Intangible capital and business productivity

The importance of intangible capital as a driver of productivity growth is recognised at both macroeconomic and microeconomic levels. However, in general, there is a lack of strong empirical evidence in the relevant literature on the connection between micro and macro approaches. This study integrates both perspectives to analyse how internal and external intangible capital influence the productivity of companies and, therefore, economic growth. A model is estimated in which the total factor productivity of companies is explained through their internal and external intangible capital. To this end, regional characteristics are considered in terms of technological endowment, human capital, and entrepreneurial capital. In addition, other agglomeration economies such as regional specialisation and regional productive diversity are also considered. In the empirical application, a panel of companies from the seventeen Spanish regions over the period 2006-2015 is used. The findings suggest that there is a positive effect of intangible capital on companies' productivity and evidence of a spillover effect as a result of local intensities of intangibles.