Intangibles are increasingly important to productivity growth and to the widening gaps between firms, yet generative AI is changing their value in ways that current approaches to defining and measuring them cannot capture. In this paper, Prof Diane Coyle proposes splitting intangibles into two codified sets - transferable knowledge capital and organisational intangibles (the tacit, relational knowledge embedded in relationships with employees, suppliers and customers) - and argues that the latter will remain firms' lasting source of competitive advantage as they adopt AI.
Intangibles play an important and growing role in the economy, contributing to both productivity growth and greater productivity dispersion at firm level. Generative artificial intelligence (AI), as an information processing system, has the potential to alter significantly the role and value of firms’ intangible assets, but understanding whether and how this is happening will require a novel approach to defining and measuring intangibles at firm level. This paper proposes a classification of intangibles into two categories: knowledge capital assets that are codified and alienable; and organisational intangibles reflecting relationships with employees, suppliers and customers that involve contextual, tacit and relational knowledge and are difficult to codify, imitate or alienate. The latter category, reflecting the relative importance of sociality for the creation of economic value, will be the source of continuing competitive advantage for firms as they adopt AI tools.
