Measurement
Definition
The process of assigning numerical values to attributes of objects, events, or phenomena according to defined rules and standards. In the context of intangible assets and productivity, measurement is both a fundamental challenge and a critical enabler of effective management. The famous management principle that 'what gets measured gets managed' is particularly acute for intangible assets, where measurement difficulties have historically led to systematic underinvestment and undervaluation. Productivity measurement relies on accurate quantification of both inputs and outputs — a task complicated by the growing share of intangible inputs (knowledge, data, organisational capital) and intangible outputs (service quality, user experience, innovation) in modern economies. Advances in measurement methodology, including the Corrado-Hulten-Sichel framework for intangible investment and the development of firm-level intangible asset metrics, are gradually closing the measurement gap.
Complementary Terms
Concepts that frequently appear alongside Measurement in practice.
The US GAAP standard that defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The International Financial Reporting Standard that defines fair value, establishes a framework for measuring it, and requires disclosures about fair value measurements. IFRS 13 introduces a three-level hierarchy based on observable market inputs and is foundational to the valuation of intangible assets in financial reporting.
Intangible assets that are not captured on a company's balance sheet or in traditional accounting frameworks, including internally generated brands, proprietary data, organisational culture, and employee expertise. These often represent the largest source of hidden value in modern businesses.
The amount of output produced per unit of labour input, commonly measured as gross value added (GVA) divided by labour costs or number of employees. Labour productivity is a key efficiency metric that reflects the quality of human capital, processes, and technology deployed by a firm.
A measure of productivity that accounts for the contributions of multiple inputs — including labour, capital, energy, and materials — to output growth. MFP captures the efficiency with which all inputs are combined and is closely related to total factor productivity, serving as a key indicator of innovation and intangible capital contributions.
The value derived from a company's capacity to develop new products, services, processes, and business models. Innovation capital encompasses R&D capabilities, creative talent, experimentation culture, and the pipeline of ideas at various stages of development.
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