The Relationship between Innovation Capital, Firm Value, and Firm Risk

Authors

  • Arya Aji Aditya Universitas Airlangga
  • Andi Rahmat Kaswar Universitas Airlangga

DOI:

https://doi.org/10.14421/EkBis.2022.6.1.1558

Keywords:

Innovation capital, firm value, firm risk

Abstract

The purpose of this study is to examine two relationships: (1) innovation capital and firm value; and (2) innovation capital and firm risk. The population of this study was all companies listed on the Indonesia Stock Exchange from 2016-2020, and the required research sample was drawn using a purposive sampling technique. Data analysis technique used multiple linear regression. The result revealed that innovation capital had a positive and statistically significant effect on firm value, but innovation capital had a negative and insignificant relationship on firm risk. Based on the analysis, it can be concluded that innovation capital has a potential factor to increase company's value, only if companies have a competitive advantage by disclosing the R&D costs and investments in their financial statements. Because of each company is unique, innovation capital is not always related to a systematic risk measurement.

Downloads

Download data is not yet available.
Abstract viewed: 234 times | PDF downloaded = 270 times

References

Aksoy, H. (2017). How do innovation culture, marketing innovation and product innovation affect the market performance of small and medium-sized enterprises (SMEs)? Technology in Society, 51, 133–141. https://doi.org/10.1016/j.techsoc.2017.08.005

Bardhan, I., Krishnan, V., & Lin, S. (2013). Business value of information technology: Testing the interaction effect of IT and R&D on Tobin’s Q. Information Systems Research, 24(4), 1147–1161. https://doi.org/10.1287/isre.2013.0481

Barney, J. B., Ketchen, D. J., & Wright, M. (2011). The future of resource-based theory: Revitalization or decline? Journal of Management, 37(5), 1299–1315. https://doi.org/10.1177/0149206310391805

Bassi, L. J., & Van Buren, M. E. (1999). Valuing investments in intellectual capital. International Journal of Technology Management, 18(5), 414–432. https://doi.org/10.1504/ijtm.1999.002779

Chang, W. S., & Hsieh, J. J. (2011). Intellectual Capital and Value Creation-Is Innovation Capital a Missing Link? International Journal of Business and Management, 6(2), 3–12. https://doi.org/10.5539/ijbm.v6n2p3

Chatzoglou, P., & Chatzoudes, D. (2018). The role of innovation in building competitive advantages: an empirical investigation. European Journal of Innovation Management, 21(1), 44–69. https://doi.org/10.1108/EJIM-02-2017-0015

Chen, J., & Zhu, Z. (2004). Measuring intellectual capital: A new model and empirical study. Journal of Intellectual Capital, 5(1), 195–212. https://doi.org/10.1108/14691930410513003

Chierici, R., Tortora, D., Del Giudice, M., & Quacquarelli, B. (2020). Strengthening digital collaboration to enhance social innovation capital: an analysis of Italian small innovative enterprises. Journal of Intellectual Capital, 22(3), 610–632. https://doi.org/10.1108/JIC-02-2020-0058

Dotzel, T., & Shankar, V. (2019). The Relative Effects of Business-to-Business (vs. Business-to-Consumer) Service Innovations on Firm Value and Firm Risk: An Empirical Analysis. Journal of Marketing, 83(5), 133–152. https://doi.org/10.1177/0022242919847221

Dotzel, T., Shankar, V., & Berry, L. L. (2013). Service innovativeness and firm value. Journal of Marketing Research, 50(2), 259–276. https://doi.org/10.1509/jmr.10.0426

Ehie, I. C., & Olibe, K. (2010). The effect of R&D investment on firm value: An examination of US manufacturing and service industries. International Journal of Production Economics, 128(1), 127–135. https://doi.org/10.1016/j.ijpe.2010.06.005

Garcia, R., & Calantone, R. (2002). A critical look at technological innovation typology and innovativeness terminology: a literature review. Journal of Product Innovation Management, 19(2), 110–132. https://doi.org/10.1111/1540-5885.1920110

Glova, J., & Mrázková, S. (2018). Impact of intangibles on firm value: An empirical evidence from European public companies. Ekonomicky Casopis, 66(7), 665–680.

Günther, T. (2010). Accounting for Innovation: Lessons Learnt from Mandatory and Voluntary Disclosure. Innovation and International Corporate Growth, 319–329. https://doi.org/10.1007/978-3-642-10823-5_19

Gupta, K., Banerjee, R., & Onur, I. (2017). The effects of R&D and competition on firm value: International evidence. International Review of Economics and Finance, 51(July), 391–404. https://doi.org/10.1016/j.iref.2017.07.003

Hsiao, S. H. (2014). PTE, innovation capital and firm value interactions in the biotech medical industry. Journal of Business Research, 67(12), 2636–2644. https://doi.org/10.1016/j.jbusres.2014.04.001

Kamasak, R. (2015). Determinants of innovation Performance: A Resource-based Study. Procedia - Social and Behavioral Sciences, 195, 1330–1337. https://doi.org/10.1016/j.sbspro.2015.06.311

Kijek, T. (2012). Innovation Capital and Its Measurement. Journal of Entrepreneurship, Management and Innovation, 8(4). https://doi.org/10.7341/2012844

Kijkasiwat, P., & Phuensane, P. (2020). Innovation and Firm Performance: The Moderating and Mediating Roles of Firm Size and Small and Medium Enterprise Finance. Journal of Risk and Financial Management, 13(5), 97. https://doi.org/10.3390/jrfm13050097

Kim, J. M., Yang, I., Yang, T., & Koveos, P. (2020). The impact of R&D intensity, financial constraints, and dividend payout policy on firm value. Finance Research Letters, 40(October 2020), 101802. https://doi.org/10.1016/j.frl.2020.101802

Kim, W. S., Park, K., Lee, S. H., & Kim, H. (2018). R & D investments and firm value: Evidence from China. Sustainability (Switzerland), 10(11), 1–17. https://doi.org/10.3390/su10114133

Liu, B., Ju, T., & Gao, S. S. S. (2021). The combined effects of innovation and corporate social responsibility on firm financial risk. Journal of International Financial Management and Accounting, 32(3), 283–310. https://doi.org/10.1111/jifm.12135

Lukovszki, L., Rideg, A., & Sipos, N. (2020). Resource-based view of innovation activity in SMEs: an empirical analysis based on the global competitiveness project. Competitiveness Review, 31(3), 513–541. https://doi.org/10.1108/CR-01-2020-0018

Mcalister, L., Srinivasan, R., & Kim, M. (2007). Advertising, Research and Development, and Systematic Risk of the Firm. Journal of Marketing, 71(January), 35–48.

Mehralian, G., Rasekh, H. R., Akhavan, P., & Ghatari, A. R. (2013). Prioritization of intellectual capital indicators in knowledge-based industries: Evidence from pharmaceutical industry. International Journal of Information Management, 33(1), 209–216. https://doi.org/10.1016/j.ijinfomgt.2012.10.002

Nadeem, M., Gan, C., & Cuong, N. (2017). The Importance of Intellectual Capital for Firm Performance: Evidence from Australia. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3001537

O’Dwyer, M., Gilmore, A., & Carson, D. (2009). Innovative marketing in SMEs: A theoretical framework. European Business Review, 21(6), 504–515. https://doi.org/10.1108/09555340910998805

Rubera, G., & Kirca, A. H. (2012). Firm innovativeness and its performance outcomes: A meta-analytic review and theoretical integration. Journal of Marketing, 76(3), 130–147. https://doi.org/10.1509/jm.10.0494

Ruggiero, S., Kangas, H. L., Annala, S., & Lazarevic, D. (2021). Business model innovation in demand response firms: Beyond the niche-regime dichotomy. Environmental Innovation and Societal Transitions, 39(January), 1–17. https://doi.org/10.1016/j.eist.2021.02.002

Santacruz, L. (2020). Measures of firm risk-taking: revisiting Bowman’s paradox. Managerial Finance, 46(3), 421–434. https://doi.org/10.1108/MF-09-2019-0466

Santosa, P. W. (2020). The effect of financial performance and innovation on leverage: Evidence from Indonesian food and beverage sector. Organizations and Markets in Emerging Economies, 11(22), 367–388. https://doi.org/10.15388/OMEE.2020.11.38

Sorescu, A. B., & Spanjol, J. (2008). Innovation’s effect on firm value and risk: Insights from consumer packaged goods. Journal of Marketing, 72(2), 114–132. https://doi.org/10.1509/jmkg.72.2.114

Suurmeijer, M., Smid, P. P. M., & von Eije, J. H. (2015). Research and Development and Firm Risk. Journal of Corporate Finance Research, 9(3). https://doi.org/10.2139/ssrn.2350270

Wu, H. Y., Chen, J. K., & Chen, I. S. (2010). Innovation capital indicator assessment of Taiwanese Universities: A hybrid fuzzy model application. Expert Systems with Applications, 37(2), 1635–1642. https://doi.org/10.1016/j.eswa.2009.06.045

Downloads

Published

2022-07-07

How to Cite

Aditya, A. A., & Kaswar, A. R. (2022). The Relationship between Innovation Capital, Firm Value, and Firm Risk. EkBis: Jurnal Ekonomi Dan Bisnis, 6(1), 74–86. https://doi.org/10.14421/EkBis.2022.6.1.1558