But an economy in which concepts form an important share of valuation has its own vulnerabilities. As the recent events surrounding Enron have highlighted, a firm is inherently fragile if its value added emanates more from conceptual than from physical assets.
A physical asset, whether an office building or an automotive assembly plant, has the capability of producing goods even if the reputation of its managers falls under a cloud. The rapidity of Enron's decline is an effective illustration of the vulnerability of a firm whose market value rests largely on capitalized reputation.