Intangible-intensive strategy in crisis

Размещено на http://www.allbest.ru

Размещено на http://www.allbest.ru

Introduction

Investments in intangibles are significantly important for organizations, because these investments define future benefits, especially in knowledge-intensive industries (Gu & Lev, 2011). Moreover, this tendency is true not only for high-tech or knowledge-intensive industries, but also for those industries that used to be traditional. New global business models, new digital solutions in marketing, logistics, data storage, analytics, employees' education and other indicators - all these contribute to intangibles of a company. In terms of crisis many companies have to relocate their resources to moderate the downturn, and in this case intangibles are prior because they contribute to future revenue streams (Guevara & Bounfour, 2013; Lev, 2000). The recent global economic crisis of 2008-2009 led to drawdown in performance of numerous companies and industries. According to [Guevara & Bounfour, 2013; Shakina & Barajas, 2016] intangibles play an important role and provide moderation effect during the economic recession periods, the intangible-intensive strategies let companies keep more stable performance for a long-term period.

Various authors explored the topic of intangibles. Shakina and Barajas, Cincera et al., Archibugi et al. and Jung et al. have profound studies on the topic of intangibles in the conditions of world crisis, which made foundation for this thesis. Therefore, this study continues investigations on this topic, but focuses on the impact of specific types of intangibles and aims to discover trends in markets of Russia and European countries before, during and after world crisis period. The new about the analysis in the thesis could be dimension as intangible-intensive strategy of companies and analyzing the role of intangibles in crisis for the Russian and European companies with comparing trends, which is not fully researched topic.

The study carries out comparative analysis with such research questions for this topic as:

Q1. Whether being intangible-intensive helped European and Russian companies overcome global crisis of 2008-2009 with less decrease in performance and recover faster than non-intangible intensive ones;

Q2. Whether specific indicators of human, relational and structural capital influenced the performance of European and Russian companies before, during and after crisis and if and if yes, whether there was industry effect for them.

The problem of the study is lack of investigation of impact of specific types of intangibles on company's performance in the periods related to crisis and lack of the research of the peculiarities as comparative analysis of Russian and European market.

The purpose of the research is to find out whether a company's performance is influenced by predominant presence of intangible resources. The object of the study - public European and Russian companies. The subject of the study is intangibles used by Russian and European companies in the conditions of world economic crisis.

The thesis contains the following objectives:

A) Analyzing and comparing the performance of intangible-intensive and not intangible-intensive Russian and European companies in the periods related to crisis

B) Investigation and comparation of intangibles' influence on the performance of Russian and European companies in crisis related periods.

C) Exploration of the industry effect for the intangibles that were significant for the performance of Russian and European companies in the observed period.

The stated objectives were reached through several stages. The first step was reviewing the previous investigations of the topic. Based on literature analysis hypotheses for the study were developed. Further, the data was prepared, variables for the research were chosen, the companies from the sample were divided according to their intangible strategy profile (human capital intensive, relational capital intensive, structural capital intensive). After that median test was conducted for comparison of the performance (EVA and MVA) of the companies with intangible intensive and non-intensive profiles before, during and after crisis for European and Russian companies separately. After that, regression models were built for European and Russian intangible-intensive companies considering periods of the crisis (before, during and after crisis). Then based on the results of the previous steps industry effect was observed for those intangibles that showed statistically significant effect on companies' performance.

The database for the research contains a number of variables that represent specific intangibles and performance indicators for more than 1600 European and 1000 Russian companies, observed in 2004-2013 years. From this initial database sample for the research was formed. Such methods of data analysis as descriptive statistics, correlation analysis, median test, regression modelling and comparative analysis for European and Russian companies were used. Regression models were built for both European and Russian companies separately for different periods, using defined intangible- intensive companies to evaluate influence of particular intangibles on the performance of the company. The research will be useful for strategic decision making and for analytics for big range of companies. It will also be helpful for investment decisions under threat of future crisis. The study also can be useful for further research, especially about the role of intangibles in Russia.

The main terms, referring to the topic, are intangibles, intellectual capital, economic and market value added (EVA & MVA). Discussing the term “intangibles” we follow the definition, provided by Baruch Lev: intangible assets are “claims to future benefits, that do not have physical or financial embodiment” [Lev, 2000]. These aspects are deeply observed in the following parts of the paper.

The structure of the thesis consists of following parts. After the “Introduction, the study has “Theoretical foundation” part with literature review. “Methodology” part contains data description and method for analysis of the data. “Statement of the research question” provides the study with hypotheses development and stages to reach objectives. “Description of results” part provides with results of analysis. “Conclusion” gives summary to the research, provides significant trends of the research and suggest further study topics.

The current paper provides deep investigation of impact of particular variables on companies' performance in unstable crisis environment, searches for economic explanation for the observed trends, discusses industry effect for statistically significant variables' impact. The limitations are provided by the quantitative type of the research: the trends that are observed for an average company may not be applicable for the concrete organization. Furthermore, geographical and time limitations exist: the development of new intangibles in the near future may completely change their role in company's assets; the observed trends in Europe and Russia may differ from, for example, Asian ones.

1. Theoretical foundation

crisis investment intangible

Intangibles have become a significant factor for company's performance, defining its success and stability in various stages of external conditions. Many authors believe that the creation of a company's value in the broadest terms is based on intangible resources [Drucker, 1993]. [Edvinsson and Malone, 1997] argue that intangible assets are more significant to the value of a company than tangible assets. The World Bank (2005) research provides information that intangible assets account for 77% of all global wealth.

The need to measure intangibles arises, first of all, from need of investors to estimate company's value. That is why investigations on the topic of relations between intangibles and company's economic and market value added, as modern approaches to measuring company's value, are relevant. Various studies about impact of intangibles created the foundation for this research paper.

Definition of intangibles and key concepts.

One of the main problems for studying intangibles is lack of standard classification and common definition of intangible capital. In general the term “intangible assets” refers to all assets of the company that are not represented physically. However, these are much more than goodwill or “intangible assets”, represented in the balance sheet, and the question of measuring real value of intangibles is very complicated. Intangibles are mostly expressed by intellectual capital. One of the first definitions for intellectual capital was “useful package of knowledge”, provided by [Sveiby, 1997, p.344]. [Edvisson, 1997] treated intellectual capital as additional to financial information that can be used as non-financial capital. Though the research of Edvisson focused on experience of one concrete company, his work is considered extremely important because it provoked broad discussion of the topic of intellectual capital. [Brookings, 1996] claims that intellectual capital contains assets, which are founded on the market knowledge, intellectual property, knowledge of human capital and technology enterprise. Some authors treat intellectual property as synonym of intellectual capital [Lev, 2000], defining both terms as “non-physical claim to future benefits”, others distinguish intellectual property as the more formal, legally claimed and measurable part of intellectual capital and emphasize the difference between the terms. As seen from definition above, intellectual property is often included into the broader term of intellectual capital. [Smith et al., 2000] defines intellectual property as intangible assets, presented in all units of business, along with tangible assets and working capital. The difference between intellectual capital and intellectual property is that intellectual property is a defined concept and has clear components; it is presented as a legal rights of the organization and has its identification in the book value. Intellectual capital is often referred as a synonym of intangibles, but that is not accurate. Referring to the definition, provided by the Organisation for Economic Cooperation and Development (OECD, 1999), intellectual capital covers two out of three aspects of intangible assets: human and organizational (“structural”) assets. The term “intangibles” also covers so-called “relational” assets. For the purpose of the presented research the broader concept of intangibles is used as the basis for intellectual capital, referring to all non-physical and non-financial assets of the company that are aimed to generate future revenue streams. [Kristandl & Bontis, 2007] also add that intangible resources should also fit VRIN criteria: valuable, rare, inimitable, non-transferrable. Maintaining these criteria is even more important for intellectual capital than for any other assets because the company cannot properly keep control and security over them, except for patents and trademarks. Such parts of intellectual capital as new discoveries (e.g. medicine, software), or innovative organizational designs provide the company with higher risks than tangible assets [Lev, 2001], but they generate source for competitive advantage. Leading companies, especially in knowledge intensive industries, cannot avoid these risks, and the only way to properly protect intellectual property is to make it difficult to imitate and adopted for the concrete company.

There is still no common approach to measurement of intangibles. The simplest method of calculating intangibles' value as the difference between the company's capital market value and its book value is incorrect for several reasons. [Lev, 2001] states that, first, it relies on the wrong assumptions that there is no mispricing in capital markets, and that historical values of assets, represented in the balance sheet reflect their current values [p.3]. Second, such approach is circulatory and does not provide any new information to investors. For the current study the goal was not to precisely estimate the value of intangibles of the company, but to conduct comparative analysis for the large groups of companies, united by same peculiarities, and to figure out common trends, therefore the analysis did not take into account all the possible intangibles, but focused on the most relevant ones.

According to [Sveiby, 1997], intellectual capital can be characterized as human capital, relational capital and structural capital. Human capital is the input that an individual worker brings to the company [Shakina & Barajas, 2013]. It refers to the individual abilities, information, ability and experience of employees. Relational capital incorporates every one of the assets engaged with the connection between the element and its accomplices (clients, investors, providers) and all the information installed in outside relations. Better knowledge of the clients and more personal and caring approach to them provides the company a competitive advantage [Tseng & Goo, 2005]. Structural capital alludes to the inside structure of the association, procedures and systems. It incorporates patents, authoritative procedures, key and regulatory innovations.

Intangibles can be internally generated or acquired. For accounting internally-generated intangibles, such as R&D, information technologies, brand creation and promotion, business processes and design, training for employees and other human resources development costs, creation and usage of “big data”, customer acquisition costs, etc. are seen as expenses, while similar acquired intangibles are seen as capital [Lew, 2018]. Generating intangibles requires much costs, that is why many intangibles developed by the firm can negatively influence economic indicators. However, for the price of the company they are seen as capital and can positively influence company's market value.

The role of intangibles is now discussed in terms of its connection with total factor productivity (TFP) [McGrattan, 2017; McGowan, 2015; Cheng, 2017]. TFP stands for the amount of output that is not explained by the amount of inputs (labor and capital costs) used in production [Comin, 2006]. The global crisis of 2008-2009, according to common explanation, was triggered by global decrease in TFP. Comparing the recent decades, global slowdown in TFP growth was dramatic, decreasing from 1.3 per cent from 1999 to 2006 to only 0.3 per cent from 2007 to 2014 [Van Ark, 2017]. Intangibles provide a source for TFP growth; influencing market, service delivery, interaction, and learning, intangibles are important to create superior new services [Cheng, 2017].

There are several classifications for intangibles. In this paper classification of intellectual capital provided by [Edvinsson, 1997] was chosen as the prior one. This classification divides all the intellectual resources into three groups: human capital, relational capital and structural. However, alternative classifications also exist. Human capital is often divided into Managerial capabilities and Human resource capabilities. [Molodchik et all., 2014] suggested a detailed classification, dividing all the intangibles into Management capabilities, Human resource capabilities, business process capabilities, innovative capabilities, customer loyalty, and networking capabilities. Another classification was used by [Cheng, 2017], who divided intellectual capital into four types, according to the sphere of involvement of the capital for the firm: market capital, service delivery capital, interaction capital, and learning capital. [Maditinos, 2010] used another classification, putting out, apart from classical human and structural capital, innovation capital and customer capital. One more classification was suggested by [Lev, 2001], who divided intangibles according to their origins: “discovery, organizational practices, human resources”. All the above classifications are not mutually exclusive, they provide complex picture of intellectual capital from the different points of view, but for the current research classical division of intellectual capital was chosen.

Methods of investigation of intangibles' influence on company's performance

The impact of intangible resources on the company's performance was investigated by researchers from various angles. [Huang et al., 2006] explored the relationship between IT investments, as part of a company's intellectual capital, and company's performance. [Delios and Beamish, 2001] investigated the effects that intangible assets have on profitability. [Carmeli and Tishler, 2004] focused on the impact of organizational intellectual capital on organizational performance. Overall, most of the investigations prove that intangibles influence the performance of the company.

Investigation of intangibles requires necessary valuation methods. The literature, which covers the topic of intangibles, provides several methods of intellectual capital valuation with usage of various approaches and models. Referring to Luthy' study (1998), Sveiby (2007) suggests four categories of intellectual capital measurement methods, which are Return on Assets and Market Capitalization methods (market models), Direct Intellectual Capital and Scorecard methods (management models). The market models measure intangibles at the aggregated organizational level, while management models - at the component level. From the provided profiles of intellectual capital measurement methods the most popular models are Technology Broker, which evaluates intellectual capital of the company with significance of intellectual property; Tobin's Q Ratio, which uses comparison of market asset value with replacement value; Skandia Navigator, which states that five focuses: human, financial, process, customer, and renewal and development derive intangibles of the firm, EVA and MVA, which are related to the Return on Assets methods and widely used in the researches [Gogan & Draghici, 2013].

EVA and MVA models are crucial for the dimension of this research paper, and these models were mentioned in previous related to this study investigations. Economic value added (EVA) measurement model for intellectual capital, founded by Stern and Stewart Co, uses the balance sheet and income statement, but adjusts it to the capital base of the firm and the firm's specific risk-based capital cost [Mouritsen, 1998]. According to this model, the company's value grows only if the return on invested capital is larger than the cost of capital spent on its acquisition [Nazari, 2014]. EVA is calculated by the following formula:

EVA = NOPАТ -- (WACC Ч К) (1),

NOPAT is Net Operational Profit After Taxes,

WACC - Weighted Average Cost of Capital

K - Operational Capital

According to [Young et al, 2000], EVA can be increased in three ways: by raising net operational profit after taxes (NOPAT), lowering the WAAC or reducing invested capital. Therefore, to have positive impact on EVA investments into intangibles have to generate economical profit higher than the investments are. Otherwise they are bringing negative impact on EVA. Advantage of EVA over simpler calculation methods is that it relies on data from balance sheet and income statement, but also considers value of capital, firms capital base and risks [Mouritsen,1998]. High explanatory ability of EVA was also proven by the research of [Shakina and Barajas, 2012].

Market value added (MVA) model reflects the distinction between the market estimation of an organization (equity and obligation) and the capital that banks and investors have depended to it throughout the years as advances, held profit and paid-in capital [Stewart, 1999]. The formula for calculating MVA is the following:

MVA=MV - Book value of stockholders' equity (2)

MV - Market Value of stocks

EVA and MVA are interconnected variables. MVA is commonly defined as the sum of expected EVA for future periods. However, the connection is not that simple and in some cases decrease in EVA would not lead to changes in MVA. This happens sometimes in some large reputable companies. Value of shares of such companies for stakeholders is defined not only by the shirt-term profitability, but also on long-term view, that is guaranteed by large capital of the company.

Role of intangibles in crisis period

Crisis is commonly defined as a wide range of disturbances, among which the most influential are sharp decline in prices of assets, disruption in foreign currency exchange or bankruptcy of large financial institutions [Hultйn et al., 2012]. All the above were observed during global crisis of 2008-2009 [Allen and Snyder, 2009; De Bonis et al., 1999]. The crisis of 2008-2009 was also marked by governmental intervention into economic affairs [Hultйn et al., 2012]. For the current investigation global crisis relates to 2008-2009, although some researches argue that these years, which are undoubtfully correct for Europe, cannot be applied to Russia, which recovered slower and was severely hit by the following crisis of 2014 and the sanctions. Among the main reasons for sanctions researchers name lack of efficient investments in machinery, human capital and organizational process [Voskoboynikov, 2017]. Lack of technology diffusion from advanced to emerging companies and industries was also named as the reason for slowdown in pre-crisis period. The impact of technologies is unequal in different industries: rapid development of mobile technologies was especially important for communicational and financial services, changing the very basics of their business model [Chu. A.B., 2018].

Investigations commonly cover such topic as crisis because of its negative effect on the activities of economic representatives. [Schenker-Wicki et al., 2010; Cohen et al., 2014; Hsu and Chiang, 2015] studied changes in the organization's strategy under volatility periods for the market, limitations in finance and investments. [Guevara and Bounfour, 2013] mention in the research that intangibles can be priority investment for the company during crisis period. The mentioned above factors that caused decrease in productivity before crisis were common for nearly all countries (apart from only the least developed); lack of technological exchange between advanced and emerging industries, inefficient labor and human capital investments, failure to adopt and use progressive technologies were the factors that were observed in Europe, Russia and different countries worldwide.

For Europe the crisis of 2008-2009 was mainly considered as external shock, sudden stop of foreign inflows after long prosperous years [Bakker & Klingen, 2012], though some efforts could be taken by the governments in advance to minimize shock of such events. Nevertheless, by 2011 all the European countries returned revenue growth, and most of them managed with the consequences of crisis even earlier, that is why 2010 and 2011 are already referred as post-crisis period in this paper.

Ineffectiveness of previous management decisions and investments in crisis forces companies to reallocate their resources, and according to recent research, in US investments into intangible assets gave higher rate of value added compared with traditional tangible investments [Lew, 2018]. The transformation of US economy for the past half century is illustrated by Figure 1. It is clearly seen that, despite all fluctuations, intangible assets showed much higher investment rate in the US in the beginning of the 21st century. The decline in investment rate is seen in 2008-2009 for both types of assets, but for intangible assets it is not that sharp and deep.

Figure 1. Investment rates in intangible (rising) and tangible (falling) assets,
Private industries, 1977 to 2016 (investment relative to private industry gross value added)

[Shakina and Barajas, 2016] investigated organization's key profile as a defender in hard monetary conditions as an instance of the economic 2008-2009. For the investigation base of large European companies observed during 8 years before, during and after the global economic recession was used. Companies were divided on three clusters: innovative, conservative and moderate. From the context of paper, provided clusters define strategy of the company as its profile. Innovative and conservative clusters of the companies can define intangible-intensive strategy, while moderate cluster of the companies can identify low usage of intangibles [Shakina & Barajas, 2015]. Three considered clusters showed different indicators in performance in MVA and EVA. Findings discovered that that lower drawdown in performance was found out for high-performed organizations with conservative profile. On opposite, conservative profile average companies had negative balance impact during and after world crisis. Negative indicators for intangible-driven performance were observed for companies with moderate profile. The organizations suffered significantly in 2008-2009 world crisis; they have not been recouping after the crisis by 2012. There was observed in lower drawdown in EVA and still high decline in MVA for all organizations with innovative profile. Companies with innovative profile have empowered the lower recuperation process contrasting with those with traditionalist profile. This investigation demonstrates that intangibles have a significant influence during crisis period. Reviewed prior research can be subsequently compared with the results of the conducted research.

The study about intangible-intensive profile of the companies gives detailed information about types of intangibles and strategy or profile of the company [Shakina & Barajas, 2015]. From the findings, intangible-intensive companies have positive results for management competences. Human resources competencies positively influence the innovative companies. Management capabilities are more positive for companies with intangible-intensive profiles, especially for the innovative one. However, findings of the research identified that intangible-intensive strategy shouldn't be extreme, because it could be cause of not excellent financial indicators. Besides this, business processes strategies competences, which can be indicator of standardization, influence negatively on the concernment of investors and its value proposition. Overall, innovation competencies have positive impact, if there were no intensive investments in intangibles. As in previous study, intangible-intensive companies outperform moderate companies with usage of EVA and MVA indicators.

[Cincera et al., 2012] studied development of corporate R&D in conditions of economic crisis. The research uses data collected in 2009. According to the findings of the research the behavior of companies during crisis changes: several companies reduced their innovation activities, some of the firms continued to support innovations, while some them significantly intensified innovations for gaining benefits from the endowment. In common, the best entertainers with benefits in performance in 2008 were those expanding R&D the most. However, the companies, which were superior in R&D investments decreased their investments earlier the volatility periods. The results of the paper are crucial for the further investigation on the similar topic, this study will be compared with the presented paper.

The investigation, which explored R&D investment for small and medium enterprises in Korea during recession period, has significant results [Jung et al., 2018]. The data was collected for 2008-2014. It was found out that influence of R&D investments differs for the various companies. For general companies R&D investments were not crucial to survive in the conditions of the economic crisis. However, it was discovered that it was positively considerable strategy for innovative companies. It was also mentioned, that size of company and industry growth can increase probability of survival of the company. This study is more concentrated on the survival of companies in crisis than on types of R&D, strategies of companies, which will be researched in the presented study.

[Archibugi et al., 2013] observed innovation investments in the UK in the period of world economic crisis. The findings in this study demonstrates that the crisis prompted a centralization of innovation activities inside a little gathering of quickly developing new firms and those organizations which were innovative enough before the market falls. The organizations in quest for additional explorative procedures for the new products and market improvements are those to adapt better to the crisis. According to the review, these results can be compared with findings for Russia on this topic.

Prior study investigated the level of Russian companies' competitive power with mentioning gap in the contribution to intangibles [Shakina & Barajas, 2017]. The paper is based on the data of European and Russian companies for benchmarking during 2004-2013. The paper reviews that both regions' companies differ by their competitive power; the Russian enterprises were behind European enterprises in terms of global competitiveness. The gap between both regions' companies was mentioned as considerable in such industries as the service, construction, finance and manufacturing. From statistical analysis, the paper reports that large gaps in contribution to the significant part of intangibles are notable in Russia. Russian companies invested less on R&D and human capital than European companies between 2004 and 2013. According to the study, low productivity, qualification of top management, long-term strategic dimension can negatively reflect on the competitive power gap. This paper can be further compared with the results of the presented research as both papers cover investment in intangibles in Russia and Europe. However, this study does not mention crisis period, which will be investigated in-depth in this research paper.

Many studies in the field of intellectual capital have observed the impact of national features of the accumulation of intellectual resources. For example, [Choo and Bontis, 2002] determined the peculiarities of the formation of intellectual resources in Sweden, Canada, Finland and Australia. As some studies show, the dominance of one of the components of the intellectual capital structure depends largely on the factors of industry and the country. A number of studies [Bontis, 2004; Malhotra, 2001] indicate that interest in intellectual resources depends on their development at the national level, namely on the level of economic development and on its key growth drivers. Due to the suggestion about significance of location for the intangibles, these investigations can become additional reference for the new research with other countries.

Industry effect of intangibles.

Most of the studies that explored intangibles in terms of industry focused on some concrete knowledge-based industry. However, findings of such research cannot be transferred to the average company and traditional industries. Another point of view on the topic is to observe industries as the factor transforming intellectual capital [Shakina & Barajas, 2015]. Industry is important as it defines a special institutional environment, is tightly connected with the type of products, specific employee and managerial skills. This statement is fully accepted for the current research.

[Maditinos, 2010] observed interconnection between different types of intellectual capital (human, structural, innovation and client) depending on the industry and compared with firm's business success. The study focused on Greek market (Athens) and revealed positive influence of human capital on client capital, positive influence of innovation on structural capital regardless of industry type and positive influence of structural capital on business performance. However, unlike current research, [Maditinos, 2010] focused on a rather narrow niche of companies, did not explore impact of crisis and got data only from one source, his own questionnaire. [Naidenova, 2013] observed companies in pharmacy, retail, steel, service and telecommunication over the period 2001-2010 and revealed interaction between intellectual capital and performance. The authors identified sectoral differences: a positive impact of economic profit on human capital was observed in retail; while in the steel industry the effect was mutual. Furthermore, in telecommunication and steel industries connection between different parts of intellectual capital was detected.

[Shakina & Barajas, 2013] using ANOVA analysis proved significant impact of industry on the company value. The goal of the study “The Contribution of Intellectual Capital to Value Creation” was to evaluate mutual effect of intellectual capital on company's value. Authors focused on EVA, which is also fundamental for the current paper. The representativeness of EVA as performance indicator, sensitive to industry differences was also proved by the research of [Yook, 2004]. Examining EVA after mergers and acquisitions, he observed great difference in the results, that was explained by the industry effect.

As the current research focuses on European and Russian companies, investigation of previous research in Russia was valuable. [Ustinova & Ustinov, 2014] observed impact of structural elements of intellectual capital on market capitalization of the Russian companies in the industry context. The results of the study claimed that human capital had no significant impact on qualitative characteristics of fuel and energy, metallurgic and food industry companies. Customer capital, less than other factors, was influential for the capitalization of electric power complex, machine building and construction sectors, where even the negative values of variables were recorded.

Overall, the reviewed literature creates sources for the further comparison and clarifications for our study. Many studies cover the topic of intangibles in crisis, but there is still no clear answer for our research question.

2. Statement of the research question

Recent macroeconomic papers argued that crisis of 2008-2009 was caused by productivity slowdown due to three reasons: (a) lack of effective technology diffusion between technologically leading and developing industries and companies; (b) inefficient investments in human capital and labor; (c) inability to implement modern technologies, knowledge and experience [Voskoboynikov, 2017]. The overall decrease was observed in nearly all countries worldwide. Moreover, there were some common trends for Europe and Russia. The decline in total factor productivity (TFP) in pre-crisis period was observed in all the world economies, including Russia. TFP in this case means the ability of the countries' companies effectively implement new knowledge, technologies, improve business processes, develop innovations and invest in R&D [McGowan, Andrews, Criscuolo, & Nicoletti, 2015; Voskoboynikov, 2017]. According to [McGowan, M., Andrews, D., Criscuolo, C., & Nicoletti, G., 2015], future growth in TFP can be provided by two sources: spreading already existing knowledge to fill the gap between companies and better allocation of skills to jobs. Both factors refer to managing intangible resources, with especial attention towards human resources. The reason why some companies manage to implement, and others cannot use the modern approaches and technologies is explained by four factors: worldwide connections, ability to experiment with new ideas, investments in intellectual capital and efficiency of resource allocation - which are tightly influenced by policies [McGovan, 2015]. Though many researchers emphasize the importance of intangibles for company's competitiveness and though investment rate of intangibles has already overcome the rate for tangible assets [Corrado, Hulten, 2010], productivity effect of intangibles is still under discussion. There is an opinion that intangible-intensive economy, especially in its digital aspects, is still in its “installation phase” and intangibles will noticeably increase productivity only when the technology enters the “deployment phase” [Van Ark, 2016]. Previous research showed that in Europe companies that could not intensify their tangible resources put preference on investing into human capital. Job creation before and during the beginning of the crisis formed a stable source for growth of the companies [McGowan, Andrews, Criscuolo, & Nicoletti, 2015]. At the same time Russian labor market was characterized by some features that are typical for developing economies and distinguished Russia from developed European countries: low mobility of human resources, enlargement of the shadow economy sector along with high macroeconomic performance was combined with relatively low unemployment rate [Gurvich & Vakulenko, 2017]. Nevertheless, both Russia and Europe faced similar problem of the labor relocation and decline of employee mobility. All in all, the researchers agree about the important role of intangibles for companies in crisis. Therefore the research questions for the study are:

1) Whether being intangible-intensive helped European and Russian companies overcome global crisis of 2008-2009 with less decrease in performance (measured in EVA and MVA) and recover faster than non-intangible intensive ones;

2) Whether influence of specific intangibles was significant for the performance of European and Russian intangible-intensive companies (measured in MVA and EVA) before, during and after crisis and if yes whether there was industry effect for them.

The first question is whether intangible-intensive companies showed higher performance (measured in MVA and EVA) before, during and after crisis than non-intangible intensive ones.

The hypotheses related to this research question is following:

H1. EVA and MVA for non-intangible intensive and intangible-intensive companies differ before, during and after crisis in Russia and Europe.

To answer the question and test the hypothesis several steps are carried out. First of all, clear definition of what are intangible-intensive and non-intangible intensive companies are developed. All the companies of the database are divided according to developed criteria. For that aim all the companies are divided into human capital intensive, relational capital intensive, structural capital intensive or non-intangible-intensive from chosen intangibles for the research. One company can fulfill requirements for several categories. Then, the companies that are included at list in one of intangible-intensive groups are called intangible-intensive. After that median of EVA and MVA for the groups is observed and intangible-intensive companies' results are compared with intangible non-intensive median and tested by median test.

To answer the second question, the question was divided into the sub-questions. The first sub-question is whether specific indicators of human, structural and relational capital are significant for the performance of Russian and European companies in crisis related periods. According to [Shakina & Barajas, 2015] research such intangibles of management capability components as qualification of board of directors, corporate university, corporate strategy implementation positively influences the performance of the European companies. Therefore, the hypothesis is the following:

H2. Qualification of directors, corporate university and corporate strategy implementation had positive impact on the performance of intangible-intensive companies in Russia and Europe in crisis-related periods.

For this stated question and hypothesis such steps are used as choosing several intangibles for the research from relational, structural and human capital and conducting regression analysis for intangible-intensive companies in Russia and Europe before, during and after crisis.

The second sub-question follows from the results of the first sub-question. The sub-question is whether significant intangibles in all crisis related periods influence on the performance of intangible-intensive companies with predominance in one industry. [Huang & Liu, 2005] investigated the impact of industry characteristics on the creation of value by innovative capital for Taiwanese companies. The study showed, innovative capital with the costs of research and development is the most important driver for the companies in the IT industry. The hypothesis related to the research question is the following:

H3. Intangibles, which were significant for the performance of intangible-intensive companies in the observed period, influenced performance in manufacturing industry more than in others.

To answer the question and test the hypothesis from the results of regression analysis the intangibles which are significant for the performance of the intangible-intensive companies in all periods: before, during and after crisis for Russia and Europe will be analyzed with effect of industries (Construction & Real Estate, Manufacturing, Energy & Chemical, Services, Trade & Related services, Finance & Insurance, Professional services).

3. Methodology

Formation of the sample.

The database was collected by International Laboratory of Intangible-driven Economy of Higher School of Economics and refers to longitudinal databases of Bureau Van Dijk (Amadeus) and Bloomberg, as well as to publicly available sources, such as corporate websites, rating agencies and information bureaus. The primary unit for the database is a company's profile for a particular year.

The database contains various indicators that illustrate different aspects of company's financial performance (economic value added (EVA), market value added (MVA), market capitalization, net income etc.), details from the balance sheet (company's assets, liabilities, equity, and indexes, calculated from these variables), information referring to intangibles of the company (information about directors' qualification, employee education, corporate university, advertising expenses, the brand, quality of website, location, awards for innovation etc.), general information about the company (year of foundation, industry, country etc.) and global competitiveness index (GCI) indicators.

The sample of the research includes more than 1693 European companies and 1096 Russian companies, observed in 2004-2013 years. The period is chosen because it covers the largest recent crisis - the global crisis of 2008-2009 and periods before (2004-2007) and after crisis (2010-2013) for comparison and more precise investigation. The companies in the sample originate from the following countries: Russia (a separate database with the Russian companies), France, Germany, Italy, Spain, United Kingdom. Figure 1 illustrates general distribution of companies by countries. According to the sample, companies from United Kingdom have predominance from European companies with more than 40 %; companies from France and Germany are presented in the sample with about 25% of all European companies and companies from Spain and Italy the least ratio with less than 10 %.

Figure 2. Distribution of companies by countries in the sample

The companies operate in seven spheres: Construction & Real Estate, Manufacturing, Energy & Chemical, Services, Trade & Related services, Finance & Insurance, Professional services.

Table 1 presents number of European companies by industries classification. Figure 2 demonstrates ratio of European companies by industries. In the sample of European companies such industries as manufacturing and professional services are predominant with more than 20 %.

Table 1. Number of European companies by industries in the sample

Figure 3. Ratio of European companies by industries in the sample

Table 2 presents number of Russian companies by industries. Figure 3 shows ratio of Russian companies by industries. In the sample of Russian companies such industry as manufacturing with 46 % of ratio among other industries is predominant.

Table 2. Number of Russian companies by industries in the sample

Figure 4. Ratio of Russian companies by industries in the sample

Choosing variables from the sample.

According to the objectives of the research for subsequent testing of hypotheses of the study it is necessary to define significant intangibles to be investigated within the study. It is also necessary to define variables to be used for measuring the performance of the company during chosen periods before, during and after crisis as dependable variables. The regression models require control variables for more accurate results. Based on the literature review and previous investigations of the topic, as well as availability of data about intangibles, the following variables were chosen and divided into three groups, according to the type of intangibles they contribute to.

The first type of intangibles is human capital. Human capital represents the impact each employee brings to the organization. It is traditionally divided into managerial potential - effect of managerial decision-making, and impact of ordinary employees. Human capital for this study includes existence of corporate university, qualification of board of directors, costs and earning per employee. Board of directors' qualification is the first variable in the block of human capital. Members of the board of directors make decisions concerning its strategy and development. Therefore, the knowledge and level of qualification of these people influences the creation of company's value. The intangible was studied by such authors as [Orenns et al., 2010], where it was discovered that this indicator influences on the formation of additional value for the company. Board of directors' qualification is a complex variable, based on directors' education (number of directors who have postgraduate level of education - MBA or PhD) and experience (number of directors that have more than 5 years' experience). If more than one third of directors fit both criteria, the company was ranked 2 for board of directors' qualification. If more than one third of directors fulfilled one of the above criteria, the company was ranked 1. Otherwise - 0. The second criteria was corporate university. This variable represents knowledge containing place which can helps with the training and integration of new employees and can transfer and exchange knowledge from various unions of the company. This indicator was used as intangible of management capability component [Shakina & Barajas, 2016] and this factor was influential for the performance of innovative companies. This indicator is a binary variable, 1 if corporate university is mentioned on the company's website, otherwise - 0). The third variable was costs per employee. This variable was self-estimated as cost per employees divided on the number of employees of the company. The cost per employees includes not only direct costs of salary payments, but also indirect costs on the various social programs, travel expenses, costs for the workplace equipment or training programs. This indicator can characterize the value of employee for the company based on the salary of employee and additional costs of training and development, special literature, special courses and conditions of working place. Last but not least was earnings per employee. The indicator of earnings per employee is an intangible resource of human capital, which reflects benefits brought by the employee of company. The variable is calculated as total earnings divided by the number of employees.

The second type of intangibles is structural capital. It represents internal networks of the company, including connections between employees and connection between an employee and the company [Shakina & Barajas, 2014]. Structural capital was also divided into innovational potential, that gives the company the advantage of “first step”, and internal process potential, which empowers knowledge exchange through teamwork and leadership [Edvinsson & Malone, 1997]. In the study structural capital was measured by number of all patents, licenses, trademarks; volume of intangible assets; ERP implementation, developing corporate strategy. Intangible assets, which are reflected in the financial statements of a company, along with other assets form the value of a company. This indicator can be reflected and evaluated financially, and it can be easy to measure influence of the indicator on the company's value creation. [Shakina and Barajas, 2012] used the variable as independent variable and intellectual capital component. Number of patents, licenses and trademarks is also crucial indicator, which was collected through website QPAT. [Sellers-Rubio et al., 2007] investigated that patents bring additional economic value to companies in electronics industry in Spain. Corporate strategy implementation. The indicator of corporate strategy development of the company is a binary variable, searched from the web site of the companies. This variable represents whether the company pays attention to public announcement of the strategy through it's corporate website. Finally, ERP system implementation is also referred to structural capital.. Enterprise Resource Planning (ERP) system implementation is a binary variable, defined by searching on the web site the of company such words «ERP», «Oracle», «NAVISION», «NAV», «SQL», «SAP».