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Does R&D increase the profit contribution of intangible assets? An exploration of European and American automotive suppliers

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Lutz, Stefan (2014) Does R&D increase the profit contribution of intangible assets? An exploration of European and American automotive suppliers. [ Documentos de Trabajo del Instituto Complutense de Análisis Económico (ICAE); nº 07, 2014, ] (Unpublished)

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Official URL: http://eprints.ucm.es/24965/


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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 intangible assets in the form of intellectual property (IP) and these assets command a return that increases overall profits of the firm. This hypothesis is investigated for the North American and European automotive supplier industries.
Results indicate that R&D expenses in fact increase both intangible asset levels and their profit contributions. 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:2014
Number:07
ID Code:24965
Deposited On:04 Apr 2014 11:51
Last Modified:04 Apr 2014 11:51

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