Do Firms Earn Rents from the Intangible Assets of Their Owners? Institution‐Based Insights from the Energy Sector

Abstract

Firms can earn rents not only from their own intangible assets (FIAs), but also from the intangible assets of their owner organizations (OIAs). Although the literature has established that rent creation from FIAs depends on the quality of institutions, it remains unclear how institutional quality influences rents from OIAs. This study examines how the rents from OIAs and FIAs change when they are deployed in environments with different institutional quality. Combining insights from the resource‐based view and institutional economics, we develop and test a set of predictions using a sample of over 6000 energy firms from 23 European countries. The study shows that the effect of institutional quality on rent creation is asymmetric, being positive for FIAs and negative for OIAs. In addition, OIAs drawn from multiple owners create higher rents than OIAs from a single owner. Such ‘multiplicity‐of‐ownership’ advantages are stronger in countries with better institutional quality. The contribution of the study lies in explaining how the two types of intangible assets generate rents for the focal firm, and in clarifying why the creation of such rents is contingent on the institutional context in which they are deployed.

The role of institutional quality and industry dynamism in explaining firm performance in emerging economies

“…Institutions also influence the pressures and costs that firms face and how they access and use resources. They can therefore augment or constrain a firm's competitiveness and that of its rivals (Aliyev & Kafouros, 2023; North, 1990).…”

“…Nevertheless, because protection from imitation is more challenging when such portfolios are diversified (Kafouros et al, 2021), firms must rely heavily on a developed legal framework. Such legal framework is particularly important in emerging economies as it protects firms from imitation and corruption and assists in the appropriation of economic rents between partners (e.g., from co‐developed products) (Aliyev & Kafouros, 2023; Teece, 1986; Williamson, 2000). For example, an emerging CEE country, Poland, has set up four specialized courts to protect IP and broaden the power of attorneys (Rzążewska & Gajek, 2020).…”