R&D and marketing productivities from cross-sectional data: A study of German chemical corporations

Abstract
The adoption of EC-regulations in German law on annual corporate reporting has introduced two new formats for profit and loss statements. Using this newly available data from a sample of German chemical companies, production functions are estimated with sales as an output measure, and R&D and marketing as input measures. It is shown that these factors are peripheral rather than complete substitutes. Marginal productivities of the factors imply the opportunity for relative increases of R&D expenditure over marketing expenditure.