Title: Competence value emersion: a key to sound practices in entrepreneurial finance. From 'Q' to 'T' ratios in the North-Eastern Italian experience

Authors: Guido Max Mantovani

Addresses: Department of Management, Ca' Foscari Challenge School, Ca' Foscari University, Dorsoduro 3246, I-30123 Venice, Italy; H.E.R.M.E.S. Universities, c/o Ecole de Management de Strasbourg, 61 Avenue de la Forêt Noire, 67000 Strasbourg, France

Abstract: The determinants of the value of the entrepreneurial competences and behaviour are examined. The study reveals that time is the link between marginal productivities of the capital assets and that of the human competences. The successful entrepreneur behaves in order to give marketability to skills, riding a cycle that transforms them into a corporate hallmark. We provide a detailed description of a methodology to measure the 'competence value' and to compare it against standard goodwill estimations. Results of empirical analysis over a sample made of more than 3,000 Italian companies show that the proposed Intato-T-ratio is a stronger estimator than the widely diffused Tobin-Q-ratio. Allocating investments according to the competence value can exploit immediately 51% of hidden values and allow higher growth rates during an entrepreneurial cycle lasting 13 years on average. Aborting competence value in credit allowances procedures will impact dramatically on SMEs after the adoption of Basel-3 agreements.

Keywords: valuation; incomplete markets; small and medium-sized enterprises; SMEs; entrepreneurship; competence value emersion; entrepreneurial finance; Italy; entrepreneurial competences; entrepreneurial behaviour.

DOI: 10.1504/IJESB.2015.067460

International Journal of Entrepreneurship and Small Business, 2015 Vol.24 No.3, pp.383 - 416

Received: 28 Mar 2014
Accepted: 06 Sep 2014
Published online: 13 Feb 2015 *

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