R&D, IP, and firm profits in the North American automotive supplier industry
No 12, Working Paper Series from Frankfurt University of Applied Sciences, Faculty of Business and Law
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.
Keywords: productivity; intellectual property; royalties; MNE; transfer pricing (search for similar items in EconPapers)
JEL-codes: D24 L20 L62 M21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-eff, nep-ino, nep-ipr, nep-knm and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fhfwps:12
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