AD ALTA
JOURNAL OF INTERDISCIPLINARY RESEARCH
USABILITY OF INTANGIBLE ASSETS IN THE TERMS OF MANUFACTURING COMPANIES
a
KLAUDIA PORUBANOVÁ,
b
PATRIK RICHNÁK,
University of Economics in Bratislava, Faculty of Business
Management,
Department of Production Management and
Logistics, Dolnozemská cesta 1, 852 35 Bratislava, Slovak
Republic
email:
a
klaudia.porubanova@euba.sk,
b
patrik.richnak@euba.sk
The article is prepared as one of the outcomes of a research project VEGA no.
1/0305/15 "Impact of environmental tools on the growth of competitiveness and
sustainability of businesses" conducted by Department of Production Management and
Logistics of University of Economics in Bratislava, Slovak Republic.
Abstract: As it was already mentioned, intangible assets are source of economic
benefits of quality and commercialisation increases prosperity of a business and
strengthen competitive position on a market. We believe, it is more advantageous for
business to use intangible assets within company, than licensing as it maintains its
monopoly position in area on certain intangible asset.
From research results it is possible to conclude that most designs 55% are registered
by large businesses, middle sized businesses register number of designs in share 28%
and small businesses in share 17%. Apart from patents, know-how, trademarks and
licenses in research we found out that businesses register industrial patterns and
designs in share 48%, improvement ideas 40% and 12% utility models.
Keywords: intangible assets, tangible assets, patents, know-how,design
1 Introduction
Severe competition is a reality. Market has changed, new players
have entered and competiveness is higher. Slovak production
businesses must carefully monitor changes on a market and react
to demands of domestic and international markets. Especially,
they must consider meeting conditions of foreign markets, as
Slovakia is highly dependent on product export. Currently, rapid
growth requires connection of tangible resources with intangible
assets as a core of successful existence of businesses. In order to
achieve desired effect is necessary to minimise tangible
resources and concentrate on intangible assets. Increased
awareness of business regarding existence and application of
intangible assets contributes to improvement of other areas of
business, e.g. environment, ethical behaviour of businesses.
Businesses should be opened and flexible towards new market
options, global productions trends, modern technologies,
innovations, research and development, modernisation of
production program, product quality assurance, quality working
labour and creation of new organisational forms.
2 Literature review
Intangible assets (intangibles) are long lived assets used in the
production of goods and services. They lack physical properties
and represent legal rights or competitive advantages (a bundle of
rights) developed or acquired by an owner. In order to have
value, intangible assets should generate some measurable
amount of economic benefit to the owner, such as incremental
turnover or earnings (pricing, volume and better delivery,
amongst others), cost savings (process economies and marketing
cost savings) and increased market share or visibility. (American
Institute of CPAs, 2012)
The study of authors Flatt and Kowalczyk and Stanley (2008)
offers some useful contributions to the significance of culture
and its relationship to reputation and financial performance.
First, we validate prior studies linking reputation to performance
and culture to performance. Second, our results support
theoretical claims that there is a significant positive relationship
between culture and reputation. Third, our findings suggest that
culture has a direct and indirect effect on performance. This
means that culture not only directly enhances financial
performance, but also is able to indirectly influence financial
performance through reputation. Therefore, practitioners should
be aware of this dual effect that culture has on performance and
seize opportunities to develop positive cultures to create a
sustainable competitive advantage.
Intangible assets are characterized as more influential than
tangible assets because they are more likely to meet Barney's
(1991). Hall (1992) refers to intangible assets as the "feedstock"
of capability differentials essential for a sustainable competitive
advantage. Kaplan and Norton (2004) apply this perspective and
develop a "strategic map" to demonstrate how intangible assets,
like culture, may be used to attain a strategic advantage and
higher performance outcomes.
The quest to identify key variables that predict reputation is
important, since without these knowledge researchers can not
advise firms how they might improve their reputation to
augment their competitive advantage to increase their financial
performance. Different researchers have explored non-economic
factors in different ways. Rindova et al. (2006) use a stakeholder
approach to better capture the predictors of reputation, perceived
quality and prominence.
Intellectual property is a central source of wealth in almost all
industrial sectors. Establishment of business strength has moved
from capital resources to intellectual property. In reality,
definition of capital resources is being moved. Term capital
resources resemble cash balance or picture of extensive industry
hall. Intellectual property, such as technological know-how,
patents, trademarks, author rights and trade secret dominates
over capital resources (Gordon and Russell, 2000).
Why are intangible assets so important? Strong brands influence
decision making processes of customers, as well as assurance
premium process would be charged. The same approach is
applied in many consumer businesses. In better cases they
represent quality assurance and sometimes in case of luxury
brands, brand distinguishes social status of consumer. This can
also support fast development of new markets.
In 21. Century, the most valuable strategic resources for business
subjects are no longer tangible assets, such as properties,
machines as it was back in 20. Century, but these are intangible
assets, such as knowledge, know-how and intellectual property
rights.
Intangible assets, therefore, provide potential competitive
advantage, but as assets they clearly demand specialist
management and communication skills. Management’s ability to
deliver its strategy is highly reliant on its customer relationships,
brands and performance of key employees – all of which are
typical intangible assets for accounting purposes. The relevance
of these factors is clearly vital to a company’s profitability and to
the sustainability of its future performance. So the question
should be more about how to improve the management of such
assets – rather than why (Rea and Davis, 2009).
Moreover, several authors stated that in order for business to be
successful in most of industry sectors, it must have competitive
advantage in technology area, which enables it to provide
excellent products. Especially technological development is
constantly growing in comparison with the last century. The
main aim is for the average length of product life cycle and
technological progress not to decrease, but to increase strategic
importance of technological expertise. Hence, businesses are
forced to constantly learn, create and update new technological
competences, as well as forget old fashioned practices, to stay
competitive in a world and to be distinguished by quick
technological advancement (Jennewein, 2005).
Different studies using different designs and methodologies have
found that while financial performance is an important predictor
of reputation, financial performance has accounted for as little as
11 to 15 percent of variance (Hammond and Slocum, 1996;
Roberts and Dowling, 2002) as much as 38 to 59 percent (e.g.,
Brown and Perry, 1994; Fombrun and Shanley, 1990), leaving at
least 40 to 89 percent of the variation unexplained by economic
variables. Hence, while researchers have been able to
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