Another important strength of Corrado’s model is its simplicity. Corrado works
from the premise that productivity is driven both by labour and intangible and
physical assets, and that all the key variables can be identified in the company’s
financial statements. The key advantage of the CHS model is that it underscores the
need to include intangibles in the production function and accumulate capitalized
intangibles over time. The introduction of intangibles in this way considerably
broadens our understanding of intangibles and their impact on productivity. What still
remains unsolved is the capitalization of spendings and investments in intangibles into
intellectual capital (genuine intangible assets). As pointed out earlier, an additional
shortcoming of the CHS model is that only capital C is affected, whereas labour L is
unaffected, and MFP or TFP (multifactor productivity or total factor productivity)
remain residual