Edited by Derek Bosworth and Elizabeth Webster
1 Derek Bosworth and Elizabeth Webster 1 INTRODUCTION This chapter reviews theoretical and empirical economic studies that discuss intangible assets (IAs) and intellectual capital (IC), and the associated discretionary investments of the enterprise (that is, R&D, advertising, training, adoption of high-performance work practices – HPWPs – and so on) that generate them (Bosworth 2005). Given that, for a large and an increasing number of companies, intangibles form a considerable proportion of their total assets, an understanding of IAs is not only crucial to the management of IAs themselves, but to the strategic decision-making of the company as a whole. The bulk of the economic literature, however, is either based on conceptual models or provides empirical estimates based on relatively large-scale, enterprise-level data sets – the results of which managers ﬁnd difﬁcult to use. By demonstrating what economists have been doing, what has been found, as well as the current limitations to the results, the present chapter may allow managers to press economics and related disciplines to address questions of importance to them. The management orientation of the present chapter restricts the focus of the discussion to the consideration of private issues (that is, those relevant to the commercial sector, as opposed to broader welfare issues). Section 2 begins by discussing the nature of IC and how this can be distinguished from the broader concept of IAs. It introduces the question of ownership rights and, thereby, appropriability. Section 3 outlines the special nature and properties of IAs from an economic perspective, such...
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