- Intangible assets are non-scarce.
- Deployment of an intangible asset is possible at the same
time in multiple uses.
- Intangibles increase in value when used.
- This is also referred to as scalability: intangibles value
increases when the scale in which they are used increases.
- Intangibles are not subject to diminishing returns as are
tangible assets, but have increasing returns.
- Intangibles have strong network effects.
- Although not exclusively applicable to intangibles, network
effects are characteristic for intangibles in the sense that intangibles
often form the core of important networks.
- Intangibles create future value. All intangibles are
future-oriented. (Because of this they are ignored by traditional
accounting systems – conservatism concept, materiality concept).
- Intangibles are
difficult to manage and to exclusively control.
- Taking full advantage of the tacit knowledge residing in
employees is more difficult than exploiting the value of a building or a
machine to it’s maximum,
- Copying or re-engineering of intellectual assets is often
- Limited ability to protect by property rights,
- Cost accounting systems are not well geared towards
intangible assets and are even wholly inaccurate for managing intangible
- Intangibles cannot be owned (except legal property rights).
- Intangibles investments are typically more risky.
- Due to the fact that intangibles play the most dominant
role in early stages of the innovation process.
- Proper management can deal with this – i.e. R&D alliances,
diversified innovation project portfolios.
- Intangible assets are nonphysical and therefore inherently difficult to
- Legal protection is weak.
- Large sunk costs, low marginal costs.
- Open exchanges for intangibles are in their infancy.
- Intangibles cannot directly be measured.
- Valuing intangibles is difficult.
- Intangibles are not evidenced by financial transactions (as tangibles