The Dynamic Relationship Between Investments in Brand Equity and Firm Profitability: Evidence Using Trademark Registrations

Dirk Crass, Dirk Czarnitzki and Andrew A. Toole

International Journal of the Economics of Business, 2019, vol. 26, issue 1, 157-176

Abstract: Most marketing practitioners and scholars agree that marketing assets such as brand equity significantly contribute to a firm’s financial performance. In this paper, we model brand equity as an unobservable stock that results from up to 30 years of past brand-related investment flows. Using firm-specific trademarks as investment proxies, our results show a significant long-run impact on financial performance. The dynamic profile of brand-related investments has an inverted-U shape that reaches its peak after 11 years. On average, it takes four years before brand-related investments show a positive return, and investments older than 19 years show no significant impact. For the median trademarking firm, brand equity contributes €265,000 to annual profits.

Date: 2019
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Related works:
Journal Article: The Dynamic Relationship Between Investments in Brand Equity and Firm Profitability: Evidence Using Trademark Registrations (2019)
Working Paper: The dynamic relationship between investments in brand equity and firm profitability: Evidence using trademark registrations (2016)
Working Paper: The dynamic relationship between investments in brand equity and firm profitability: Evidence using trademark registrations (2016)
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DOI: 10.1080/13571516.2019.1553292

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