We show that short-term liquidity can be a source of competitive advantage by enabling firms to invest in intangible assets. Our analysis leverages a French reform that capped payment delays in trade credit contracts, which generated quasi-experimental variation in corporate liquidity across manufacturing firms. Higher liquidity led to significantly greater investment in intangibles, which, in turn, raised markups and market shares. These results suggest a strategic role for liquidity in shaping firm performance, indicating that initial financial conditions can have lasting effects on productivity and market structure.
Altomonte, C., Morlacco, M., Sonno, T., Favoino, D. (2025). Liquidity as competitive advantage: The role of intangibles. JOURNAL OF INTERNATIONAL ECONOMICS, 158(104168), 1-14 [10.1016/j.jinteco.2025.104168].
Liquidity as competitive advantage: The role of intangibles
Altomonte C.;Sonno T.;
2025
Abstract
We show that short-term liquidity can be a source of competitive advantage by enabling firms to invest in intangible assets. Our analysis leverages a French reform that capped payment delays in trade credit contracts, which generated quasi-experimental variation in corporate liquidity across manufacturing firms. Higher liquidity led to significantly greater investment in intangibles, which, in turn, raised markups and market shares. These results suggest a strategic role for liquidity in shaping firm performance, indicating that initial financial conditions can have lasting effects on productivity and market structure.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
