shows that Pakistani investors and firms give IC weight in their investment decisions and must focus on IC for success in a competitive world. Accounting bodies should also focus on developing standards that incorporate IC as an asset. This study considered firms of multiple sectors to examine the significance of IC in Pakistani firms successfully. Along with enhancing IC literature, the VAIC model is significant in measuring IC in developing economies. This study also tried to extend IC literature in the context of the financial Vulnerability of firms and its indirect impact on financial performance.
... In recent literature, several papers have discussed the relationship between IAs and performance, typically using large publicly-traded firms (Alarussi & Gao, 2021;Balzer et al., 2020;Chiarelo et al., 2015;Denicolai et al., 2015;Haji & Ghazali, 2018;Hartsema et al., 2021;Ni et al., 2020;Pechlivanidis et al., 2022;Qureshi & Siddiqui, 2021;Rika Gamayuni, 2015;Wahyuni et al., 2023). The central hypothesis of our body of research is as follows: the higher the IAs, the better the performance of firms. ...
... Similarly, Denicolai et al. (2015), using data from 294 listed European firms, stated that IAs positively related to the firm compounded average growth rate. They also found that firm size moderated the relationship, as SMEs highly benefited from those effects. ...
Intangible assets (IAs) are fundamental for the creation of firm value. However, the literature is inconclusive regarding the relationship between IAs and profitability. This paper uses financial data from Colombian firms from 2005 to 2015 to determine if this relationship exists. Thirty dynamic panel models have been used to see whether IAs are related to Return on Equity, Return on Assets, Earnings Before Interest and Taxes, Earnings Before Interest, Taxes, Depreciation, and Amortization, Gross margin, and Net margin. The results, despite a limited sample size and missing variables, are related to the literature in that they signal the negative relationship between IAs and profitability. Thus, the capitalized value of IAs seems to negatively affect Colombian firms' performance in the short and long term.
... This evolving dynamic has propelled investments in intangible assets as a critical strategic imperative, underpinning firm competitiveness (Roth et al., 2023). The extant literature establishes a notable contribution of knowledge assets to firm performance, highlighting their role in sharpening a firm's competitive edge (Denicolai et al., 2015;Dancaková et al., 2022;Uddin et al., 2022). Further, this contribution is more intense when there is a propel balance with other complementary assets. ...
... It is calculated as the ratio of the cumulative net book value of knowledge assets, including patents, copyrights, design models, licenses, self-generated software, and capitalized development costs, to the total net book value of non-current assets. This approach, drawing on the insights of scholars like Denicolai et al. (2014b) andDenicolai et al. (2015), ensures a focused measure of a firm's investment in knowledge assets relative to its overall asset base.The study's second explanatory variable, the External Sourcing Intensity, was determined byFigure 1. Conceptual model parsing the net book values of externally acquired knowledge assets. The Outsource KnowledgeIntensity (OKI) was calculated by dividing the cumulative net book value of externally acquired knowledge assets by the overall net book values of knowledge assets. ...
The purpose of this paper is to investigate how knowledge assets and corporate social responsibility jointly influence the market value of a firm. In the contemporary knowledge-driven economy, where competitive advantage is based on intangible and intellectual capital, this paper emphasizes the strategic significance of knowledge assets, open innovation, and sustainable development practices in creating and maximizing market value. By employing multiple regression analysis on panel data for ten financial years, the study examines the optimal composition of knowledge assets and the impact of CSR initiatives on firm value. Key findings highlight a crucial threshold leading to the peak of market value, approximately when knowledge assets account for about 36% of a firm’s total non-current assets. Further, this study demonstrates that maintaining a balance between internally developed knowledge assets and external acquisitions significantly enhances value, correlating with the cultivation of a capitalization ability. Finally, this paper shows that corporate social responsibility emerges as a substantial driver of generating firm value, suggesting that integrating these practices into corporate strategic decisions not only aligns with ethical goals but also enhances market valuation. The insights from this study offer valuable perspectives for both academic researchers and industry professionals, advocating for a well-balanced approach to corporate asset management and underscoring the strategic importance of incorporating corporate social responsibility.
... It has also been found that location does affect differently in business recovery. The studies found that business performance is influenced by location (Denicolai et al., 2015;Minai & Lucky, 2011). It reflects the location's characteristics which play key support for business recovery. ...
The current study investigates how institutional constraints and firms’ and entrepreneurs’ characteristics affect business recovery. Some elements have not yet been rigorously examined in the existing literature, especially not concerning the post-communist countries’ business recovery component and the same is the research gap current study intended to address. To evaluate the study model, ordinal logistic regression was used. More than 300 valid questionnaires are collected from the Czech Republic, Hungary, and Serbia. The findings show that factors such as firm tenure and size, location, sector, entrepreneurial motivation, product change, etc., have conflicting effects on business recovery. Some of the outcomes of the present study is supported by the existing studies and some requires further research. The study focuses on the less explored independent variables and their association with business recovery, specifically on SMEs, which highlights the paper’s originality. The output of the current study adds to the existing literature of business recovery and institutional constraints. Policymakers interested in removing institutional limitations and promoting a quicker business recovery for SMEs are drawn to the research. The study findings are also helpful from a managerial standpoint because business owners and managers significantly impact decisions about entrepreneur motivation, product change, and other issues.
... The application of the inspiration, ideation and implementation stages, characteristic of design thought (Brown, 2009) in organizational transformation projects, specify the way in Strategic design to organizational transformation which design may be applied to strategic company problem resolution, thus increasing company structural capital (Denicolai et al., 2015), especially when applied as methodology to organizational transformation projects, when the reason for organizational transformation is clear, as specified below. ...
Purpose
The present document presents the possible contributions of strategic design to organizational transformation, as a part of business intellectual capital.
Design/methodology/approach
A case study from a Colombian family business group, with three business units, industrial, commercial and service, were used. Interviews regarding critical events and semi-structured interviews were employed. Data were processed with NVivo software.
Findings
It was found that abductive, empathetic and creative competencies (human capital) that may facilitate the comprehension of nature, needs and alternatives to be employed in organizational change processes. Further, the importance of the participative design approach in co-creation, with interest groups, transformation projects (relational capital), and design thought, as a methodology for the implementation of the preceding (structural capital), was identified.
Research limitations/implications
The results revealed, in this case, suggest several future investigative routes. Firstly, increased empirical research, based on this proposal, is suggested. Specifically, it would be relevant to perform causal studies that report the contribution of each of the components of strategic design to the diverse organizational transformation processes. A third line of investigation might include delving into certain relationships that have already been identified, but require further comparison. One of these might be the role of design thought as a method to perform specific organizational transformation projects.
Practical implications
As a result of the present investigation, a model is established (see Figure 2) which may be useful to companies to address organizational transformation, capitalizing on the benefits offered by strategic design. In summary, the proposal considers four phases (see the central circle in Figure 2). Phase 1: understanding organizational occurrences and situations, the basis upon which to determine the nature of an organizational transformation. This activity alludes to the work that is collaboratively managed with different interest groups, in the systematic comprehension of the business organizational transformation chain of events. Phase 2: determining the path to be followed or the route for collaborative action. Doing so in participative fashion permits the representation of a diversity of ideas and opinions on a given problem/potential identified in the preceding process. This stimulates and strengthens the creative competency in company personnel (Jeffries, 2007). If this competency is incorporated into the corporate culture, differential factors may be established, in an environment with broad competency, thus achieving transformations appropriate for a competitive environment.
Social implications
Co-creation, the central axis of the organizational transformation process. At the base of all organizational transformation processes is an approach focused on human beings, whose principal questions include: What place do individuals have in strategic problem resolution, like those of organizational transformation, in companies? How are human competencies strengthened when applied to organizational transformation processes? What types of ties are made, beyond the establishment of natural relationships (work, purchase, sell), with interest groups? And most importantly: How do they achieve the construction of new business realities together? To do this, participative and co-creative methods must be employed as a scenario to jointly achieve multiple satisfaction realities, in which understanding the essence of the participative design approach becomes meaningful (Jones, 2015).
Originality/value
Design thought, as a methodological proposal for organizational transformation projects. The use of inspiration, ideation, and implementation stages, iteratively and permanently, is suggested. Continuous review of the point of departure, the path trodden and the goals to be achieved should be prioritized, such that they may act as compasses for organizational transformation, considering strategic design to be a key motor (Yee et al. , 2017).
... There are controversies over the appropriate measure of firm growth (Hart et al., 2021). According to Delmar (2019), both objective (financial and nonfinancial metrics) and subjective (entrepreneur's satisfaction) approaches have been adopted in the measurement of firm growth depending on the circumstance and field of study (Collins and Clark, 2003;Denicolai et al., 2015;Davidsson et al., 2005;Mahmood et al., 2017). Delmar (2019) offered a compelling criticism of the use of subjective measures of firm growth, which limited the choice of firm growth metrics in this study to objective financial (turnover) and nonfinancial (firm age) metrics as expressed in equation (1). ...
Purpose
Studies focusing on the growth of indigenous construction firms (ICFs) are getting dated, and unreflective of recent policy changes in developing countries. This study sought to analyze critical barriers to the growth of ICFs and obtain an unsupervised parsimonious grouping of the barriers for policy improvements.
Design/methodology/approach
A mix of quantitative and qualitative research methods was adopted for the study. ICFs in Nigeria were cross-sectionally surveyed based on a set of firm growth barriers obtained from literature and refined by focus group discussion. Descriptive (means, standard deviations, percentages) and inferential (Kruskal-Wallice and Mann-Whitney U test) statistics were used in the analyses of the data. Factor analysis was used to group the variables.
Findings
Results showed that “declining” ICFs are more negatively impacted by low construction mechanization/use of labor intensive methods, inadequate geographical reach of operations, and inadequate flow of jobs/low demand than “stunted” and “growing” ICFs. The three main domains of critical barriers to the growth of ICFs were identified in descending order of importance as low patronage, difficulty accessing funds, and business management incapacity.
Research limitations/implications
The study recommends improvements in access to funds for ICFs by increasing the percentage of advance payments, and creating a pool of equipment for easy hire by ICFs. ICFs are advised to seek information on tendering opportunities outside their regions of domicile in order to increase their patronage.
Originality/value
This study reveals differences in the impacts of growth barriers on ICFs at different growth levels. This study also clarifies persisting barriers to the growth of ICFs [primarily construction micro, small and medium-sized enterprises (MSMEs)] from a developing country perspective using a longer list of variables.
