Intangible-intensive profiles of companies: protection during the economic crisis of 2008-2009
| Date | 10 October 2016 |
| DOI | https://doi.org/10.1108/JIC-02-2016-0029 |
| Published date | 10 October 2016 |
| Pages | 758-775 |
| Author | Elena Shakina,Angel Barajas |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & Finance,Accounting/accountancy,Behavioural accounting |
Intangible-intensive profiles of
companies: protection during the
economic crisis of 2008-2009
Elena Shakina
Department of Economics and Finance,
National Research University Higher School of Economics, Perm, Russia, and
Angel Barajas
Department of Accountancy and Finance, University of Vigo, Ourense, Spain and
IDLab, National Research University Higher School of Economics, Perm, Russia
Abstract
Purpose –This study explores the strategies adopted by companies during the economic crisis of
2008-2009. It investigates whether it is reasonable for companies to intensify their investment in
intangibles during recession periods. The purpose of this paper is to find empirical evidence that
companies withclear intangible-intensiveprofiles are likely to outperformthose without a clear strategy.
Design/methodology/approach –This paper explores the intangible-intensive strategies of
companies in terms of their dynamics during the pre-crisis, crisis and post-crisis periods. Through
dummy regression applied to data from more than 1,600 European companies involved in the empirical
analysis, the paper aims to show moderating effects from intangible-intensive strategies on company
performance, expressed in terms of economic value added and market value added.
Findings –The results established in this study shed some light on the global economic crisis in
2008-2009. The findings of this study demonstrate that companies with a conservative profile towards
intangibles outperform both those without a defined profile and those with an innovative one.
However, an innovative profile enables faster recovery after a crisis.
Originality/value –This paper contributes to the literature on the strategic management of
companies, and highlights the particular importance of intangible-intensiveness when markets
experience systematic distresses. It is emphasized that lessons learned during the recent global
economic crisis must be taken into account in the strategic vision of any company.
Keywords Performance, Strategy, Intangibles, Crisis
Paper type Research paper
1. Introduction
The failure and success of companies during economic crises is a widely discussed
issue. It has been considered in conceptual and empirical research papers, in analytical
overviews, and in consulting reports such as those by Krugman (2009) and Elliott
(1980). The most recent global economic crisis of 2008-2009 attracted particular
attention from researchers, since it led to dramatic structural changes in certain
industries and companies. Nevertheless, research into the core strategies of a company
which successfully survives an economic crisis has not been frequently undertaken.
It is generally assumed that the larger the number of unique resources at the
disposal of a company, the greater the chance that they will weather an economic
recession. Unique resources are mainly contained in a company’s intangible portfolio
(Barney, 1991; Grant, 1991; Wade and Gravill, 2003; Kristandl and Bontis, 2007). The
evidence for the crucial role played by intangibles during the economic recession of
2008-2009 was introduced by Guevara and Bounfour (2013). This paper examines
whether intangibles become more important during economic turbulence, and which
Journal of Intellectual Capital
Vol. 17 No. 4, 2016
pp. 758-775
©Emerald Group Publishing Limited
1469-1930
DOI 10.1108/JIC-02-2016-0029
The current issue and full text archive of this journal is available on Emerald Insight at:
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JIC
17,4
specific intangibles increase a company’s ability to outperform others under difficult
economic conditions. This idea has been tested by numerous researchers like Beltratti
and Stulz (2009), Lee and Makhija (2009), Santoro (2009), Schenker-Wicki et al. (2010)
and Cohen et al. (2014). Petkov (2011) notes that the lack of accounting for internally
generated intangible assets is one of the factors that originated the 2008 financial crisis.
The current study contributes to the development of this research. In taking this
step, it is assumed to be likely that specific, isolated intangible resources do not play a
critical role in a company’s success, especially in crisis conditions. At the same time,
however, companies are likely to intensify those intangibles which are aligned
with their strategic vision. These intangibles make up a company’s strategic
resource portfolio (Kristandl and Bontis, 2007). The question of which combination of
intangibles allows companies to survive and even succeed while others fail holds much
interest for researchers. An economic crisis offers a unique opportunity for the study of
this phenomenon, since it acts as a natural experiment in exogenous shock for all
companies and industries.
Shakina and Barajas (2015) have reported that when companies intensify their
intangibles, their behaviour has several features in common. In their study, three
company profiles were identified, of which two were considered to be intangible-
intensive. There were two clusters of companies that showed a clear predominance of a
particular combination of intangibles in their resource portfolio. These two profiles
were identified as being conservative and innovative. The remaining profile, which was
not characterized by a clear strategy with regard to its intangibles portfolio, was
termed a moderate profile. This profile was not considered to be intangible-int ensive.
The current study examines the change in the performance of each one of these
profiles under the conditions of the exogenous shock resulting from the global
economic crisis of 2008-2009. This research aims to identify which strategic profile can
provide protection or even success for companies during difficult economic conditions.
To answer this question, the results presented by Shakina and Barajas (2015) are
used. Based on this study, an empirical test is undertaken to reveal whether a
significant difference exists between the performance of the companies in each profile,
before and after the crisis. This study considers the economic crisis to be an exogenous
interference, and attempts to establish a causal relationship between the performance
of the companies, the moderating effect of the crisis and intangible-intensive profiles.
This paper is organized as follows. The next section provides a review of the
literature; Section 3 introduces the design of the research and the econometric strategy;
Section 4 describes the results of the model estimation; and the final section presents a
discussion of the results and the limitations of the research framework, and gives an
overview of possible future directions for this study.
2. Theoretica l foundation
Economic crises usually attract the attention of academics due to their negative impact
on the behaviour of economic agents. The amount of published research on crises
increases sharply during the year after the onset of a crisis. Hsu and Chiang (2015),
Schenker-Wicki et al. (2010) and Cohen et al. (2014) have considered shifts in company
strategy under market collapse, and financial and investment restrictions. The recent
global economic crisis generated particular interest in the investment behaviour of
companies. According to Guevara and Bounfour (2013), companies are challenged
during a downturn to find the best ways of reallocating their resources. Intangibles are
considered priorities, since they provide a “stream for future benefits”(Lev, 2000).
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Intangible-
intensive
profiles of
companies
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