%0 Report
%A Lutz, Stefan
%T Does R&D increase the profit contribution of intangible assets? An exploration of European and American automotive suppliers
%J Documentos de Trabajo del Instituto Complutense de Análisis Económico (ICAE)
%D 2014
%U https://hdl.handle.net/20.500.14352/41561
%X 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 intangible assets in the form of intellectual property (IP) and these assets command a return that increases overall profits of the firm. This hypothesis is investigated for the North American and European automotive supplier industries.Results indicate that R&D expenses in fact increase both intangible asset levels and their profit contributions. 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.
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