IDEAS home Printed from https://ideas.repec.org/a/eee/streco/v66y2023icp200-212.html
   My bibliography  Save this article

Tangible and intangible investments and sales growth of US firms

Author

Listed:
  • Rabinovich, Joel

Abstract

This article presents new insights into the evolving relation among different types of investments and the growth in sales of US nonfinancial listed firms during the 1979–2018 period. By means of quantile regressions, it is observed an increasing relevance over time of intangible investments vis-à-vis a stable or declining contribution of capital expenditure for all types of firms. However, the impact of different types of intangible investment differs depending on the kind of firm. Whereas advertising has a growing relevance on all types of firms except the top decile in growth distribution, the positive effects of research and development become increasingly concentrated in high-growth firms.

Suggested Citation

  • Rabinovich, Joel, 2023. "Tangible and intangible investments and sales growth of US firms," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 200-212.
    • Handle: RePEc:eee:streco:v:66:y:2023:i:c:p:200-212
    DOI: 10.1016/j.strueco.2023.05.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0954349X23000668
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.strueco.2023.05.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lewis Alexander & Janice Eberly, 2018. "Investment Hollowing Out," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 66(1), pages 5-30, March.
    2. Coad, Alex & Rao, Rekha & Tamagni, Federico, 2011. "Growth processes of Italian manufacturing firms," Structural Change and Economic Dynamics, Elsevier, vol. 22(1), pages 54-70, February.
    3. Carol Corrado & Charles Hulten & Daniel Sichel, 2005. "Measuring Capital and Technology: An Expanded Framework," NBER Chapters, in: Measuring Capital in the New Economy, pages 11-46, National Bureau of Economic Research, Inc.
    4. Ozgür Orhangazi, 2008. "Financialisation and capital accumulation in the non-financial corporate sector:," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(6), pages 863-886, November.
    5. Francesca Lotti & Enrico Santarelli & Marco Vivarelli, 2009. "Defending Gibrat’s Law as a long-run regularity," Small Business Economics, Springer, vol. 32(1), pages 31-44, January.
    6. Alex Coad & Tom Broekel, 2012. "Firm growth and productivity growth: evidence from a panel VAR," Applied Economics, Taylor & Francis Journals, vol. 44(10), pages 1251-1269, April.
    7. García-Manjón, Juan V. & Romero-Merino, M. Elena, 2012. "Research, development, and firm growth. Empirical evidence from European top R&D spending firms," Research Policy, Elsevier, vol. 41(6), pages 1084-1092.
    8. Mariana Mazzucato & Stuart Parris, 2015. "High-growth firms in changing competitive environments: the US pharmaceutical industry (1963 to 2002)," Small Business Economics, Springer, vol. 44(1), pages 145-170, January.
    9. Ivan A. Canay, 2011. "A simple approach to quantile regression for panel data," Econometrics Journal, Royal Economic Society, vol. 14(3), pages 368-386, October.
    10. Martina Lawless, 2014. "Age or size? Contributions to job creation," Small Business Economics, Springer, vol. 42(4), pages 815-830, April.
    11. Dolores Añón Higón & Jaime Gómez & Pilar Vargas, 2017. "Complementarities in innovation strategy: do intangibles play a role in enhancing firm performance?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(5), pages 865-886.
    12. Giulio Bottazzi & Alex Coad & Nadia Jacoby & Angelo Secchi, 2011. "Corporate growth and industrial dynamics: evidence from French manufacturing," Applied Economics, Taylor & Francis Journals, vol. 43(1), pages 103-116.
    13. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 645-709.
    14. Mafini Dosso & Antonio Vezzani, 2020. "Firm market valuation and intellectual property assets," Industry and Innovation, Taylor & Francis Journals, vol. 27(7), pages 705-729, August.
    15. Maria Elena Bontempi & Jacques Mairesse, 2015. "Intangible capital and productivity at the firm level: a panel data assessment," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 24(1-2), pages 22-51, March.
    16. Arrighetti, Alessandro & Landini, Fabio & Lasagni, Andrea, 2014. "Intangible assets and firm heterogeneity: Evidence from Italy," Research Policy, Elsevier, vol. 43(1), pages 202-213.
    17. Engelbert Stockhammer, 2004. "Financialisation and the slowdown of accumulation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 28(5), pages 719-741, September.
    18. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731.
    19. Enrico Santarelli & Luuk Klomp & A. Roy Thurik, 2006. "Gibrat’s Law: An Overview of the Empirical Literature," International Studies in Entrepreneurship, in: Enrico Santarelli (ed.), Entrepreneurship, Growth, and Innovation, chapter 0, pages 41-73, Springer.
    20. Maarten de Ridder, 2022. "Market power and innovation in the intangible economy," POID Working Papers 064, Centre for Economic Performance, LSE.
    21. Giulio Bottazzi & Angelo Secchi, 2003. "Common Properties and Sectoral Specificities in the Dynamics of U.S. Manufacturing Companies," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 23(3_4), pages 217-232, December.
    22. Cristiano Antonelli & Gianluca Orsatti & Guido Pialli, 2023. "The knowledge-intensive direction of technological change," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(1), pages 1-27, March.
    23. Romano, Livio, 2019. "Explaining growth differences across firms: The interplay between innovation and management practices," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 130-145.
    24. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The Skill Content of Recent Technological Change: An Empirical Exploration," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(4), pages 1279-1333.
    25. Loof, Hans & Heshmati, Almas, 2002. "Knowledge capital and performance heterogeneity: : A firm-level innovation study," International Journal of Production Economics, Elsevier, vol. 76(1), pages 61-85, March.
    26. Giulio Bottazzi & Angelo Secchi, 2006. "Explaining the distribution of firm growth rates," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 235-256, June.
    27. Stefano Bianchini & Gabriele Pellegrino & Federico Tamagni, 2016. "Innovation Strategies and Firm Growth," LEM Papers Series 2016/03, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    28. Bart J. Bronnenberg & Jean-Pierre Dubé & Chad Syverson, 2022. "Marketing Investment and Intangible Brand Capital," Journal of Economic Perspectives, American Economic Association, vol. 36(3), pages 53-74, Summer.
    29. Stefano Bianchini & Giulio Bottazzi & Federico Tamagni, 2017. "What does (not) characterize persistent corporate high-growth?," Small Business Economics, Springer, vol. 48(3), pages 633-656, March.
    30. Tristan Auvray & Cédric Durand & Joel Rabinovich & Cecilia Rikap, 2021. "Corporate financialization’s conservation and transformation: from Mark I to Mark II," Review of Evolutionary Political Economy, Springer, vol. 2(3), pages 431-457, December.
    31. Colombelli, Alessandra & Haned, Naciba & Le Bas, Christian, 2013. "On firm growth and innovation: Some new empirical perspectives using French CIS (1992–2004)," Structural Change and Economic Dynamics, Elsevier, vol. 26(C), pages 14-26.
    32. James R. Brown & Steven M. Fazzari & Bruce C. Petersen, 2009. "Financing Innovation and Growth: Cash Flow, External Equity, and the 1990s R&D Boom," Journal of Finance, American Finance Association, vol. 64(1), pages 151-185, February.
    33. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    34. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 1033-1082, Elsevier.
    35. Alexander Coad & Nicola Grassano, 2016. "Whos doing who? Growth of sales, employment, assets, profits and R&D entangled in a curious five-way love triangle," JRC Working Papers on Corporate R&D and Innovation 2016-03, Joint Research Centre.
    36. Tristan Auvray & Joel Rabinovich, 2019. "The financialisation–offshoring nexus and the capital accumulation of US non-financial firms," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(5), pages 1183-1218.
    37. Antonelli, Cristiano, 2017. "Digital knowledge generation and the appropriability trade-off," Telecommunications Policy, Elsevier, vol. 41(10), pages 991-1002.
    38. Connolly, Robert A & Hirsch, Barry T & Hirschey, Mark, 1986. "Union Rent Seeking, Intangible Capital, and Market Value of the Firm," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 567-577, November.
    39. Nicolas Crouzet & Janice Eberly, 2018. "Intangibles, Investment, and Efficiency," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 426-431, May.
    40. Coad, Alex & Rao, Rekha, 2008. "Innovation and firm growth in high-tech sectors: A quantile regression approach," Research Policy, Elsevier, vol. 37(4), pages 633-648, May.
    41. Daniele Moschella & Federico Tamagni & Xiaodan Yu, 2019. "Persistent high-growth firms in China’s manufacturing," Small Business Economics, Springer, vol. 52(3), pages 573-594, March.
    42. Jan De Loecker & Jan Eeckhout & Gabriel Unger, 2020. "The Rise of Market Power and the Macroeconomic Implications [“Econometric Tools for Analyzing Market Outcomes”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 561-644.
    43. Werner Hölzl, 2009. "Is the R&D behaviour of fast-growing SMEs different? Evidence from CIS III data for 16 countries," Small Business Economics, Springer, vol. 33(1), pages 59-75, June.
    44. Daniele Girardi & Riccardo Pariboni, 2016. "Long-run Effective Demand in the US Economy: An Empirical Test of the Sraffian Supermultiplier Model," Review of Political Economy, Taylor & Francis Journals, vol. 28(4), pages 523-544, October.
    45. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    46. Han, Bong H. & Manry, David, 2004. "The value-relevance of R&D and advertising expenditures: Evidence from Korea," The International Journal of Accounting, Elsevier, vol. 39(2), pages 155-173.
    47. Giovanni Dosi & Marco Grazzi & Daniele Moschella & Gary Pisano & Federico Tamagni, 2020. "Long-term firm growth: an empirical analysis of US manufacturers 1959–2015," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 29(2), pages 309-332.
    48. Imran S. Currim & Jooseop Lim & Yu Zhang, 2018. "Effect of analysts’ earnings pressure on marketing spending and stock market performance," Journal of the Academy of Marketing Science, Springer, vol. 46(3), pages 431-452, May.
    49. Ken Shadlen, 2008. "Globalisation, Power and Integration: The Political Economy of Regional and Bilateral Trade Agreements in the Americas," Journal of Development Studies, Taylor & Francis Journals, vol. 44(1), pages 1-20.
    50. Stephen Bond & Julie Ann Elston & Jacques Mairesse & Benoît Mulkay, 2003. "Financial Factors and Investment in Belgium, France, Germany, and the United Kingdom: A Comparison Using Company Panel Data," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 153-165, February.
    51. Fama, Eugene F. & French, Kenneth R., 1997. "Industry costs of equity," Journal of Financial Economics, Elsevier, vol. 43(2), pages 153-193, February.
    52. David Wang & Tiffany Yu & Fang-Ru Ye, 2012. "The value relevance of brand equity in the financial services industry: an empirical analysis using quantile regression," Service Business, Springer;Pan-Pacific Business Association, vol. 6(4), pages 459-471, December.
    53. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    54. Carol Corrado & Jonathan Haskel & Cecilia Jona-Lasinio & Massimiliano Iommi, 2022. "Intangible Capital and Modern Economies," Journal of Economic Perspectives, American Economic Association, vol. 36(3), pages 3-28, Summer.
    55. Chih-Hai Yang & Chia-Hui Huang, 2005. "R&D, Size and Firm Growth in Taiwan‘s Electronics Industry," Small Business Economics, Springer, vol. 25(5), pages 477-487, December.
    56. Kevin W. Chauvin & Mark Hirschey, 1993. "Advertising, R&D Expenditures and the Market Value of the Firm," Financial Management, Financial Management Association, vol. 22(4), Winter.
    57. Peters, Ryan H. & Taylor, Lucian A., 2017. "Intangible capital and the investment-q relation," Journal of Financial Economics, Elsevier, vol. 123(2), pages 251-272.
    58. Herman Mark Schwartz, 2022. "Global secular stagnation and the rise of intellectual property monopoly," Review of International Political Economy, Taylor & Francis Journals, vol. 29(5), pages 1448-1476, September.
    59. Laura Power, 1998. "The Missing Link: Technology, Investment, And Productivity," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 300-313, May.
    60. Natália Barbosa & Vasco Eiriz, 2011. "Regional Variation of Firm Size and Growth: The Portuguese Case," Growth and Change, Wiley Blackwell, vol. 42(2), pages 125-158, June.
    61. Colombelli, Alessandra & Haned, Naciba & Le Bas, Christian, 2013. "On firm growth and innovation: Some new empirical perspectives using French CIS (1992–2004)," Structural Change and Economic Dynamics, Elsevier, vol. 26(C), pages 14-26.
    62. Higson, C. & Holly, S. & Kattuman, P., 2002. "The cross-sectional dynamics of the US business cycle: 1950-1999," Journal of Economic Dynamics and Control, Elsevier, vol. 26(9-10), pages 1539-1555, August.
    63. Cecilia Rikap & Bengt-Åke Lundvall, 2021. "The Digital Innovation Race," Springer Books, Springer, number 978-3-030-89443-6, December.
    64. Jonathan P. O'Brien, 2003. "The capital structure implications of pursuing a strategy of innovation," Strategic Management Journal, Wiley Blackwell, vol. 24(5), pages 415-431, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joel Rabinovich & Niall Reddy, 2024. "Corporate Financialization: A Conceptual Clarification and Critical Review of the Literature," Working Papers PKWP2402, Post Keynesian Economics Society (PKES).
    2. Giovanazzi, Carmen & Victor, Vincent & Putscher, Dorothee, 2024. "Corporate investment trends in Germany: The role of financialization, intangibles and M&A," ifso working paper series 40, University of Duisburg-Essen, Institute for Socioeconomics (ifso).
    3. Biswajit Banerjee & Jelena Ćirjaković, 2023. "The Impact of the Covid-19 Pandemic on the Non-financial Corporate Sector in Slovenia," Working Papers 108, Ashoka University, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joel Rabinovich, 2022. "The evolving contribution of R&D, advertising and capital expenditures for US-listed firms’ growth in sales, 1979-2018. A quantile regression analysis," Working Papers hal-03539656, HAL.
    2. Canarella, Giorgio & Miller, Stephen M., 2018. "The determinants of growth in the U.S. information and communication technology (ICT) industry: A firm-level analysis," Economic Modelling, Elsevier, vol. 70(C), pages 259-271.
    3. García-Manjón, Juan V. & Romero-Merino, M. Elena, 2012. "Research, development, and firm growth. Empirical evidence from European top R&D spending firms," Research Policy, Elsevier, vol. 41(6), pages 1084-1092.
    4. Silviano Esteve-Pérez & Fabio Pieri & Diego Rodriguez, 2022. "One swallow does not make a summer: episodes and persistence in high growth," Small Business Economics, Springer, vol. 58(3), pages 1517-1544, March.
    5. Bartoloni, Eleonora & Baussola, Maurizio & Bagnato, Luca, 2020. "Waiting for Godot? Success or failure of firms’ growth in a panel of Italian manufacturing firms," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 259-275.
    6. Caterina Santi & Pietro Santoleri, 2017. "Exploring the link between innovation and growth in Chilean firms," Small Business Economics, Springer, vol. 49(2), pages 445-467, August.
    7. Flavio Calvino, 2016. "Technological Innovation and the Distribution of Employment Growth: a firm-level analysis," LEM Papers Series 2016/37, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. SooGeun Ahn & Jeewhan Yoon & YoungJun Kim, 2018. "The innovation activities of small and medium-sized enterprises and their growth: quantile regression analysis and structural equation modeling," The Journal of Technology Transfer, Springer, vol. 43(2), pages 316-342, April.
    9. Cristiano Antonelli & Gianluca Orsatti & Guido Pialli, 2023. "The knowledge-intensive direction of technological change," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(1), pages 1-27, March.
    10. Daniele Moschella & Federico Tamagni & Xiaodan Yu, 2019. "Persistent high-growth firms in China’s manufacturing," Small Business Economics, Springer, vol. 52(3), pages 573-594, March.
    11. Guarascio, Dario & Tamagni, Federico, 2019. "Persistence of innovation and patterns of firm growth," Research Policy, Elsevier, vol. 48(6), pages 1493-1512.
    12. Coad, Alex & Segarra, Agustí & Teruel, Mercedes, 2016. "Innovation and firm growth: Does firm age play a role?," Research Policy, Elsevier, vol. 45(2), pages 387-400.
    13. Alessandra Colombelli & Jackie Krafft & Francesco Quatraro, 2015. "Eco-innovation and Firm Growth: Do Green Gazelles Run Faster? Microeconometric Evidence from a Sample of European Firms. WWWforEurope Working Paper No. 88," WIFO Studies, WIFO, number 57897.
    14. Reddy, Niall, 2024. "“Downsize And Distribute” Or “Merge And Monopolize”? A Critique Of Corporate Financialization Theories," SocArXiv 2zy5h, Center for Open Science.
    15. Hyunseog Chung & Soomin Eum & Chulung Lee, 2019. "Firm Growth and R&D in the Korean Pharmaceutical Industry," Sustainability, MDPI, vol. 11(10), pages 1-19, May.
    16. Joel Rabinovich & Niall Reddy, 2024. "Corporate Financialization: A Conceptual Clarification and Critical Review of the Literature," Working Papers PKWP2402, Post Keynesian Economics Society (PKES).
    17. Krafft Jackie & Quatraro Francesco & Colombelli Alessandra, 2011. "High Growth Firms and Technological Knowledge: Do gazelles follow exploration or exploitation strategies?," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201114, University of Turin.
    18. Juan Federico & Joan-Lluis Capelleras, 2015. "The heterogeneous dynamics between growth and profits: the case of young firms," Small Business Economics, Springer, vol. 44(2), pages 231-253, February.
    19. Liu, Duan & Li, Zhiyuan & He, Hongbo & Hou, Wenxuan, 2021. "The determinants of R&D smoothing with asset sales: Evidence from R&D-intensive firms in China," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 76-93.
    20. Martin Falk, 2012. "Quantile estimates of the impact of R&D intensity on firm performance," Small Business Economics, Springer, vol. 39(1), pages 19-37, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:streco:v:66:y:2023:i:c:p:200-212. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/525148 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.