Universidad Complutense de Madrid
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R&D, IP, and firm profits in the automotive supplier industry

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Lutz, Stefan (2013) R&D, IP, and firm profits in the automotive supplier industry. [ Documentos de Trabajo del Instituto Complutense de Análisis Económico (ICAE); nº 15, 2013, ] (Unpublished)

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Official URL: http://eprints.ucm.es/21270/


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Abstract

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.


Item Type:Working Paper or Technical Report
Additional Information:

JEL classification: D24, L20, L62, M21.

Uncontrolled Keywords:Productivity, Intellectual property, Royalties, MNE, Transfer pricing.
Subjects:Social sciences > Economics > Econometrics
Series Name:Documentos de Trabajo del Instituto Complutense de Análisis Económico (ICAE)
Volume:2013
Number:15
ID Code:21270
Deposited On:08 May 2013 11:45
Last Modified:16 Feb 2016 13:05

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