Short and medium-term effects of intangible capital on firm growth: firm-level evidence from austrian microdata

Abstract This paper examines the extensive and intensive margins of intangible investments in firm growth processes in the short and medium term. Both intensive and extensive margins of investment are highly skewed and differ across sectors. Less productive firms are less likely to invest in intangibles, whereas incorporated firms are more likely to do so. Intangible capital only complements physical capital for a limited number of firms. Intangible investment is positively associated with short-term productivity growth, especially among firms that invest consistently over time. Medium-term effects on productivity are limited, and largely confined to the top-performing firms. For employment growth, we find systematic short-term effects of intangible investment. Regular investment patterns correlate with higher employment growth over both time horizons. These results challenge conventional assumptions that intangible capital uniformly enhances firm performance and highlight the importance of sustained investment behaviour and sectoral context.