Updating investment estimates for Australia's organisational capital

Business enterprises Innovation Investments Australia
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Organisational capital refers broadly to internal practices, processes and systems that enable firms to generate value. This paper presents an updated experimental estimate of organisational capital in the Australian market sector, derived using the standard expenditure approach for measuring intangible capital. We find that business investment in organisational capital in Australia is significant and fast growing. The relative share of organisational capital stock increased dramatically during the 1990s when compared to physical capital, but has since been gradually retreating over the last decade or so. This pattern appears to reflect similar trends in business function outsourcing and the uptake of enabling technologies over the same period.

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