Michael D. Moberly January 13, 2015 ‘A blog where attention span really matters”!
I had the pleasure to communicate/converse with Dr. Tatiana Garanina of St. Petersburg University recently to discuss her research titled ‘Value Creation in Russian Companies: The Role of Intangible Assets’. What follows is a collaborative summary of that discussion.
Dr. Garnina’s research revealed that…
- as much as one third of all investment solutions occurring in Russia are related to a company’s (existing) intangible assets.
- business decisions-transactions allow management teams to make more accurate income and profitability projections including shareholder value.
- management teams of leading (Russian) companies are more apt to acknowledge and understand that the key sources of their company’s value creation are irreversibly rooted in intangible assets.
- Dr. Garnina distinguishes intangibles in Russian companies on the basis of their composition and structure which hrough her and co-researchers’ analysis of 43 (sampled) companies, intangibles were distinguished intangibles in five aggregated fields, i.e.,
- mechanical engineering
- extractive industry
- power engineering
- communication services, and
- metallurgy.Drs. Garanina and her co-researcher Dr. Volkov also found that leading (Russian) companies are endeavoring manufacturing cost reductions, hence value creation, which translates as reductions in the value of their tangible/physical assets. Doing so advances another trend, which producing more intangible assets, i.e., intellectual, structural, and relationship capital, proprietary know-how and creativity.Some rovocative perspectives, offered by Drs. Garanina and Volkov offered are
- Dr. Garanina astutely points out a key challenge for (Russian) management teams today creating conditions that will lead increasing the value of (their) intangible assets and therefore the value of their entire company, something which has global relevance far beyond the Russian border.
- Admittedly, value creation through intangible assets represent a new component for business development in Russia but has yet to witness significant successes, particularly for companies still expressing reliance on conventional tangible (physical) assets. The leadership of these firms were less able to cope with the globally competitive markets.
- related to the composition and structure of intangible assets, particularly intellectual capital. In many other research papers I have read, researchers describe the structure and/or composition of intangible assets and then try to define the primary component that (most) affects the assets’ ‘contributory’ value. Drs. Garanina and Volkov claim there is no known uniformity, i.e., means, mechanisms, etc., to address this aspect in Russian business as yet.
- their views on (intangible asset) market capitalization value over periods of time. Even though, a number of theoretical works have stressed the strategic importance, as well as the role of intangibles as key value drivers for company’s competitiveness (Edvinsson, Malone, 1997; Sullivan, 2000; Wenner, LeBer, 1989); there remain, the authors believe, an absence of approaches to evaluate those mechanisms in terms of how intangible assets actual contributory value to a company. (Carlucci, Schiuma, 2007).
An obvious result, Garanina concludes is that more studies are needed in order to better understand…
- the relationship between intangible assets,
- the way these assets are clustered, and
- their contributory role in value creation
As always, reader comments are welcome and respected, and please read and submit a review of Mike’s newest book ‘Safeguarding Intangible Assets’ http://safeguarding-intangibles.com/