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Status-quo vs new strategy in intangibles

Status-quo vs new strategy in intangibles PurposeThis study explores company strategies for intangibles. The authors investigate whether it is reasonable for companies to intensify intangibles when the current strategy is not intangible-intensive. The purpose of this paper is to elaborate a theoretical model to describe the strategic decision making in companies.Design/methodology/approachThe authors use the Bellman-equation framework to find the conditions under which a change in strategy for intangibles is reasonable.FindingsThe results determine the parameters of returns on intangibles in different strategies, the optimal intangible stock and the influence of external economic shocks. The findings of the study demonstrate that many requirements have to be met to make intangible-intensive strategy beneficial for a company. Moreover negative shocks of crises force a company to postpone a new strategy on intangibles.Practical implicationsThis research provides an insight into strategic behavior of companies under uncertainty. The theoretical findings demonstrate under which conditions companies should decide to switch to a strategy more intangible-intensive. This model can be used to empirically test parameters of different investment strategies of companies using structural estimation techniques.Originality/valueThis work contributes to the theory of managerial economics giving closed form solutions for the dynamic optimization of company behavior. The findings also show how this behavior might change when economic crises are faced or expected. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Studies Emerald Publishing

Status-quo vs new strategy in intangibles

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0144-3585
DOI
10.1108/JES-07-2015-0132
Publisher site
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Abstract

PurposeThis study explores company strategies for intangibles. The authors investigate whether it is reasonable for companies to intensify intangibles when the current strategy is not intangible-intensive. The purpose of this paper is to elaborate a theoretical model to describe the strategic decision making in companies.Design/methodology/approachThe authors use the Bellman-equation framework to find the conditions under which a change in strategy for intangibles is reasonable.FindingsThe results determine the parameters of returns on intangibles in different strategies, the optimal intangible stock and the influence of external economic shocks. The findings of the study demonstrate that many requirements have to be met to make intangible-intensive strategy beneficial for a company. Moreover negative shocks of crises force a company to postpone a new strategy on intangibles.Practical implicationsThis research provides an insight into strategic behavior of companies under uncertainty. The theoretical findings demonstrate under which conditions companies should decide to switch to a strategy more intangible-intensive. This model can be used to empirically test parameters of different investment strategies of companies using structural estimation techniques.Originality/valueThis work contributes to the theory of managerial economics giving closed form solutions for the dynamic optimization of company behavior. The findings also show how this behavior might change when economic crises are faced or expected.

Journal

Journal of Economic Studies – Emerald Publishing

Published: Jan 9, 2017

References

  • A unified model of investment under uncertainty
  • Japanʼs intangible capital and valuation of corporations in a neoclassical framework
  • Firm resources and sustained competitive advantage
  • Assessing knowledge assets: a review of the models used to measure intellectual capital
  • A historical comparison of resource-based theory and five schools of thought within industrial organization economics: do we have a new theory of the firm?
  • Intangible capital and US economic growth