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Factors Affecting Investments in Intangible Assets: Insights from Indian Companies

Aparna Bhatia, and Khushboo Aggarwal

DOI: https://doi.org/10.62206/sajm.30.4.2023.7-29

PUBLISHED : 26 Feb 2024

Abstract

The present study focuses on assessing the intangible assets of a business comprehensively and identifying the industry- and firm-specific factors influencing the investment in intangibles. Using a fairly large sample of 346 companies for a period of seventeen years from 2000-2001 to 2016-2017, various hypotheses were tested by applying the Generalized Method of Moments (GMM). The effect of firm-size, market-share and profitability were found to be positive and significant on the investment in intangible assets, while leverage, age and capital intensity were found to be negatively influencing the same. The findings of the study may help managers to re-direct the limited resources towards investment in intangible assets as their businesses grow in size, profitability and market-share. The new and young companies must make deliberate efforts to invest in intangibles in order to secure distinctive competencies and a sustainable competitive advantage. With respect to India, a majority of research studies have assessed the determinants of intangible assets in terms of R&D only. The present study contributes to the extant literature by measuring intangibles holistically including visible intangible assets like licenses, purchased goodwill, patents, copyright and other intangible assets and invisible intangible assets representing external Structure (brands, customer and supplier relations); internal structure (the organisation management, legal structure, manual systems, attitudes, R&D); and individual competence (education and experience).

Key Words

Determinants, Firm specific variables, Generalized Method of Moments (GMM), Intangible assets, Resource-based view

Author Biography

Aparna Bhatia
Associate Professor, University School of Financial Studies, Guru Nanak Dev University, Amritsar, India. E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Khushboo Aggarwal
Assistant Professor, Department of Commerce, Pt. Mohan Lal S.D. College for Women, Gurdaspur, India; and is the corresponding author. E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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