1. I NTANGIBLE - DRIVEN P ERFORMANCE : SME S VS L ARGE C OMPANIES iCare 22.09.2014 Mariia Molodchik Carlos Jardon Angel Barajas

2. Motivation “ A Reprise of Size and R&D” (Cohen and Klepper, 1996, The economic Journal) “A small business is not a little big business”, - Welsh and White (1981, Harvard Business Review) SMEs: “resource poverty”, flexibility and informal strategies. (Terziovki, 2010, Strategic Management Journal) Intangible-driven performance. Does the size matter? 2iCare, ID Lab

3. Previous studies Innovation: SMEs vs LC Intangible-driven performance. Size is controlled Intangible-driven performance: empirical evidence from SEMs Performance management for SMEs Comparative study of intangible employment and intangible-driven performance SMEs vs LC 3iCare, ID Lab

4. What are intagibles? K RISTANDL AND BONTIS (2007) INTANGIBLES - “ STRATEGIC FIRM RESOURCES THAT ENABLE AN ORGANIZATION TO CREATE SUSTAINABLE VALUE ” K RISTANDL AND BONTIS (2007) INTANGIBLES - “ STRATEGIC FIRM RESOURCES THAT ENABLE AN ORGANIZATION TO CREATE SUSTAINABLE VALUE ” 4iCare, ID Lab J ACOBSEN ET AL. (2005); MOLODCHIK ET AL. (2014) TWO - LEVEL DECOMPOSITION OF INTANGIBLES : H UMAN CAPITAL ( HUMAN RESOURCE CAPABILITIES ; MANAGEMENT CAPABILITIES ); S TRUCTURAL CAPITAL ( INNOVATION CAPABILITIES ; INTERNAL PROCESS CAPABILITIES ) R ELATIONAL CAPITAL ( NETWORKING CAPABILITIES, CUSTOMER LOYALTY ) J ACOBSEN ET AL. (2005); MOLODCHIK ET AL. (2014) TWO - LEVEL DECOMPOSITION OF INTANGIBLES : H UMAN CAPITAL ( HUMAN RESOURCE CAPABILITIES ; MANAGEMENT CAPABILITIES ); S TRUCTURAL CAPITAL ( INNOVATION CAPABILITIES ; INTERNAL PROCESS CAPABILITIES ) R ELATIONAL CAPITAL ( NETWORKING CAPABILITIES, CUSTOMER LOYALTY )

5. Hypotheses: H1: There are differences in terms of implementing intangibles conditioned by firm size. H2: There are differences in the impact of intangibles on firm performance according to firm size. 5iCare, ID Lab

6. Research design 6iCare, ID Lab 1 To find the differences by employment T-test; significance of interaction effect 2 To find the differences in impact Dummy-variable regression (stata 12)

7. Dummy-variable regression iCare, ID Lab7 WHERE, I NT R – VECTOR OF INTANGIBLE RESOURCE INDICATORS SIZE – DUMMY REGRESSOR FOR FIRM SIZE ( SIZE =1 FOR LARGE ENTERPRISES ; SIZE =0 FOR SME S ) I NT R* SIZE – INTERACTION REGRESSOR

8. Two in one iCare, ID Lab8 Large enterprises: SMEs:

9. Measurement approach M EASUREMENT USING PUBLIC AVAILABLE DATE. 9iCare, ID Lab Type of intangibleProxy indicator Human resource capabilities Ebit/Costs of employees Management capabilities High qualification of board of directors (more than one third of directors have a postgraduate level of qualification and more than five years' experience) Innovation capabilitiesNumber of patents Internal process capabilities Knowledge management system implementation Networking capabilitiesParticipation in professional associations Customer loyaltyHigh citation in search engines

10. Measurement approach 10iCare, ID Lab Type of variableIndicator PerformanceROA=Ebit/Book value Control variables Industry Economic crisis (year 2008)

11. Database 2004 – 2011 years European public companies (UK, Germany, France, Spain, Italy). All industries The initial database contains 1700 (36% SMEs) The sample was balanced considering equal number of SMEs and large companies 11iCare, ID Lab

12. Results. T-test. 12iCare, ID Lab VariablesMeanT-test SMEsLEsDifference Ebit/Costs of employees 0.590 (14.97) 3.551 (32.72) -2.960*** High qualification of board of directors 32.9% (0.46) 43.3% (0.49) -0.104*** Number of patents 7.12 (45.91) 719.88 (4203) -712.99*** Knowledge management system implementation 15.5% (0.36) 34.9% (0.47) -0.194*** Participation in professional associations 23.9% (0.42) 37% (0.48) -0.134*** High citation in search engines 3.2% (0.17) 29.9% (0.45) -0.267***

13. Results. Dummy-regresison Number of observations = 4394 R-squared = 0.121 F(25, 4368) = 19.50*** iCare, ID Lab13 -0.086*** 0.170***

14. IntangiblesEffect onCoeff Rob.std.err. Human resources capabilities (Ebit/costs of employees) SME 0.014 0.009 Difference -0.009 0.009 LE 0.005 Management capabilities (High Qualification of Board of Directors) SME -0.114** 0.051 Difference 0.123** 0.052 LE 0.009** Innovation capabilities (Number of patents) SME 0.00000024** 0.00000010 Difference -0.00000053** 0.00000012 LE -0.000000029** Internal Process Capabilities (Knowledge Management System Implementation) SME 0.272*** 0.025 Difference -0.269*** 0.026 LE 0.003*** Networking capabilities (Participation in professional associations) SME -0.055 0.043 Difference 0.069 0.044 LE 0.014 Customer loyalty (High level of citation in search engines) SME 0.237*** 0.030 Difference -0.232*** 0.031 LE 0.005*** 14iCare, ID Lab

15. Conclusions T HE PAPER REVEALED SIGNIFICANT DIFFERENCES IN THE EMPLOYMENT OF INTANGIBLE RESOURCES ACCORDING TO FIRM SIZE : – LARGE ENTERPRISES ARE ABLE TO OUTPACE SME S BY DEVELOPING ORGANIZATIONAL CAPABILITIES BASED ON INTANGIBLE RESOURCES (S CHUMPETER, 1942) – INTANGIBLES ARE UNDERDEVELOPED IN SME S (H UTCHINSON AND Q UINTAS (2008) – SME S CAN GAIN POTENTIAL BENEFITS THROUGH THE INTENSIFICATION OF INTANGIBLE RESOURCES EMPLOYMENT. T HE PAPER DISCOVERED THAT SME S GAIN MORE FROM INTANGIBLE RESOURCES THAN LE S : – THREE TYPES OF INTANGIBLE RESOURCES THAT SHOULD BE DEVELOPED BY SME S : INNOVATION, INTERNAL PROCESS CAPABILITIES AND CUSTOMER LOYALTY. L IMITATIONS : – P UBLIC COMPANIES 15iCare, ID Lab