Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/176682
Authors: 
Lutz, Stefan
Year of Publication: 
2018
Series/Report no.: 
Working Paper Series: Business and Law 12
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.
Subjects: 
productivity
intellectual property
royalties
MNE
transfer pricing
JEL: 
D24
L20
L62
M21
Document Type: 
Working Paper

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