Skip to main navigation menu Skip to main content Skip to site footer

On the trail of the intangible: a theoretical and empirical investigation of innovations and patents in Germany in the years 2006-2019


Objective: We want to better understand what incentives firms to pursue innovations. For this purpose, we set up a new intertemporal principal-agent model. We then proceed to empirically assess the determinants of innovation activities unfolded by German firms between 2006 and 2019 and to also look at the causal factors – related to innovation activities – for the occurrence of patent registration in Germany.

Research Design & Methods: In the theoretical part, we make use of intertemporal optimization tools based on the principal-agent model (PAM). In the empirical part, we apply the so-called DuPont decomposition and non-linear regression techniques.

Findings: It seems that investment activities in conjunction with product innovations are the major determinants of innovation intensity. The latter (and other innovation related variables) in turn, is (are) responsible for the dynamics of patent registration in Germany.

Implications & Recommendations: Our results highlight the importance of smart reward systems in R&D departments in order to incentivize innovative activities. Our findings also point at the significance of a patent regulation friendly to the innovator.

Contribution & Value Added: Our findings deliver a new foundation of innovation activities based on an intertemporal principal agent approach which is confirmed by the empirical facts in the case of Germany.


innovation economics, principal-agent model, DuPont decomposition, non-linear regression

(PDF) Save

Author Biography

Friedrich L. Sell

Professor emeritus at the University of the Bundeswehr, Munich (Germany). In this, his last academic position, he held a chair for macroeconomics and economic policy (1998-2020). His research interests are located in the areas of innovation economics, labor economics, the theory of income distribution and (European) monetary policy. He has consulted the Deutsche Akademische Austauschdienst (DAAD), the German Research Foundation (DFG) and the Leipzig Institute for Economic Research (IWH) in Halle, Germany, as chief of the advisory scientific board (2009-2011). He has published over 100 peer reviewed papers.


  1. Baumann, M. P. (2014). Forecasting operating profitability with DuPont analysis: further evidence. Review of Accounting & Finance, 13(2), 191-205.
  2. Behrens, V., & Viete, S. (2020). A note on Germany's role in the fourth industrial revolution. Working Paper 09/2020, German Council of Economic Experts, Wiesbaden.
  3. Behrmann, N. (2007). Patente als Quelle von Innovationen. In G. Koch (Ed.), Region, Kultur, Innovation (pp. 185-199). VS, Verlag für Sozialwissenschaften.
  4. Belleflamme, P., & Bloch, P. (2013). Dynamic protection of innovations through patents and trade secrets. CES-Ifo Working Paper 4486, Munich.
  5. Benazzouz, N. M. (2019). Entrepreneurial orientation and innovation intensity: A synthetic literature review. International Entrepreneurship Review, 5(2), 23-36.
  6. Bigos, K., & Michalik, A. (2020). The influence of innovation on international new ventures’ exporting in Central and Eastern Europe and Central Asia countries. Entrepreneurial and Economics Business Review, 8(3), 47-63.
  7. Borodin, A. (2021). Mathematical modeling for financial analysis of an enterprise: motivating of not open innovation. Journal of Open Innovation, 7(1), 1-15.
  8. Burhan, M., Singh, A. K., & Jain, S. K. (2017). Patents as proxy for measuring innovations: a case of changing patent filing behaviour in Indian public funded research organizations. Technological Forecasting & Social Change, 123, 181-190.
  9. Burr, W. (2017). Innovationen in Organisationen (2nd ed.). Kohlhammer Verlag.
  10. Chen, T., Cheng, H. K., Jin, Y., Li, S., & Qiu, L. (2021). Impact of competition on innovations of IT industry: an empirical investigation. Journal of management information systems, 38 (3), 647-666.
  11. Coronado Guerrero, D. (2017). The role of regional economic specialization in the production of university-owned patents. The Annals of Regional Science, 59(2), 513-533.
  12. Deutsches Patent- und Markenamt (2020). The number of patent registrations in Germany between 2000 and 2019. Retrieved from on October 2, 2021.
  13. Falk, M., & Hagsten, E. (2021). Innovation intensity and skills in firms across five European countries. Eurasian Business Review, 11(3), 371-394.
  14. Frenkel, J., & Razin, A. (1984). Fiscal Policies, Debt, and International Economic Interdependence. NBER Working Paper, W1266.
  15. Gang, L. (2021). Promoting information-resource sharing within the enterprise: a perspective of blockchain consensus perception. Journal of Open Innovation, 7(3), 1-18.
  16. Goel R. K., & Zhang, X. (2019). Knowledge flows from business method software patents: influence of firms global social networks. The Journal of Technology Transfer, 44(4), 1070-1096.
  17. Goel R. K., & Nelson, M. A. (2021). How do firms use innovations to hedge against economic and political uncertainty? Evidence from a large sample of nations. The Journal of Technology Transfer, 46(2), 407-430.
  18. Handelsblatt (2022). Various issues, January and February. Düsseldorf.
  19. Hernandez, J. G., & Rueda Galvis, J. F. (2021). Innovation and patents as a business success factor. Journal of Economics, Finance and Administrative Science, 26(51), 143-159.
  20. Kaszowska-Mojsa, J. (2020). Innovation strategies of manufacturing companies during expansions and slowdowns. Entrepreneurial and Economics Business Review, 8(4), 47-66.
  21. Kasik, J., & Snapka, P. (2020). A General Model Based on the DuPont System of Financial Analysis for Identification, Analysis and Solution of a Potential Crisis in a Business. Montenegrin Journal of Economics, 16(4), 55-66.
  22. Klauß, M. (2019). Analysis of the international cooperation network in alternative energy production technology development based on co-patents. Konstanz.
  23. Koppel, O., Berger, S., Kempermann, H., Orth, A. K., & Röben, E. O. (2017). Investitionsatlas. IW Analysen, Institut der Deutschen Wirtschaft. Deutscher Instituts-Verlag.
  24. Koppel, O., Pohl, P., Röben, E., & Schade, P. (2019). Standards and innovations: a patent analysis using the eCl@ss standard as an example. IW-Trends, 46(4), 19-35.
  25. McKinsey (2019), A new look at the declining labour share of income in the United States. Discussion Paper. May 22. Retrieved on January 1st, 2022 from
  26. Morris, J. R., & Daley, J. P. (2017). Introduction to Financial Models for Management and Planning (2nd ed.). CRC Press.
  27. Narayan, D., Janvry, A. de, & Sadoulet, E. (2019). Credit and land contracting: a test of the theory of sharecropping. American Journal of Agricultural Economics, 101(4), 1098-1114.
  28. Pena-Sanchez, R. (2013). The GDP growth-rates of countries with the highest production of patents. International Business and Economics Research Journal, 12(2), 229-237.
  29. Richter, R., & Furubotn, E. G. (1999). Neue Institutionen-Ökonomik. Neue Ökonomische Grundrisse (2nd ed.). J. C. B. Mohr Verlag.
  30. Schumpeter, J. A. (1911). The theory of economic development. Harvard University Press.
  31. Thang, D. N. , Ha, L., Dung, H. P., Thanh, T. T., Dung, L., & Huyen, N. (2021). Determinants and risk-taking behaviour of outsourcing innovation decision and intensity in Vietnam: make, pure or hybrid? International Journal of Innovation Management, 25(4), 1-33.
  32. Taniguchi, E., & Thompson, R. G. (2018). City logistics 2: modeling and planning initiatives. IST.
  33. Urbaniec, M. (2019). Competitiveness of innovation-driven economies: Insights from selected European countries. International Entrepreneurship Review, 5(3), 113-127.
  34. ZEW (2021). Innovationserhebung. Kernindikatoren. Ausgabe 2021. Mannheim.


Download data is not yet available.

Similar Articles

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 > >> 

You may also start an advanced similarity search for this article.