Trade Marks and Performance in UK Firms: Evidence of Schumpeterian Competition through Innovation

Christine Anne Greenhalgh () and Mark Rogers ()

No 300, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: This paper uses novel data on trade mark activity of UK manufacturing and service sector firms to investigate whether trade marks improve the profitability and productivity of firms. We first analyse Tobin`s q, the ratio of stock market value to book value of tangible assets. We then investigate the relationship between trade mark activity and productivity, using a value added production function. Finally we examine interactions between firms IP activity, to explore creative destruction and growth via innovation. We find trade marks are positively related to both Tobin`s q and to productivity. Also in the short run greater IP activity by other firms in the industry reduces the value added of the firm, but this same competitive pressure has later benefits via productivity growth, also reflected in higher stock market value. This describes the Schumpeterian process of competition through innovation, restraining profit margins while increasing product variety and quality.

Keywords: Trade Marks; Market Value; Productivity; Manufacturing; Services (search for similar items in EconPapers)
JEL-codes: O30 L60 L80 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-eff, nep-ino, nep-int and nep-tid
Date: Written
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