Financial Valuation of Intangibles, Real Options and Entrepreneurial Performance

This paper aims to analyse the Basque Country companies' view about the financial valuation of intangibles relevance and its influence on business performance. First, the role of intangibles in business competitiveness will be justified, based on the theory of resources and capabilities. The importance of intangibles as a strategic resource is not new. However, the intensified business competition and the advent of information technologies have brought changes with deep implications for the competitiveness of firms. The traditional factors of production have become secondary. The success in the "new economy" is argued to be primarily based on the development and utilization of intangible resources. Subsequently, the advantages and difficulties generated by the financial valuation of intangibles and the different methodologies developed to date will be discussed. One of the main problems in the proper management of intangibles is that there is a general lack of information about them. Many authors think that if you can't measure something, neither you can manage it. On one hand, intangible resources are difficult to identify and evaluate. On the other hand, there are not properly reflected in the financial statements of firms; they are "invisible" assets. Therefore, financial valuation of intangibles will lead to significant benefits to the organization that will help to determine business strategy, process design as well providing competitive advantage. The previous statement leads to the first hypothesis of this work, i.e. the higher sensitivity to the financial valuation of intangibles, the better financial results of firms. One of the main characteristics of knowledge is that often allows to obtain more knowledge, and therefore constitutes an option about more knowledge. An intangible asset or a competence includes real options if its holding or current availability may affect future net income, either because it allows other assets or competencies to be acquired in the future, or because it allows investment projects to be carried out in the future. The second hypothesis of this work asserts that firms that are able to identify options in its intangible resources will generate a better financial performance. To achieve this objective, a field study are done, making telephone calls to Basque Country companies' financial managers. Then, their responses and the financial performance of their firms are analysed. The data of financial performance are obtained form SABI database. Nonparametric contrasts are used.