Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202153 
Year of Publication: 
2015
Series/Report no.: 
IPTS Working Papers on Corporate R&D and Innovation No. 01/2015
Publisher: 
European Commission, Joint Research Centre (JRC), Seville
Abstract: 
This paper provides the first empirical attempt of linking firms’ profits and investment in R&D revisiting Knight’s (1921) distinction between uncertainty and risk. Along with the risky profit-maximizing scenario, identifying a second, off-setting, unpredictable bias that leads to heterogeneous returns to R&D investments is crucial to fully understand the drivers of corporate profits.
Subjects: 
Corporate R&D investment
firms’ operating profits
Knightian uncertainty
ambiguity.
JEL: 
O30
D22
D81
Document Type: 
Working Paper

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