Intangible value in business operations
Enterprises use intangible investments to boost their success in the markets. Even though physical products and their production remain important, intangibility and non-material matters are also becoming increasingly important in the properties of physical products. The economy is more and more a matter of intangibility, such as services, research and development and brands.
The public sector in Finland contributes to the building of intangible capital for enterprises by supporting their research and development projects (R&D). However, R&D activities account for less than half of companies' intangible capital.
Intangible value creation is a national success factor. The central question is how to create expertise-based growth and how to create as much as possible of the value of products and services in Finland or through measures directed from Finland.
Sectors making efficient use of intellectual property rights are more significant exporters and boast higher pay levels. Intellectual property rights emerge from various types of creative work such as research, development and innovation or creative processes.
Companies invest in intangible capital in order to gain benefits that are mainly realised in three ways.
1. Intangibility as a service
Intangible investments are a means to develop something that is sold to the customer as a service. Digitalisation makes many services more scalable and independent of where they are located. At the same time, it also allows the development of new service functions for industrial products. Digitalisation allows services companies to compete both locally and globally.
2. Intangibility as an instrument for more efficient operations
Enterprises use intangible investments to improve their internal operations. Improved internal operations help enterprises to sell more products and services or to make them more profitable. Intangible investments aimed at improving internal operations include the training of personnel, enhancing efficiency of the production of goods and services, service design and the development of new sales or marketing methods. However, it is essential that the benefits from improving internal operations are always generated through the sales of products or services.
3. Intangibility as a product property
Enterprises aim to develop additional properties for physical products (goods) through intangible investments and the customer is prepared to pay more for these properties. These include better design, technical properties, the brand and ease of use. What is typical of the value creation method is that the added value is realised through a physical product.