2004 Fiscal Year Final Research Report Summary
An Empirical Study on Cost-Benefit Analysis and Measurement of Technological Knowledge Stock in R & D Investment
| Project/Area Number |
15530306
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Accounting
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| Research Institution | Toyo University |
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Principal Investigator |
NISHIMURA Yuko Toyo University, Department of Business Administration, Professor, 経営学部, 教授 (10099228)
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| Project Period (FY) |
2003 – 2004
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| Keywords | R & D investment / the stock of technological knowledge / Intellectual assets / Cost-Benefit analysis / Nonfinancial metrics |
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| Research Abstract |
In this research, I examined the innovation chain that is composed of "inputs→intermediate variables→outputs" in R & D investment project. The inputs are investment in basic research aimed at creating innovation capabilities or new knowledge, in product development, and in processes R & D such as efforts to increase the efficiency of producing the goods. Intermediate variables are the stock of technological knowledge by which inputs are converted to outputs. Innovation capabilities rest on the stock of technological knowledge. The outputs may be indicated by revenues from patent sales and royalties, sales of differentiated products, and cost saving.
Recently, Japanese companies recognize value creation as the corporate goal. To evaluate the corporate value, we forecast the present value of future cash flow stream, or the present value of future EVA, discounted at the cost of capital. To maintain consistency with the metrics of corporate value, managements should use DCF and the present value of EVA to measure the anticipated efficiency of R & D investment project.
The difficulty of measuring the stock of technological knowledge originated from nonrivalry or inappropriability and inherent high risk. To measure the stock of technological knowledge, nonfinancial metrics such as patent expiration dates, patent-expired products, anticipated development completion dates, FDA drug approval, a beta test for soft program, are used.
I have conducted the questionnaire concerning R & D and the patent last year. According to this survey, the rate of patent utilization decreases with the scale of the firm. This is due to the diversification of the research and development in the large firms.
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