R&D, IP, and firm profits in the North American automotive supplier industry

Arbeitspapier

Economic theory implies that research and development (R&D) efforts increase firm productivity and ultimately profits. In particular, R&D expenses lead to the development of intellectual property (IP) and IP commands a return that increases overall profits of the firm. This hypothesis is investigated for the North American automotive supplier industry by analyzing a panel of 5000 firms for the years 1950 to 2011. Results indicate that R&D expenses in fact increase profitability at the firm level. In particular, increases in the R&D expense to sales ratio lead to increases in the profit contribution of intangible assets relative to sales. This indicates that more R&D intensive IP should command higher royalty rates per sales when licensed to third parties and within multinational enterprises alike.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper Series: Business and Law ; No. 12

Classification and Topics

• Classification: Wirtschaft ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; Firm Objectives, Organization, and Behavior: General ; Automobiles; Other Transportation Equipment; Related Parts and Equipment ; Business Economics
• Subject: productivity ; intellectual property ; royalties ; MNE ; transfer pricing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lutz, Stefan
• Event: Veröffentlichung
• (who): Frankfurt University of Applied Sciences, Frankfurt Research Institute for Business and Law
• (where): Frankfurt a. M.
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/176682
• Last update: 10.03.2025, 11:44 AM CET