Measuring the Contribution of Intangibles to Productivity Growth: A Disaggregate Analysis of Japanese Firms

In this study we examined Japanese firm-level data to test whether increments in intangible assets will leads to differences in productivity growth. Our results show that the marginal contribution of inputs varies a greatly among sectors, industries and depending on firm's size. Therefore, marginal increments in intangibles investments are not always associated with productivity growth suggesting that when intangibles exceed a threshold, additional investments could be inefficient. We conclude that among intangibles, firm-specific organizational capital and advertising are two of the critical factors in determining the productivity growth.