Intangible Assets and Firm-Level Productivity Growth in the U.S. and Japan

The purpose of this study is to measure the effect of intangibles on the growth of developed countries, particularly, at firm level. This paper analyzes the role "intangibles" play in firms' growth and performance, in addition to the production factors of labor and tangible capital, using their financial data in the U.S. and Japan. And this study attempts to analyze whether companies accumulating intangible assets respond better to shocks (for example, financial crises) than those without intangible capital. We could see that intangibles were important sources of productivity growth at the micro level in the U.S. Those results were not obtained in Japan. The cross term between intangibles and tangibles was positive and significant in both the U.S. and Japan. This suggests that if a firm invests more not only in intangibles but also in tangibles, the firm can enjoy a high productivity growth. Finally, this paper analyzed whether companies that had invested in intangibles responded better to shocks than those without intangible capital. The results showed that the firms with greater intangible capital managed to overcome the crisis in the U.S.