Market value of R&D, patents, and organizational capital: Finnish evidence

This paper studies how knowledge and organizational capital (OC) affect the market valuation of firms. Detailed occupational information from Finnish linked employ-eremployee data is used to form new estimates of firms' organizational investments. The market value of OC is analyzed together with research and development (R&D) and patent variables. A nonlinear least-squares regression is used to investigate the contribution of these variables to the market value of Finnish firms during the period 1995-2008. The results show that OC, R&D, patents, and patent citations all have positive and significant effects on market value. A particularly interesting finding is that the effect of OC appears to be even stronger than the effect of R&D investments. This study also provides internationally comparable results on the market valuation of knowledge assets that indicate that in Finland, the market valuation of R&D, but not patents, is lower than in the USA and many European countries.