Organizational Capital

There’s been a lot of discussion of “organizational capital” recently. Here‘s a good place to start. If you don’t have the time or patience, here’s my summary:

Businesses invest in themselves to ensure future profitability. One form of investment is “organizational capital”. This is an investment in intangible procedures such as a new inventory management algorithm. Organizational capital investments sometimes yield greater returns that traditional capital or labor investments. Recent technologies have made some new kinds of procedures possible. Businesses may have new high return investment opportunities superior to traditional capital and labor investments. This would be bad news for some parts of the economy and good news for others. It also raises a host of interesting questions for economists and business theorists.

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