The capital budgeting process: A methodological approach based on financial and intellectual value creation

M. Dolores Guerrero-Baena, José A. Gómez-Limón, J. Vicente Fruet Cardozo


Purpose: This paper aims to develop a novel capital budgeting method to improve the quality of the appraisal process for productive investments by decomposing the total value that is created by the new assets into two components: financial value and nonfinancial capital value, the latter stemmed from the intellectual capital of the firm.

Design/methodology/approach: This paper proposes a methodology based on the multi-criteria technique called the Analytic Hierarchy Process (AHP). Within the model, four main criteria (financial capital, human capital, structural capital, and relational capital), several subcriteria and the investment alternatives are defined. In order to determine the total value of each alternative, CEO preferences are required using a pairwise comparison-based questionnaire, the results of which feed a multiattribute utility function. A case study on the agrifood sector illustrates the model empirically.

Findings and Originality/value: The empirical application evidences the need to consider the impact of productive investments on firms´ intangible assets, as this impact actually affects the choice of optimal investment alternative in the real world.

Practical implications: Using the theoretical model proposed, CEOs can appraise productive investments by incorporating nonfinancial capital value creation into the analysis. This procedure permits more accurate and successful decision-making and contributes effectively to the selection of the investment option that maximizes firms’ market value.

Originality/value: This research provides an important addition to the current literature by integrating intellectual capital into capital budgeting and by proposing a unified methodological framework.


Capital budgeting, intellectual capital, nonfinancial capital value, analytic hierarchy process

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This work is licensed under a Creative Commons Attribution 4.0 International License

Intangible Capital, 2004-2022

Online ISSN: 1697-9818; Print ISSN: 2014-3214; DL: B-33375-2004

Publisher: OmniaScience