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On the Profitability of Innovative Assets

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  • Kraft, Kornelius
  • Czarnitzki, Dirk

Abstract

Successful innovative activity is a major contribution to the intangible capital of firms. Although its importance is generally acknowledged, the contribution to companies? profits is a priori unclear. We present the results of an empirical study on the effects of the patent stock on profitability. The data base is a representative sample of German manufacturing firms and we use a number of control variables including measures of competition and firm leadership. It turns out that the patent stock has a strong and robust effect on profitability.

Suggested Citation

  • Kraft, Kornelius & Czarnitzki, Dirk, 2004. "On the Profitability of Innovative Assets," ZEW Discussion Papers 04-38, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:2034
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    References listed on IDEAS

    as
    1. Hall, B.H., 1999. "Innovation and Market Value," Economics Papers 1999-w3, Economics Group, Nuffield College, University of Oxford.
    2. Zvi Griliches, 1984. "R&D, Patents, and Productivity," NBER Books, National Bureau of Economic Research, Inc, number gril84-1.
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    9. Czarnitzki, Dirk & Kraft, Kornelius, 2004. "Innovation indicators and corporate credit ratings: evidence from German firms," Economics Letters, Elsevier, vol. 82(3), pages 377-384, March.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Innovation; Patents; Profitability; Discrete Regression Models;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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