How to ensure 21st century companies invest for the long term

In the twentieth century, firms were predominantly capital-intensive and competed on cost efficiency. Companies with the most efficient factories could outcompete their rivals and become market leaders. The twenty-first century firm is different. Competitive success now depends increasingly on product quality and innovation. These in turn hinge on a company’s intangible assets, such as its human capital and R&D capabilities. But unlike a factory, which is easily visible to investors, the fruits of intangible investment take several years to appear.

Alex Edmans, Professor of Finance, London Business School

To read the full article, click here.

blog comments powered by Disqus