In this brief, we discuss characteristics and consequences of intangible capital, such as brands and patents.
The characteristics of intangible capital lead to a tendency for markets to concentrate, to growing disparities between good and bad companies, and to an increasing significance of management and growth entrepreneurship. On an individual level, the increasing importance of intangible capital may result in a rise in inequality.
Intangible factors of production are closely related to people and to their flexible utilization in the workplace. Therefore, light regulation of labor and end markets encourages investment in intangible capital.
Finland is currently aiming for ”one thousand new doctors” and has also other quantitative goals for developing the national innovation system. While quantitative targets may be necessary, it is important to note that, although intangible capital is scalable from the perspective of its utilization, scaling it itself is challenging in a leap-like manner. Additionally, the characteristics of intangible capital highlight the importance of its quality and context of use. At the very least, this means that competion and creative destruction among businesses as well as growth entrepreneurship are equally worthy topics upon thinking how to develop the national innovation system.
