Abstract
<jats:p>This paper examines how investments in intellectual and digital rights affect firm productivity and the microeconomic foundations of economic security in a small open economy. Using a balanced panel of over 620,000 firm-year observations for Croatian enterprises from 2014 to 2023, the analysis draws on Schumpeterian and dynamic capabilities perspectives to assess how knowledge-based assets interact with financial and structural factors. Random-effects estimates indicate that a higher share of intellectual and digital rights – such as patents, licences, brands, and software – is associated with lower current labour productivity, reflecting adjustment costs and incomplete integration into production. Capital intensity and foreign ownership have strong positive effects, while leverage and firm size are associated with lower efficiency. The findings suggest that the benefits of digital transformation depend on complementary investment, managerial capacity, and sound financial practices.</jats:p>