Firm performance and investment in R&D and intellectual property

Mark Rogers

Research output: Preprint or Working paperWorking paper

Abstract

This paper analyses the relationship between innovation - proxied by Research and Development (R&D), patent and trade mark activity – and profitability in a panel of Australian firms (1995 to 1998). Special attention is given to assessing the nature of competitive conditions faced by different firms, as the nature of competition is likely to affect the returns to innovation. The hypothesis is that lower levels of competition will imply higher returns to innovation. To allow for a time lag time before any return to innovation, the market value of the firms is used as a proxy for expected future profits. The results give some support for the main hypothesis: the market’s valuation of R&D activity is higher in industries where competition is lower. However, the paper highlights the difficulty in assessing competitive conditions and finds a number of results that challenge the simple hypothesis.
Original languageEnglish
PublisherMelbourne Institute of Applied Economic and Social Research
Number of pages25
ISBN (Print)0-7340-1539-9
Publication statusUnpublished - Aug 2002

Publication series

NameMelbourne Institute Working Paper
PublisherMelbourne Institute of Applied Economic and Social Research
No.wp2002n15
ISSN (Print)1328-4991

Keywords

  • innovation
  • profitability
  • research and development
  • Australian firms
  • competition

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