The peculiarity of the influence of the economic downturn in the company - Курсовая работа

Opportunity costs of operational personnel and resources become extremely low when capacities stay without action (in crisis, when demand falls). Consequently, a recession may be favorable time to enhance R&D and human capital development activities. Furthermore, there is a point of view that opportunity costs component is larger for human capital- than for R&D-investments, so that a pit-stop effect is relatively stronger for investments in human capital (Knudsen and Lien, 2014). However, the next embedded quality of intangibles hinders top-management in their effort to maintain investment programs in a crisis. To be more precise, this quality is defined as cash intensity. R&D expenditures and expenses for employees development have cash-intensive nature that may even offset opportunity cost effect (Cincera et al, 2012). In the literature we can find considerable macro-level evidence that absolute level of R&D investments is pro-cyclical, which confirms that financing effects dominate the pit-stop effect for such kind of investments (Archibugi et al, 2013; Filippetti and Archibugi, 2011). But although in aggregate terms R&D are pro-cyclical, in an economy we might find cases of opposite firm’s behavior. Low propensity of a firm to debt capital (or equally - large internal cash reserves) may serve as a prerequisite to the counter-cyclical firm behavior relative to investments in R&D and employees (Lopez-Garc?a et al, 2013). If we compare cash intensity of human resources development programs with R&D programs, researchers incline towards the less required cash for human capital investments (Knudsen and Lien, 2014). One additional quality of investments in intangibles, which is significant when we bear in mind tough economic conditions, is long-term nature of such kind of investments. In the literature this feature relates mainly to R&D investments. To describe, R&D have high adjustment costs expressing in unique specialists and new knowledge embedded in teams, which prevent firms to contract R&D-budgets in a crisis and stimulate firms to smooth such kind of investments in tough economic circumstances (Hall, 2010; Knudsen and Lien, 2014). Other researchers confirm such view appealing to phenomenon of technological accumulation and persistency (Filippetti and Archibugi, 2011) and to high adjustment costs for changing R&D in crisis (Cincera et al, 2012). Previous studies of investments in intangibles during a recession should be observed. We might note that there are few papers investigating knowledge investments strategies in crisis, especially their impact on performance. However, some researchers examine management strategies for intangibles in crisis and found that increasing expenditures on employees during the economic turmoil when a company suffers from external pressures may sustain the company (Henry, 2013; Holtskoga and Ringenb, 2013 - qualitative researches). Sheehan (2012) found that management development expenditures in multinational corporations headquartered in United Kingdom had a positive link with perceived subsidiary performance during the last economic crisis.