THE EFFECT OF INTANGIBLE RESOURCES ON THE ECONOMIC PERFORMANCE OF THE FIRM

Abstract

With the new economic conditions, the intangible resources play an important role in the performance as well as in the survival of the modern firm. Therefore, the internal development of resources, mainly the intangible ones, is vital in the resources theory. Thus, this paper deals with the relationship between the intangible resources and the financial performance of the firm. Our empirical results have led to the theory validation. Based on the Tobin's Q as a measure of the intangible resources, our regression models have allowed confirming the positive contribution of the intangibles to the amelioration of the economic performance. In addition, these resources have an explicative and significant effect on the existence and the persistence of differences in the performance between the firms. [PUBLICATION ABSTRACT]

Headnote

Abstract

With the new economic conditions, the intangible resources play an important role in the performance as well as in the survival of the modern firm. Therefore, the internal development of resources, mainly the intangible ones, is vital in the resources theory. Thus, this paper deals with the relationship between the intangible resources and the financial performance of the firm. Our empirical results have led to the theory validation. Based on the Tobin's Q as a measure of the intangible resources, our regression models have allowed confirming the positive contribution of the intangibles to the amelioration of the economic performance. In addition, these resources have an explicative and significant effect on the existence and the persistence of differences in the performance between the firms.

Keywords: Intangible resources, Tobin's Q, Resource-based view, Performance, Specific profits.

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

In our economy where the industrial era gave way to the era of information technology, knowledge, know-how, the firms can be created and disappeared on the basis of intangible elements such as qualification of the employees, research and development, dynamism of commercial circuit, the evolution of organizational structure. In other word, these elements, defined as intangibles resources, have become the fundamental characteristics of the present economy largely apparent in the developed countries. In fact, these resources are considered as principal factor of growth (Michalisin and al, 2000).

Its importance has been advocated by several economic theories (essentially the theories of new growth) under the framework of the strategic analysis of industries. The characteristics of the industry have been constituted the main factors which explain a superior performance. So, the strategic analysis is considered on the one hand as the identification of the industries and on other hand as the decrease of the pressure of competition taking into consideration the structure of the industry. Consequently and with the crucial position held by the firm in the economy, it has been developed a theory of resources or resource-based view which focuses on bridging the gap with the previous theories. This theory is interested in the strategic assets which allow the development of the performance and consider the industry only as a field of using these assets. Thus, the resource based view highlights the importance of the internal resources of the firm in the strategic reflexion and the achievement of a superior performance. Besides, it considers that the firm possesses a range of heterogeneous resources. The heterogeneity of the resources will be translated into a difference of competitive position and so a difference of performance (Roberts, 2001, Arrègle, 2006). In fact, the intangible resources can have the necessary characteristics (the non transparency, the non transferability) to develop and maintain a superior performance as well as a difference of performance between firms. The latter will reflect a competitive advantage defensible for a certain times in relation with the characteristics of these intangible resources.

The following paper is essentially based on the theory of resources and aims at studying the impact of intangibles on the economic performance of the firm. As a consequence, the purpose of this article is the empirical test of the relation between:

- the intangible resources and the economic performance in terms of the creation and amelioration of the profitability of the firm (Waring, 1996, Roberts, 2001) ;

- the intangible resources and the difference in performance between the firms in terms of the creation and the persistence of the specific profits. The importance of this empirical test is highly fundamental especially that it was not sufficiently dealt with (McGahan and Porter, 1999, 2003).

This paper is presented as follows: We are going to start with the literature review which focuses directly on this subject (section 1). Based on this review, we are going to build our hypotheses and methodology of research (section 2) which will be applied on a French sample. Finally, we are going to be interested in the interpretation of the empirical results (section 3) which will lead to the conclusion in the last part of this paper.

1- LITERATURE REVIEW

Actually, the firm can achieve crucial competitive advantages due to its intangible resources. In fact, the competitive advantage leads to the achievement of higher revenues compared to the competitors. Based essentially on the resource theory, several theoretical studies have highlighted the strategic importance of intangible resources in the determination of the performance of the firms (Reed and Defilipper, 1990, Barney, 1991, Grant, 1991, 1996, Amit and Schoemaker, 1993, Peteraf, 1993, Hunt and Morgan, 1995, Godfrey and Hill, 1995, Teece and al, 1997).

These studies which are essentially theoretical studies have pointed out that this type of resources is a fundamental condition to obtain a tenable competitive advantage leading to a difference in the performance between the firms. However, they are insufficient since they should be approved by empirical researches. So, it is evident to examine the empirical studies which have treated this topic and determine the principal contributions as well as the gaps. But, it should be noted that the researches linking the economic performance (particularly the profitability) with the intangible resources and based on the resource theory are not abundant. In fact, the majority of empirical researches have focused mainly on a particular aspect of these resources. They have basically treated the effects of innovation and technology (Geroski and al, 1993, Vargas and al, 2003, Belkaoui, 2003, Gu, 2004, Lopez and al, 2005, Czarnitzki and Kraft, 2005) and, with less care, the reputation (Robert and Dowling, 2002). However, hardly can we find empirical researches that have treated the intangible resources in their totality.

Starting with innovation and technology, Geroski and al (1993) have made a very important research even though it is not recent. They tried to see whether the correlation between the outputs of innovation (in terms of new products or process) and the profitability reflect the permanent or transitory differences between the innovative and the non-innovative firms. Geroski and al (1993) measured innovation by the number of innovations achieved in a sample of British firms. They empirically approved that the innovative firms have higher profitability and a differential performance following to the introduction of the new specific innovations. They noticed that the number of innovations produced by the sample was declining during the study period. Moreover, if the product of the innovation is the only explanation of the innovation's effect on the profitability, then, it is expected to have a very important difference in the profitability between the innovative and the non-innovative firms at the beginning of the period. However, they found that this difference is more accented toward the end of the period which is characterised by a recession in the Great Britain. This finding shows that the difference is deduced by a generic difference between the innovative and non-innovative firms caused by the innovation process. The latter has made the innovative firms more capable to face harmful economic conditions.

Despite the importance of empirical findings, this study is relative to the context in which it was carried out due to the specificity of the collected data about the innovation. The construction of these data depends on the productive institution and the industries decomposition.

Vargas and al (2003) concluded in their empirical study that the information technologies could considerably ameliorate the competitive position. Yet, this relation is strongly moderate due to the size effect of the firm. It is also conditioned by qualified human resources and by the nature of the competitive intensity that the firm should face. Thus, the researchers have indicated that the information technology is a necessary factor though is not enough for the improvement of the competitive position.

In the latter study carried out in a Spanish context, the measure of the competitive position was partly determined by a questionnaire measuring the opinion of the customers concerning the quality of the services offered by the firm. The technological variables were deduced also from a questionnaire filled out by the CEO, the direction of the available technology and by the employees. In fact, these primary data may hedge the empirical results due to the possibility of the existence of a subjectivity bias or the risk of bad understanding of the items by the responders. Furthermore, the interpretations of results were based on the correlation analysis bringing up an exploratory relation of association between the variables rather than a relation of causality. In addition, these interpretations were concerned only with the pharmaceutical industry and they can be different for the other industries.

By emphasizing the usefulness of the intangible resources in a more general context, Belkaoui (2003) has studied the relationship between the performance of the firm and the intangible resources using a sample of American multinationals firms. He has shown that the transfer of capacities of patents, reputation, customers and other elements is easier and more fruitful inside the same groups of firms. This study presents a particular objective which resides in the fact of motivating the internationalization of intangible resources because of its crucial advantage in the achievement of high competitiveness. Moreover, it is more beneficial for the international firms to transfer an element of its intangible capital abroad through a subsidiary instead of selling or renting (like the patent) under the framework of this study, the performance was measured by the difference between the added value of the enterprise and the median value of the sample. This measure aims at distinguishing the enterprises in terms of the worth creation. The intangible resource was represented by the number of patent owned by the company. So, Belkaoui (2003) concluded that the intangibles resources allowed the multinational firms to maintain a higher differential performance during a period of five years and consequently can maintain their competitiveness. However, this study is limited to the multinational firms and to one type of intangible resources which is important but insufficient. So, this study presents the constraint of the generalization of the empirical results.

Concerning the effect of reputation, we distinguish the study of Robert and Dowling (2002). They have treated the impact of reputation on the economic performance of firms from American context. These searchers have empirically confirmed that the reputation of the firms has a positive and considerable impact on the persistence of profitability in the short term. These authors have measured the profitability by the performance of the asset returns of the firm and they have determined the reputation by using the "Fortune" data base. Nevertheless, the data about the reputation were collected from managers and financial analysts while there are potential groups of investors whose opinion about the performance is very important. Besides, there are other partners in the firm (such as the employees, the customers, the supplies) who have their own implications about the dynamism of the economic performance.

Finally, treating the subject in its totality, Villalonga (2004) tested directly the effect of the intangible resources of the firm on the tenability of its competitive advantage by using a sample of American firms. The intangible resources were firstly measured by the Tobin' Q and secondly by the predicted value from a hedonic regression of Tobin' Q on several accounting measures of intangibles (such as R&D expenditures). The sustainability was measured by the persistence of specific profits of the firm. The latter were determined by the difference between the operating income of the company and the average of its sector (same method of measuring differential performance as that of the study of Geroski and al (1993), Belkaoui (2003), Casta and Ramond (2005), etc.

Villalonga (2004) concluded that as much as the intangible resources are important, the persistence is high and the competitive advantage is sustained. Moreover, he noticed that the direct use of Tobin's Q as an indicator of intangibility is more efficient than using the Tobin's Q estimated from the accounting measures. Therefore, he approved that the Tobin's Q can be considered as an efficient captor of various intangibles aspects.

Casta and Ramond (2005) have made a more global study concerning the impact of the intangible investment on the competitive performance in the three different samples which are: French sample, Spanish sample and British sample. This study presents a particular interest because it tries to show if there is a difference in the effect of this investment according to the market and the study context.

The competitive performance has been defined as the strategic benefits measured by the ratio of revenues of the firm divided by the revenues of the sector. The intangible investment has been determined by the R&D expenditures, the variation of goodwill and the intangible assets recognised in the balance sheet. Furthermore, they introduced the number of employees as an explanatory variable of the competitive performance. The empirical results show that the number of employees has a positive impact on the competitive performance for the total sample. But, this variable may be considered also as an efficient proxy of the firm's size which may improve its capacity to face the competitors and consequently the size may influence the competitive performance. Concerning the intangible investment, the empirical results indicate that they affect negatively the competitive performance of the French and Spanish firms. Nevertheless, this investment kind has a positive effect for the British firms.

Casta and Ramond (2005) have provided the following explanations:

- the competition is more sustained on the British market ;

- the efficiency of the intangibles assets recognized in the balance sheet of the British firms is more important rather than of the French and Spanish firms.

However, these results may be attributed to the measure of the variable of the study. Firstly, the searchers have completed the missing observations of the R&D expenditures by an approximation. Also, the intangible resources and the goodwill may be not efficient to represent the intangible resources since their accounting treatment is determined by the manager's decision. Secondly, the measure of competitive performance in terms of revenues without including the necessary expenses for the realization of these revenues may be insufficient to capture the real capability of profitability. Thus, we can conclude from this study that the effect of intangible resources on the competitive performance depends on the market characteristics then it is indispensable to provide more empirical evidence for this matter.

2- HYPOTHESES AND METHODOLOGY

2-1- HYPOTHESES

The change of the production's process in favour of intangible investment involves its importance in the performance of the firm. Lev (2001) indicates that the intangible assets constitute for the majority of firms a determinant source of their growth and their wealth. Many searchers have suggested that a significant portion of the profits are not generated by tangible factor of production but by the intangible capital of the firm (Lev, 2001, 2004, Sullivan and Sullivan, 2000). Indeed, several empirical studies have shown the importance of intangible investment in the determination of economic performance of the firm. However, with regard to the literature review, these studies call for many critics. For example, scarce are the articles which are interested directly in the intangibles assets recognized in the financial reports and observing their impact on the wealth generation of the firm. In addition, the majority of papers have been limited to the study of the effect of one element of the intangible resources. Thus, it will be useful to deal with these gaps in order to reinforce the resource based view which must be continually tested because it depends on the change of the importance of the production factors binding to the economic conditions. Consequently, we pose our first hypothesis H1:

H1: More the degree of intangible resources is important, more the economic performance is important.

If we verify this hypothesis, we can say that the intangible resource may be qualified as a strategic asset. In fact, the same asset may be considered by a firm as strategic asset but not with other firm. This can be explained by the strength of the competitive pressure in a particular industry. Therefore, it will be indispensable to examine also the industrial effect on this issue.

Our economy, which qualified as an economy of knowledge, is characterized by a continual increase of the portion of intangible capital in the firms since it is perceived as a solution in front to the concurrence. The resource-based view anticipates a positive contribution of the intangible asset as a strategic asset in the creation's wealth and in the realization of competitive advantage involving differential performance between firms. But, we remark that empirical researches have given a modest attention in the relationship between intangible resources and competitive performance. Thus, we pose our second hypothesis H2 :

H2: More the degree of intangible resources is important, more the difference in the economic performance between firms is important.

By this hypothesis we seek to test if the intangible resources permit to the firm to realize specific profits rather than other firms. But, in a dynamic environment it does not sufficient to create a competitive advantage permitting the realization of specific profits, then, it is indispensable to sustain this advantage. Therefore, we pose our final hypothesis H3:

H3: More the degree of intangible resources is important, more the difference in the economic performance is sustained.

We notice that the realization of a sustained competitive advantage by the firm does not depend only on the intangible resources which represent its competitive base but it depends also on the harmonization between these resources and the whole strategic factors of the industry.

2-2- SAMPLE

Our sample is constituted by 365 quoted American companies and observed from 1994 to 2005. Then, this search yielded 4380 American firm-year observations from the database Compustat. The repartition of the firms is summarized in the table 1.

In the collection of our data, we choose the firms which have at least nine observations concerning the variable of the intangible assets recognized by the balance sheet because it is not evident to find automatically this variable in a continue way. This criterion of choice limited considerably the number of the observations in this study but it avoids at the same time the existence of a bias on the estimators of the variables.

The firms of the sample are partitioned into two groups in order to validate ours hypotheses. The first five sectors (SIC code 13, 20, 22, 47 and 51) are considered as traditional sectors which don't based essentially on intangible expenses and noted as "group 0". The others sectors (SIC code 28, 73, 35, 36) are considered as high technology sectors which requiring intensive intangible expenses and noted as "group 1". The distinction between the traditional sectors and the sectors of high technologies was made on the basis of the previous empirical studies (Gu and Wang, 2003, Emad Mohd, 2005, Darrough and Ye, 2007).

The choice of the adopted classification was not made according to the intensity of intangible assets recognized in the financial reports such as many researches (Sougiannis, 1994, Rogers, 2002, Ballester and al, 2003) but it was made according to the nature of the industry. In this way, we may avoid a bias due to many problems concerning the accounting treatment of intangibles.

2-3- VARIABLES CHOICE

Economic performance: For measuring the economic performance, we have used the operating earnings indicated in the annual financial report which represent according to Lev (2004) the economic earnings of the enterprise. In fact, the notion of economic performance of a company reflects its capacity to create some economic value.

Tangible capital: Since the tangible is considered as a factor of production, it is indispensable to see its contribution in the wealth's generation in the new economic conditions. For the measure of this variable, we have taken the accounting value of tangible assets. Lev (2001, 2004) considers that the enterprise generates economic earnings due to two components: tangible capital and intangible capital.

Intangible capital: The measure of intangible resources poses a problem relative to its specific character and the difference in the accounting normalization of intangibles. For dealing with this problem, we have taken two measures:

- An accounting measure: We have taken the accounting value of intangible assets recognized in the balance sheet.

- An approximate measure: Taken into account the critics concerning the intangible assets recognized in the financial reports, an alternative way to measure these assets consists in the Tobin's Q. This proxy is defined as the report of the value of the firm to the replacement value of its assets. This measure is used as an efficient indicator of the intangible capital of the firm (Lindeberg and Ross, 1981, Megna and Klock, 1993, 2000, Skinner, 1993, Jannine, 2003, Villalonga, 2004, Merino and al, 2006). The calculation of the Tobin's Q is presented as follow:

...

2-4- STATISTIC TOOLS AND MODELS

For the test of the hypotheses H1, H2 and H3, we have used the multivariate regressive models as will describe below:

... Model 1

... Model 2

... Operating earnings divided by the total assets of the firm i during the period t;

... The difference between the operating earnings of the firm i and the mean of the operating earnings of the sample during the period t divided by the total assets. This variable indicates also the specific profits of the firm;

... Tobin's Q of the firm i during the period t representing not recognized intangible resources;

... Intangible assets recognized in the financial reports divided by the total assets of the firm i during the period t;

... Tangible assets divided by the total assets of the firm i during the period t;

... The interaction between the intangible resources and the specific profits of the previous period (t - 1).

3- INTERPRETATION OF EMPIRICAL RESULTS

3-1- DESCRIPTIVE ANALYSIS

The results presented in the table 2 (panel A and panel B), were realized on the basis of the raw variables and the deflated variables and we have got the same interpretations and conclusions.

On the basis of the deflated variables, the average of the tangible assets (0,228) over the period of the study is raised generally much more than that of the intangible assets (0,117). This does not mean that the level of the tangible investment is more important in the process of production and in the creation of wealth than the intangible investment. This difference in the average can reflect a problem in the accounting treatment of intangible investments.

In spite of the importance of the tangible assets than the intangible assets, we notice an annual continuous growth of the ratio "intangible assets / tangible assets" as shows it the graph.

By dividing the sample between the firms of traditional sectors (the group 0) and the firms of high technologies, we notice that Tobin's Q is more raised for the group 1 (2,669) than for the group 0 (1,650). Only, the average of the intangible assets in the group 1 is less important (0,108) than in the group 0 (0,142). Thus, we can say that the companies of high technologies do not recognize the totality of their intangible assets especially those which are created inside the company.

By examining the standard deviation, we notice that the tangible assets are more scattered than the intangible assets. This can explain by the fact that all the tangible assets are recorded in the balance sheet and amortized while the policy of recording of the intangible is still in the phase of theoretical development and practical development. So, the part of the intangible taken into account is limited what limits their dispersal. Besides, the intra group dispersion of the intangible assets is more important than for the inter groups reflecting an important dispersion in the accounting practice essentially for the companies of high technologies.

In fact, companies which capitalize their immaterial expenditures will have more intangible assets than the companies which do not opt for the capitalization while the real level of the investment can be the same. Consequently, we will have an increase in the difference of the value of the intangible assets between the firms due to the accounting mode of record. Besides, the characteristics of the intangible can create some difference. Every firm can have its own intangible assets which are not available on the other firms as far as there isn't an organized market for the intangible assets as for the physical assets.

In the care of these first descriptive analyses, we conclude that the phenomenon of dematerialization, which leads to an intensification of the knowledge and the know-how in the processes of production, is a global and remarkable phenomenon.

3-2- ANALYSIS OF THE RESULTS OF THE REGRESSION MODELS

3-2-1- THE IMPACT OF THE INTANGIBLE RESOURCES ON THE IMPROVEMENT OF THE ECONOMIC PERFORMANCE

In the case of the panel data, we must firstly examine the existence of the specific effects. The Fisher test informs us about the existence of a joint significativity of the introduced fixed effects (F (353, 3837) = 1, 19 with a probability > F = 0,000). Then, we proceeded to an estimation in random effects. After this last estimation, we proceed to a Breusch-Pagan test which examines the significativity of the random effects. The probability of the statistics of the Breusch-Pagan test is globally significant at the level of 1 % (chi2 (1) = 753, 61 with a Probability > chi2 = 0,000). We then passed to the test of Hausman specification to be able to decide what model is suited to the data which we have.

The probability given by the test (chi2 (1) = 57, 23 with a probability > chi2 = 0,000) is lower than 1 %. This implies that the model with fixed effects is preferable in the model with random effects. When the probability of the test is superior at the level of 10 %, the Hausman test does not allow differentiating the model with fixed effects of the model with random effects. In that case, the choice of the one or the other model must be strictly justified and it depends on the conviction of every author on the relevance of a model than the other one. At this level and on the basis of the made tests, we make our analysis on the basis of a model for fixed effects.

Before proceeding to an analysis of the results given by STATA, it is to note that we made, on the chosen model, another test of Ramsey Reset available on this software which allows testing the possibility of an omission of a relevant explanatory variable or a bad specification of the model. So, we obtained a probability of test of Fisher superior to 10 % (F (3,971) = 1, 85 with Probability > F = 0, 1372), thus we cannot throw reject the hypothesis of a good specification. Consequently, this test allows us to make sure of the efficiency of the model adopted within the framework of this analysis.

It is to note that every time we try to estimate a simple or multivariate model and we follow systematically these various stages.

The table 3 summarizes the empirical findings shown by STATA on the simple regression after the correction of the heteroscedasticity by the method of White to determine an average behaviour of the companies of the sample.

We notice that adjusted R2 is for 89, 73 % and consequently the model have an explanatory important power for the total sample. Besides, Fisher's F, which measures the global significativity of the model, is 39, 57 and statistically significant at the level of 1 %.

The coefficient of Tobin's Q (2,135) is significant at the level of 1 % and it is positive what implies the confirmation of the hypothesis H1 relative to the existence of a positive relation between the intangible resources of the company and the economic performance measured by the operating profit. So, following resources-based view, the introduction of the intangible resources in the process of production as strategic assets is indispensable in the creation and the improvement of the economic performance of the company in our actual environment. This finding confirms also several empirical studies (Robert and Dowling, 2002, Belkaoui, 2003). But, the majority of these studies focused the interest on a particular aspect of the intangible (such as the number of patents). The fact of treating a single aspect can neglect the effect of the other elements and their interaction and so we can lose a considerable volume of information and bias, afterward, the empirical results.

To more confirm our empirical findings, we divided, on one hand, the total sample between the high-technology firms (group 1) and the firms of traditional sectors (group 0) to know if the composition of the total sample influences the empirical results. According to the panel B of the table 3, the model remains strong for both groups as far as the adjusted R2 is of the order of 57 % for the group 0 and of 89 % for the group 1. Besides, the coefficient of Tobin's Q for each group is very close.

On the other hand, we divided the sample between the profitable firms and the deficit firms. We considered a firm as being profitable if it realized, at least, over seven years (more than half of the period of the study) a positive accounting earnings. This distinction did not change the significativity of Tobin's Q in the explanation of the economic performance. Only, the coefficient of this last one is much more important for the profitable firms (2,179) than for the deficit firms (0,766). These empirical findings can show that the profitable companies are more capable, on one hand, of developing strategic intangible resources and, on the other hand, of exploiting suitably these resources.

It is to indicate that the introduction of variables relative to the intangible and tangible assets recognized by the balance sheet in the model of simple regression did not increase its explanatory power global as shown in the table 4 (panel A). Only, the introduction of the effect of sectors increased the explanatory power of the model of 1, 08 % (4, panel B).

All the sectors constituting our sample present a positive and significant effect of the intangible resources on the economic performance of companies but with a difference at the level of the importance of the coefficient.

The software sector presents a less important coefficient (1,236) than the biological and pharmaceutical sector (2,228) and the sector of industrial machinery and computer equipment (2,182). This can be explained by the fact that the first sector is more sensitive to the competition and more exposed to the risk of imitation of products. Consequently, the effect of its intangible resources will be more limited than the effect of a sector which is more protected by barriers in the entrance.

Besides, we notice that the coefficient of the Tobin's Q is considerable (2,587) for the traditional sectors. This confirms the importance of the intangible resources in the activity of the company whatever the nature of its sector. So, we confirm the observation Brynjolfsson and Yang (2000) who indicated that the intangible investments characterize "the new economy ".

Concerning the recognized assets in the balance sheet, the tangible or physical assets have a positive effect (1,135) and significant at the level of 1 %. While, the recognized intangible assets have a negative effect (0,378) and significant at the level of 5 %. This does not mean that this type of asset is not productive. It can be that the published amount is widely insufficient than its reality to reflect their real potential in the creation of wealth. In fact, the recognized assets are generally acquired from the outside and were not created inside as far as accounting standards forbid the activation the intangible assets created by the company. Consequently, this variable does not reflect all intangible resources.

It is to remind that we have introduced the variable I_INTG to check the effect of intangible assets recognized in the balance sheet on the generation of profits. Because this last variable can miss the reliability of measure and can reflect several problems of accounting treatment, we have already considered that our variable of interest is Tobin's Q which is chosen as an effective indicator of the intangible resources.

In summary, this multivariate analysis confirmed the essential importance of the intangible resources measured by it Tobin's Q in the improvement of the economic performance measured by the operating profit. This positive and significant relation limits itself not only to the companies of the new economy but it extends to the traditional sectors, thus the necessity of the specific, idiosyncratic and immaterial assets for the survival of the modern companies.

3-2-2- THE IMPACT OF THE INTANGIBLE RESOURCES ON THE CREATION AND THE SUSTAINABILITY OF THE DIFFERENCE OF ECONOMIC PERFORMANCE BETWEEN THE FIRMS

Within the framework of this analysis, the regression model 2 allows to verify, on one hand, the hypothesis H2 relative to the positive relation between the intangible resources and the difference of economic performance between companies and, on the other hand, the hypothesis H3 relative to the sustainability of this difference due to these resources.

Before beginning our analysis of the empirical findings, we remind that we measured the difference of performance between companies by the realized specific profits. These last ones, representing our variable to be explained, are determined by the difference between the average of the operating profits of the sample and the operating profit of the company. Indeed, it was confirmed in the literature that when the firm is more capable of realizing specific profits than the other firms, it has inevitably a competitive advantage which allows making these profits (Amit and Schoemker, 1993, Peteraf, 1993).

* THE IMPACT OF THE INTANGIBLE RESOURCES ON THE CREATION OF THE DIFFERENCE OF ECONOMIC PERFORMANCE BETWEEN FIRMS

In the previous part, we have confirmed the capacity of the intangible resources in the improvement of the economic performance of the company. Only, this is not sufficient in a competitive environment. In fact, it is necessary to have a different offer with regard to the others on the market of products and services. As it was pronounced in theory, more the company is based on specific and immaterial resources, more it is different than the other firms and more it is capable to realize more important profits on the market. In this sense, the company can even change the tastes and create new needs at the customers and consequently it attracts them towards its products due to its brand image, to the quality of the services assured by its human resources.

The adopted model is a dynamic model because it contains a delay of the dependent variable as an explanatory variable (the specific profit of the period t-1). So, by applying the GMM, it is necessary to proceed to two tests which are: the test of Sargan / Hansen which allows testing the validity of delayed variables as instruments, and the test of autocorrelation of Arellano and Bond where the hypothesis is the absence of the errors autocorrelation (second order) of the equation in difference.

According to the table 5 and for the total sample (panel A), we notice that the test of Hansen (p = 0,318) does not allow the reject of the hypothesis of validity of delayed variables in level and in differences as instruments and that the autocorrelation test (second order) of Arellano and Jump (p = 0,179) does not allow the reject of the hypothesis of the absence of second order autocorrelation. Consequently, we approve the validity of our model.

On the basis of the empirical findings, we notice that the coefficient of our explanatory variable of interest, Q of Tobin, is widely significant (at the level of 1 %) and positive (0,871). Thus, we confirm the hypothesis H2 relative to the existence of a positive and significant relation between the intangible resources and the specific profits. Consequently, the intangible resources increase the capacity of the company to extract specific profits and so these last ones can create of difference of economic performance between companies operating in the same sector.

The same empirical findings were found by the study of Villalonga (2004) which made appeal to the same measure of the intangible resources (Tobin's Q) and in a sample of American companies. However, Casta and Ramond (2005) did not confirm this result by using a sample of French and Spanish companies and another measure of the intangible resources. This last one was essentially established on accounting measure.

The distinction between the nature of sectors changed the significativity (at the level of 1 %) of the variable Tobin's Q in the explanation of the difference of performance between companies but without changing the sign of its coefficient. For the high technology firms, the coefficient of Tobin's Q (1,924) remains significant and by the same importance (0,882) as the total sample (0,871). For the group 0 of the traditional sectors, this coefficient is positive (0,648) but not significant. So, we can conclude, firstly, that the awareness concerning the necessity of the intangible resources is a general phenomenon (that is for the total sample) but the degree of the necessity differs according to the nature of sector. Secondly, we consider that the weight, which is more important and considerable of the participation of the intangible resources in the creation of the discrimination between the companies of high technologies than those relative to the traditional sectors, can reflect widely the fact that the intangible resources of the hightechnology companies perform better the criteria of strategic asset. Besides, the effort and the experience of these last ones in the acquisition of these resources are more important and more extensive to fight against the competition. Consequently, this type of resources has the capacity to create a competitive advantage to the company.

The fact of generating a competitive advantage is not sufficient but it is necessary to support it. In other words, it is not enough to realize a performance more raised than the other firms but it is necessary to maintain it at least for a short-term. Thus, it would be useful to know if these intangible resources are capable to assure this role.

* THE IMPACT OF THE INTANGIBLE RESOURCES ON THE SUSTAINABILITY OF THE DIFFERENCE OF ECONOMIC PERFORMANCE BETWEEN COMPANIES

After the confirmation of the direct relation between the intangible resources and the creation of difference of economic performance between companies, we should test, in this part, their effect on the persistence of this differentiation. In fact, firms can realize specific profits. But, the competitive strength can make this high profitability as a transitory phenomenon. Thus, we must test the potential of the intangible resources in the preservation of the specific profits.

At this part, our variable of interest is represented by the interaction between Tobin's Q and the specific profits of the previous period ( Qit * D_RE it -1 ). In other words, we should test the effect of the intangible resources of the current period on the sustainability of the specific profits of the previous period.

According to the empirical examination of the effect of the interaction, we notice that the coefficient is significant (at the level of 1 %) and positive (0,121) on the whole sample. Generally, we conclude that the intangible resources contribute to the persistence of the difference of economic performance between companies and, consequently, sustainability of the competitive advantage whatever is the nature of the activity. In the light of this result, we confirm the hypothesis H3 according to which there is a positive relation between the intangible resources and the sustainability of difference of performance between companies. This relation was essentially verified by the study of Villalonga (2004) on a sample of American companies.

The empirical findings show also that there is an effect concerning the sector. In this way, we notice that, for the group 0 of the companies of the traditional sectors, this coefficient remains significant at the level of 1 % and positive (0,044). Only, it is more important (0,122) for the group 1 of the high technology companies. This result confirms more that the intangible resources of the high technologies sectors are much more qualified than the intangible resources of the traditional sectors. Consequently, we can say that the effect of the intangible resources depends on their characteristics. Considering their activity based essentially on the knowledge, the companies of high technologies may assure these fundamental characteristics of the intangible strategic resources and exploit them in their favour.

4- CONCLUSION

Recently, the investment contents carried out by the modern firms have largely changed. Furthermore the physical investment, it is developed immaterial investments in order to increase the wealth and competitive potential of the firm. The importance of intangible resource as strategic resource is justified by the resource-based view and has been verified in our sample. Our analysis is based on the Tobin's Q as an indicator of intangible resources of the firm. The intangible assets recognized in the financial report can't provide significant information which can be explained by the problems in their accounting treatment or by the fact that managers look for preserving the confidentiality of their intangibles.

Firstly we have confirmed the significant and positive contribution of intangible resource on the amelioration of the economic performance whatever is the nature of the activity of companies and the level of their performance (profitable or deficit). So, we strengthen their impact on the whole economy which is oriented more and more to the knowledge, the information technology, the services, etc. In fact, the necessity and the importance of this process of dematerialization, which led to an intensification of the knowledge within companies, vary according to the nature of the activity.

Furthermore, we have found that these resources have more effect on the high technology firms rather than the traditional sector firms. Indeed, the intangible resources are the result of flows and efforts allocated by the firms in the previous periods following to an accumulation process of resources.

Secondly, we have confirmed the significant and positive contribution of intangibles in the creation of the economic performance difference between firms and consequently in the creation of competitive advantage. These differences reinforce the competitive position of the firm and increase its specific profits essentially for the firms operating in the high technology. In these sectors, the intangible resources are more specific and idiosyncratic. This heterogeneity of the firms is coming from the originality of their resources particularly the immaterial resources which are largely heterogeneous.

Finally, we have shown a positive effect of these resources on the persistence of the difference among firms essentially in the high technology. So, the intangible resources allow not only creating more successful companies than the others but also to sustain this advantage at least in short-term.

Generally, our empirical results carry on with the resource-based view by using the Tobin's Q since many empirical studies have approved its efficiency in the measure of the intangible resources of the firm. This efficiency has been verified also by this paper in a French era. However, the intangible assets recognized in the financial reports have not an explanatory power similar Tobin's Q. Indeed, the intangibles mentioned in the financial reports may largely enter a bias in the empirical result because of, on one hand, a deficiency on the accounting standards and, on other hand, a possibility of discretionary manipulation by the managers.

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Appendix

(ProQuest: Appendix omitted.)