Proceedings of the 3rd European Conference on Intellectual Capital

Impact <strong>of</strong> Investment in Human Capital on <strong>the</strong> Business
Value
Lidia García-Zambrano, Arturo Rodríguez-Castellanos and José Domingo
García-Merino
University <strong>of</strong> <strong>the</strong> Basque Country, Spain
lidia.garcia@ehu.es
arturo.rodriguez@ehu.es
josedomingo.garcia@ehu.es
Abstract: At present, it is known that intangible resources, or intellectual capital, are <strong>the</strong> drivers <strong>of</strong> economic
growth. One <strong>of</strong> its components is <strong>the</strong> human resources. Human resources are <strong>the</strong> main source <strong>of</strong> knowledge <strong>of</strong>
firms, and it is considered a critical resource, maybe <strong>the</strong> most important one (Johanson, 2005; Marr and Roos,
2005). For this reason, its management and its development are crucial to increase <strong>the</strong> value <strong>of</strong> <strong>the</strong> firm. The
objective <strong>of</strong> this paper is to analyse <strong>the</strong> influence that <strong>the</strong> training expenses have over <strong>the</strong> total value <strong>of</strong> <strong>the</strong>
intangibles. From <strong>the</strong> business management, <strong>the</strong> expenditure on training are an investment. It has been selected
a sample <strong>of</strong> <strong>the</strong> main Spanish companies, those that are included into IBEX-35 (<strong>the</strong> main index <strong>of</strong> reference <strong>of</strong>
<strong>the</strong> Spanish Stock Exchange, made up <strong>the</strong> 35 companies with more liquidity on <strong>the</strong> Spanish Stock Exchange),
and it has been analysed <strong>the</strong> relationship between <strong>the</strong> investment into human resources and <strong>the</strong> total value <strong>of</strong>
intangibles. The variable “expenditure on training” is a flow variable, ga<strong>the</strong>rs <strong>the</strong> investment done during a period
<strong>of</strong> time, while <strong>the</strong> variable “value <strong>of</strong> intangibles” is a stock variable, collects <strong>the</strong> total value <strong>of</strong> investment done
until a period <strong>of</strong> time. The value <strong>of</strong> intangibles in a particular time will be collected because <strong>of</strong> <strong>the</strong> investments
done into this intangible minus <strong>the</strong> depreciation suffered by <strong>the</strong>se investments. For this, it has been recollected
data about “expenditure on training” variable <strong>of</strong> <strong>the</strong> sample during <strong>the</strong> period 2006-2008; and <strong>the</strong> “value <strong>of</strong>
intangibles” variable in 2009, trying <strong>of</strong> analysing its relationship. From this, it obtains a positive relationship
between both variables, that is, <strong>the</strong> investment on training <strong>of</strong> employees generates increases on future intangible
value <strong>of</strong> <strong>the</strong> firm. The results are similar using different rates <strong>of</strong> depreciation on <strong>the</strong> investment <strong>of</strong> training. It is
significant that <strong>the</strong> analysis has been done during period <strong>of</strong> bear market. This conclusion reinforces <strong>the</strong> strategic
value <strong>of</strong> human resources during times <strong>of</strong> crisis.
Keywords: intellectual capital, human capital, expenditure on training, depreciation, business value
1. Introduction
It is widely accepted that intangible resources are those that generate economic growth in many
economic sectors. Investing in intangibles is <strong>the</strong> path that companies must follow to consolidate <strong>the</strong>ir
competitive position and ensure long-term growth. Recent studies (García-Merino et al., 2009;
García-Zambrano, 2010; Rodríguez-Castellanos et al., 2010) show how <strong>the</strong> companies that believe it
is important to invest in intangible resources obtain better economic results that those that do not.
Marshall (1890) already recognised <strong>the</strong> importance <strong>of</strong> knowledge as a significant resource and a
powerful production factor. However, <strong>the</strong> interest in measuring and managing intangibles, in particular
those due to knowledge −"intellectual capital"−, did not emerge until <strong>the</strong> mid 1990s, when models
began to be developed (Edvinsson, 1997; Edvinsson & Malone, 1997). Factors that contributed to
increasing <strong>the</strong> importance <strong>of</strong> intangibles in <strong>the</strong> company have been, on <strong>the</strong> one hand, <strong>the</strong> increasing
business competences driven by <strong>the</strong> globalisation <strong>of</strong> <strong>the</strong> markets and, on <strong>the</strong> o<strong>the</strong>r hand, <strong>the</strong> advent
<strong>of</strong> <strong>the</strong> information technologies, whose greatest exponent is <strong>the</strong> Internet boom.
Today’s society is noted <strong>the</strong> knowledge-based society. Knowledge is <strong>the</strong> main strategic resource that
is capable in itself <strong>of</strong> generating new knowledge. Therefore, intangible resources have become <strong>the</strong>
competitiveness base for any company, as <strong>the</strong>ir ownership provides <strong>the</strong> company with <strong>the</strong> opportunity
to generate sustainable competitive advantage and increases <strong>the</strong> value <strong>of</strong> <strong>the</strong> company.
Numerous authors acknowledge that knowledge is <strong>the</strong> main value source <strong>of</strong> corporate intangible
resources (Johanson, 2005; Marr & Ross, 2005). Given <strong>the</strong> rapidity at which <strong>the</strong> required skills and
knowledge change and <strong>the</strong> employees being considered as an essential competitive resource to
obtain a lasting competitive advantage (Guerrero & Sire, 2001), training is one <strong>of</strong> <strong>the</strong> essential factors
that determine <strong>the</strong> efficiency <strong>of</strong> <strong>the</strong> organisations.
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