Measuring Organization Capital in Japan: An Empirical Assessment Using Firm-Level Data

Tsutomu Miyagawa ; YoungGak Kim

Professor, Department of Economics, Gakushuin University, 1-5-1, Mejiro, Toshima-ku, Tokyo 171-8588, Japan tsutomu.miyagawa@gakushuin.ac.jp
Graduate Student, Department of Economics, Hitotsubashi University 2-1, Naka, Kunitachi-shi, Tokyo 186-8601, Japan ed051012@srv.cc.hit-u.ac.jp

JEL Classification: L21, L23, L25

Abstract

Globalization and the ICT revolution of the 1990s have forced firms to reorganize in order to survive in a more competitive market. Using an optimizing firm model with multiple assets, we examined whether organization capital is accumulated with investment in several types of assets. In contrast to Cummins’s (2005) results, we found that the accumulation of organization capital is associated with investment in R&D assets and marketing assets. Using these results, we measured the contribution of organization capital to the conventional TFP growth. The estimation results implied that the growth of organization capital did not have significant effects on productivity growth.

Keywords:

Adjustment cost of investment, Intangible asset, Organizational capital, Tobin’s q, Total factor productivity

Acknowledgments

This study was inspired by Professors Van Reenen, Shankerman, and other members in Program on Productivity, Innovation and Intellectual Property in the Center for Economic Performance in London School of Economics, when Miyagawa stayed at the CEP as a visitor. We thank Professors van Ark, Timmer, and Los for their valuable comments at the seminar of the University of Groningen. We also thank Professor Jae-Hyung Lee (Seoul National University) and Dr. Byungwoo Kim (Science and Technology Policy Institute) for insightful comments at the 15^th Seoul Journal of Economics International Symposium in Seoul National University. All remaining errors are our responsibility.

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