Firm Dynamics

This paper explores the empirical observation of the rising intangible-to-tangible ratio since 1990, then its stagnation in the past decade accounting for intangible heterogeneities. I propose that not only firms’ transferable assets (R&D, productivity) but also embedded intangible assets, such as brand value and organizational capital, influence business dynamics.

In this research, I investigate what caused the intangible over tangible ratio to increase. One explanation for the surge in intangible assets is the increase driven by globalization and skill-biased task specialization. Globalization has expanded market size and intensified competition, making the marginal cost advantage more significant through intangibles.