Measuring intangibles' productivity. Empirical evidence from Spanish firms

As companies and shareholders begin to note the potential repercussions of intangible assets upon business results, the inability of the traditional financial statement model to reflect these new ways of creating business value has become evident. Companies have widely adopted new management tools, covering in this way the inability of the traditional financial statement model to reflect these new ways of creating business value. However, there are few prior studies measuring on a quantifiable manner the level of productivity unexplained in the financial statements. In this study, we measure the effect of intangible assets on productivity using data from Spanish firms selected randomly by size and sector over a ten-year period, from 1995 to 2004. Through a sample of more than 10,000 Spanish firms we analyse to what extent labour productivity can be explained by physical capital deepening, by quantified intangible capital deepening and by firm’s economic efficiency (or total factor productivity –PTF). Our results confirm the hypothesis that PTF weigh has increased during the period studied, especially on those firms that have experienced a significant raise in quantified intangible capital, evidencing that there are some important complementary effects between capital investment and intangible resources in the explanation of productivity growth. These results have significant differences considering economic sector and firm’s dimension.