Strategic alignment of intangible assets: The role of corporate social responsibility
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Strategic alignment of intangible assets: The role of corporate social responsibility Na Shen 1 & Kevin Au 2 & Weiwen Li 3 # Springer Science+Business Media, LLC, part of Springer Nature 2019
Abstract Intangible assets are becoming increasingly important to firms. However, the question of how firms can realize the full potential of intangible assets remains. We propose that corporate social responsibility (CSR) can help a company create value from intangible assets for two reasons. First, firms invest in CSR to increase employee loyalty, which in turn help retain knowledge workers. Second, firms engage in CSR activities to increase employees’ organizational identification, and to promote collaboration across units, which is crucial for the integration and alignment of intangible assets with other intangible assets and tangible assets. Moreover, we propose that institutional development may weaken the positive relationship between intangible assets and engagement in CSR, whereas product diversification may strengthen the relationship. Data analyses based on a sample of 4788 Chinese entrepreneurial firms provides support toward our main arguments. This study highlights a novel idea that firms may use CSR practices to realize the potential of their intangible assets. This study has important managerial implications as well. Keywords Chinese entrepreneurial firms . Corporate social responsibility (CSR) .
Employee . Intangible assets . Institutional development . Product diversification
* Weiwen Li [email protected] Na Shen [email protected]
1
Department of Business Administration, Hong Kong Shue Yan University, North Point, Hong Kong
2
Department of Management and Centre for Entrepreneurship, The Chinese University of Hong Kong, Sha Tin, Hong Kong
3
Business School, Sun Yat-Sen University, Guangzhou, China
N. Shen et al.
Firms’ tacit, intangible assets, as opposed to their costly tangible ones, are of particular managerial importance in forming a competitive advantage (Miller & Shamsie, 1996). Intangible assets are less visible and more complex; thus, they are difficult to imitate and replace and therefore likely to be a source of a company’s core competencies (Barney, 1991; Prahalad & Hamel, 1990). However, the existence of intangible assets does not guarantee that a firm will fully realize the resources’ potential and gain a competitive advantage in the marketplace (Barney, 1995; Barney & Wright, 1997; Kaplan & Norton, 2004). Two main challenges hinder a company from taking full advantage of its intangible assets. First, human resources represent one of the most important intangible assets. However, it poses a major challenge for firms in terms of management and utilization. Employees with valuable know-how are the ones most likely to quit and join rival firms, thereby leading to knowledge leakage that erodes the firm’s advantage (Flammer & Kacperczyk, 2019). Second, intangible assets could generate a competitive advantage only if they are integrated with other intangible assets and tangible asset
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