Research On The Influence Of Organization Capital On Corporate Investment Efficiency

In the era of knowledge economy,talent is the primary productive force,and organization capital is a powerful guarantee for talents to be effective in the company.Organization capital includes organization structure,institutional norms and corporate culture,such as information systems,business practices,key talents,customer relationships,brands,patents and goodwill.Organization capital helps to match human skills with physical capital,thus improving organization efficiency.According to the existing literature,firms with higher organization capital have realized efficient production,stable operations and fast transactions,thus improving productivity and achieving better performance.Organization capital has gradually become an important part of the firm.The existing literature has found that organization capital can optimize the internal management of the firm,but has not yet mentioned whether organization capital can optimize the allocation of external resources and influence the investment decisions.Based on the empirical data of China’s A-share listed companies from 2007 to 2021,this paper measures firms’ investment efficiency by the regression residuals of the Richardson model,and uses firms’ expenditure on organization capital calculated according to the perpetual inventory method as a proxy variable for organization capital.The empirical test finds that organization capital can significantly improve corporate investment efficiency.After a series of robustness tests,such as replacing the measurement of core variables,considering endogeneity problems,considering the influence of different investment efficiency levels,and considering the noise in the measurement of organization capital,the finding still holds.Further research shows that reducing the information asymmetry and agency costs are two important channels through which organization capital improves the investment efficiency.Meanwhile,the positive relationship between organization capital and investment efficiency is affected by the internal and external governance environment of the firm.The positive effect of organization capital on investment efficiency is more pronounced in firms with weaker external governance environment,higher internal governance level and lower financing constraints.This shows that organization capital works better with a higher level of internal governance,and it can make up for the problems caused by the weak external governance environment.The possible research contributions of this paper are reflected in the following three aspects:First,it broadens the research on the economic consequences of organization capital,and finds that organization capital can optimize the allocation of external resources and improve investment efficiency.Second,it expands the research about the micro factors that affect the investment efficiency.It is found that organization capital can improve investment efficiency by reducing the information asymmetry and agency costs,thus finding a new way for firms to curb inefficient investment.Third,the internal and external corporate governance has different effects on the role of organization capital.Organization capital is more important when external monitoring is weak;meanwhile,a good internal governance environment is a prerequisite to ensure that the role of organization capital is fully realized.Organization capital has a greater contribution to investment efficiency when the level of internal governance is higher and the degree of financing constraints is lower,which helps to further understand the role of organization capital.