In today’s increasingly knowledge-based economy, intangible assets—such as technology, brands, and know-how—are vital for corporate growth and competitive advantage. As global investments in intangibles continue to rise, companies face growing pressure to optimize the value derived from these assets, especially when expanding into international markets.
Yet, intangibles travel poorly. Deploying proprietary technologies or established brands overseas involves navigating unfamiliar markets, overcoming information gaps, and addressing agency issues. As a result, many firms struggle to capitalize on these assets, particularly during foreign acquisitions. In our new study published in the Global Strategy Journal, we shed light on how companies can better harness their intangible strengths abroad, highlighting the board of directors as an essential governance mechanism. Effective boards monitor managerial actions and provide valuable advice, thereby facilitating the strategic evaluation and deployment of intangible assets internationally.
Specifically in our study, we analyzed 675 cross-border acquisitions made by U.S. public firms. The researchers examined two types of intangibles—technology-related (R&D intensity) and marketing-related (advertising intensity)—and assessed market reactions with event-study abnormal returns. Importantly, they matched those deals with four key attributes of board effectiveness: independence (presence of outsider directors and separation of CEO and board chair roles), expertise (directors with overseas managerial experience), bandwidth (few “busy” directors burdened by multiple directorships), and motivation (director share ownership).
Our analyses confirmed that companies with greater R&D intensity generally experience higher market returns upon acquisition announcements. However, unlocking the full value of these intangible assets depends crucially on having a broad structured for effective governance. Boards characterized by high independence, international expertise, sufficient bandwidth, and strong incentives – which substantially improve their ability to monitor and advise management – enhance the returns to the utilization of intangibles abroad.
In addressing intervening decisions made by multinational corporations, we also provide evidence of how corporate leaders – as well as boards – attend strategically to disclosure decisions (whether to report investments in intangible assets) and to the choice of expansion mode (in this case, acquisition) as antecedents to international expansion.
These insights are especially relevant given the intensifying global competition in technology and innovation, particularly in fields such as artificial intelligence, reflecting an escalating global race for technological leadership. Firms must not only invest in intangible assets but also cultivate governance structures capable of turning such investments into long-term value. Strengthening board effectiveness is thus a strategic imperative for companies seeking global success in the knowledge economy.
Xavier Martin is Professor of Strategy and International Business at Tilburg University (NL). His research examines how corporate international strategies, interfirm relationships, and knowledge-based assets affect each other and jointly affect firm performance. He also does research on methodology as applied to strategic management. Tao Han is Assistant Professor of Strategy and Organization at emlyon Business School (France). He uses different theories of the firm and econometric analyses to understand the behavioral and competitive factors in firms’ corporate development activities (e.g., global strategy and M&As) and how they translate into firm performance.
