Does measuring intangibles for management purposes improve performance? A review of the evidence

Abstract

Despite the development of dozens of frameworks and techniques for measuring intangible assets, an open question is whether the internal measurement of intangible assets for management purposes is associated with higher economic performance. This paper provides an overview of the statistical evidence on the performance consequences of intangible asset measurement. Although the bulk of these studies provide at least some evidence that intangible asset measurement is associated with higher performance, many are limited by over‐reliance on perceptual satisfaction or outcome variables, inadequate controls for contingency factors, simple variables for capturing complex measurement practices, and the lack of data on implementation practices. I conclude by offering suggestions for improving and extending studies on the performance consequences of intangible asset measurement.

Key words:

• intangible assets
• intellectual capital
• non‐financial performance measures
• balanced scorecard
• performance evaluation

Notes

The author is an Ernst & Young Professor of Accounting at The Wharton School, University of Pennsylvania. E‐mail: [email protected]. He thanks Marshall Vance for his research assistance. The financial support of Ernst & Young, the ICAEW, and The Wharton School are gratefully acknowledged.