Measuring Organizational Capital
Schmalenbach Business Review, Vol. 61, pp. 393-412, October 2009
20 Pages Posted: 22 Feb 2010
Date Written: October 1, 2009
Firms develop their organizational practices to realize returns from given and marketable resources. Implementing effective practices requires substantial up-front investment. We approximate the economic relevance of establishment-specific organizational capital by using a two-step procedure. First, we extract an establishment-specific performance differential from a within-panel estimator. Second, we explain the variation in this differential by using organizational and control variables. Our results make it possible for us to predict the contribution of organizational practices to the performance differential. We label this part of the firm-specific performance differential "organizational capital." Our results indicate that organizational capital has a substantial impact on performance.
Keywords: Managerial Economics, Organizational Capital, Organizational Design, Production Function
JEL Classification: D24, L23, M29
Suggested Citation: Suggested Citation