The Quantitative Assessment of Organization Capital

Author Name MIYAGAWA Tsutomu  (Former Faculty Fellow, RIETI / Faculty of Economics, Gakushuin University) /KIM Young Gak  (Graduate School of Economics, Hitotsubashi University)
Creation Date/NO. June 2006 06-J-048
Download / Links


Globalization and IT revolution in the 1990s requires that firms make a reorganization to survive in the more competitive world. There are several approaches to assess the organization capital. Using an optimizing firm model assuming that a firm holds multiple assets suggested by Yang and Brynjolfsson (2001) and Cummins (2003), we examine whether the organization capital is accumulated with investment in several types of assets. In contrast to Cummins (2003)'s results, we find the accumulation of organization capital associated with investment in R&D asset and marketing asset. Using these results and following Basu, Fernald, Oulton, and Srinivasan (2003), we measure the contribution of organization capital to the conventional total factor productivity (TFP) growth. Its contribution dominates about 3% of TFP growth in the middle term.