The relevance of intangible assets in German SMEs
| Published date | 25 July 2008 |
| Pages | 410-432 |
| DOI | https://doi.org/10.1108/14691930810892018 |
| Date | 25 July 2008 |
| Author | Susanne Durst |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
The relevance of intangible
assets in German SMEs
Susanne Durst
Institute of Entrepreneuership, Hochschule Liechtenstein,
Vaduz, Principality of Liechtenstein
Abstract
Purpose – The purpose of this paper is to study the perceptions of the advisors and valuers of
German associations regarding the relevance of intangible assets in general, and for the purpose
of company succession in particular.
Design/methodology/approach – To perform this study German associations were examined,
which play an essential role in company succession in Germany, from both sides of the process.
Conducting a web-survey, 51 answers were received (response-rate ¼42.5 per cent) which could be
used for the analyses.
Findings – Amongst others, the study showed that intangible assets are of a moderate relevance.
However, a large proportion of respondents expect intangible assets to be of greater relevance in the
future. The study highlighted that intangibles do have a great impact on the decision-making process
of an investor.
Research limitations/implications – The total population of German Association is 135.
The author received answers from 51 associations, which did not fulfil the statistical size to conduct
advanced statistical methods. The specific relationship of German associations with small- to
medium-sized enterprises (SMEs) is rather unique compared to similar institutions around the world,
therefore, the results may not be replicable in other countries.
Practical implications – The results of this study will help practitioners as well as academics to
better understand the relevance of intangible assets in SMEs.
Originality/value – This paper is pioneering in the analysis of the influence of intangible assets in
German SMEs for the purpose of company succession.
Keywords Small to medium-sizedenterprises, Intangible assets,Investors, Succession, Germany
Paper type Research paper
1. Introduction
The pending changes in population structure will have a marked effect on company
succession. According to the Commission of the European Communities (2006, p. 3),
one-third of European entrepreneurs will leave within the next ten years. In absolute
figures, this means approximately 690,000 small- to medium-sized enterprises (SMEs)
and 2.8 million jobs every year. Additionally, more and more owners of SMEs have to
consider a third party as a potential successor since there is no apparent successor
within the family. Owing to this situation the investor is in a position to choose the
company which matches their expectations best.
Although, against this background, company succession seems to be of
considerable relevance the literature review revealed that the articles dealing with
this topic are mainly focused on the other side of the business transfer process, namely
the perspective of the incumbent owner (Motwani et al., 2006; Olbrich, 2005; Sambrook,
2005). This focus should change as potential investors in SMEs play an important
role in the succession process such as preventing well-established SMEs from closing.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1469-1930.htm
JIC
9,3
410
Journal of Intellectual Capital
Vol. 9 No. 3, 2008
pp. 410-432
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930810892018
They also provide an economic contribution by preventing the loss of job s which,
consequently, strengthens the national economy. Thus, it is important to better
understand the decision-making process of such a successor.
On the other hand, the terms “globalization” and “information technology” are
perceived to trigger dramatic changes in the structure of companies. These changes are
likely to elevate intangible assets to the role of key value drivers of businesses.
These intangibles and the ability to create and utilize them can be regarded as the core
activities of a company for securing its continuity. Furthermore, they represent the
resources a potential investor is looking for (Nonaka et al., 2001). Companies of all sizes
are forced to increasingly recognize these resources as their most precious assets and
staff as the most sought-after resources.
Although both topics have great relevance in today’s economy and generate a large
amount of public attention, respectively, little is known about the relevance of
intangible assets in the succession process of SMEs.
The underlining research, representing the basis for this paper, builds on the
proposition that the decision-making process of an investor in SMEs is mainly based on
the essential intangibles providing the basis for competitive advantage(s). Thereby, the
paper in hand provides results of an empirical study of the relevance of intangible
assets in general and for the purpose of company succession in particular.
The empirical research, which is based on a web survey, was used in order to gather
descriptive data about the present situation of intangible assets in German SMEs.
2. Objectives and research design of the empirical study
The aim of the quantitative research is to garner the perceptions of German
associations dealing with SMEs on a day-to-day basis concerning their attitud e and
opinion towards intangibles in SMEs and in company succession. Furthermore, they
were assumed to provide a conceptual view as to whether these assets are assessed
properly and if there are any additional intangibles to be taken into account.
The Trade Corporations and Chambers of Commerce were selected due to their
strong focus on company succession and their good contacts with both sides of this
process, namely the seller and the buyer. Based on the research question, which centres
on status quo data, a cross-sectional design was chosen. Cross-sectional design
is suitable when attitudes or retrospective aspects are of great interest (Diekmann, 2005).
3. Population and type of data collection
The total population of the quantitative study consists of the sub-populations of the
Trade Corporations and the Chambers of Commerce. Thereby, the co-workers of
the departments responsible for company succession represent the unit of analysis
of the survey. No limitations were given referring to age, gender or similar
characteristics. The data collection comprised all of the associations existing in
Germany during the period of examination: 54 trade corporations; and 81 chambers of
commerce.
Owing to the small total population, it was decided to address the total population
rather than drawing a sample. As every department was contacted, the work
represents a census study. A census study is suitable when a small population is
given (Stier, 1996) otherwise such a study is not appropriate in view of time and cost
(Schnell et al., 2005).
The relevance
of intangible
assets
411
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