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原文FinancialManagementofR&DFinancialthinkingaboutR&Dhasevolvedwellbeyondbasicdiscountedcashflowmodels.Bettertoolshavebeendevelopedtovalueintellectualcapital,includingthequantitativeassessmentofthevalueaddedbyR&D.ThedissectionoftheelementsofriskandtheapplicationofrealoptionstheoryarenewfeaturesoftheR&Dlandscape.Financingvehicleshavealsochangedwithanenormoussurgeofventurecapitalandprivateequityfunds.Theanalysestoolboxhasbeenenhancedbyelectronicspreadsheets,on-linedatabases,MonteCarlosoftware,theInternet,andtheubiquitouspersonalcomputer.IndustrialR&Discharacteristicallyahigh-riskinvestmentwithadeferredpayoff.Itsimportancetoindustrialsocieties,andtoindividualfirmswithintheseeconomies,isparamountLauhasestimatedthatmorethan50%ofthewealthcreationindevelopedcountriesoriginatesfromtechnology,whichistypicallyaproductofR&D.However,R&Dcomesatacost,anditisascapableofdestroyingvalueascreatingit.Knowingthedifferenceiscrucial;thepenaltiesforunderinvestmentcanbeadeterioratingcompetitivepositionandlostopportunity;foroverinvestmentitwillbeaslowerosionofthefirm‘scapitalbase.Butmeasuringthedifferencebetweenvaluecreationandvaluedestructionisnoteasy.OnesourceofconfusionisthataccountingconventionstreatR&Dasanexpense,notaninvestment.Anevenmorefundamentalissueisthatpastperformanceisnotareliableguidetofutureperformance.Facedbyameasurementproblemthatisbothdifficultandimportant,thebusinessfinancialandacademiccommunitieshavecontinuedimprovingtheirtools.Asaresult,R&Danalysisandmanagementhasevolveddramaticallyinthepastfiftyyears(3),andthatevolutionisfarfromover.Initsfirstpostwarphase,industrialR&DwasviewedasacreativeenterpriseandIts‘managementwaslefttotheR&Ddirectors.Theirmainfinancialmetricwasanannualbudget(atoolbasicallyinadequatetoevaluateaninvestment).Thebudgetwasinpartdeterminedbyindustrybenchmarks,suchasR&Dexpenseasapercentageofrevenues.Accordingly,thefinancialskillsofR&Dexecutiveswerelargelyfocusedoncostaccountingandcostcontrol(4).Inmanycompanies,topmanagement(oftenlackingpersonalexperienceinR&D)didn‘thaveaclueabouttherelationshipofvaluetocost,andattemptedtomanagethefunctionbyaprocessthathasbeenpithilydescribed(5)as''managingthemanager".Inotherwords,poorR&Dreturnswereviewedmoreasaproductofpoormanagementthanaconsequenceofafirm'sstrategy.Thesolutionwasoftentohirea'newboy."Thesecondphase,inthe1970s,wastheintroductionofincreasinglypowerfultoolsforevaluatinginvestmentsunderriskbeingadoptedbyfinancialanalyststoR&D,leadingtoacircumstanceIwoulddescribeas'theapparenttriumphofDCF(DiscountedCashFlow)."TheuseofDCFinevaluatinginvestmentswasanimportantstepforwardinthatitintroducedthedisciplineofbusinessplans,factoredintheconceptofrisk,andhelpedbridgethecommunicationsgapbetweentechnicalandnon-technicalexecutives.TheDCFtoolkitincludednetpresentvalue(NPV)internalrateofreturn(IRR)andriskweightedcostofcapital."Butasitwasappliedinpractice,theuseofexcessivediscountratesandoverlyconservativeterminalvaluescombinedtocondemnalmostanylong-termR&D.project.Thisresultcontradictedindustry'scommonexperiencethatmanyofthemostprofitableinnovationshadlonggestationperiods.Thewordvaluehasbecomeafixtureofthebusinesslexiconduringthepasttwodecades.Unfortunately,thisomnipresentwordisbeingusedintwoverydifferentcontexts:economicvalueandmarketvalue.Thetwoformsofvaluearenotatallthesame.ThedistinctionisprofoundforR&D,becauseinnovationinitiallycomesatacostioneconomicvalue,butisequallyoftenadriverformarketvalue!EconomicValueThetermEconomicValueisinvokedinmuchcurrentbusinessjargon,explicitlyInsuchconceptsasEconomicValueAdded(EVA),andimplicitlyindiscussionsof'valuechains,"and'valuepropositions."Theeconomicvalueofanenterpriseisdeterminedbytheprojectedsumofitsfreecashflows,discountedbyitscostofcapital.TheEVAconcept,althoughtraceabletoAlbertP.Sloan,thelegendaryCEOofGeneralMotors,wasreintroducedtothecorporatecommunitybythefirmSternStewartinthe1990s,withconsiderableimpact.EVAisdefinedasnetoperatingprofitminusanappropriatechargefortheopportunitycostofallcapitalinvestedintheEnterprise.(TherelationshipbetweenEVAandEconomicValueissimple:EconomicValueisjustthesumoftheEVA,saddedbytheenterpriseineachsuccessiveyear.)EVAisanestimateoftrue''economicprofit,"ortheamountbywhichearningsexceedorfallshortoftherequiredminimumrateofreturnthatshareholdersandlendersmightearnbyinvestinginalternativesecuritiesofcomparablerisk.TheCrisisinValuation;WhenMarketValueDidn,tTrackMarketValueForprofessionalinvestorsinsecurities,thebottomlineisnoteconomicreturn,itistotalshareholderreturn(TSR),definedastheappreciationofthestockpriceplusdividendpayments.Thisis'cashisking"reasoning,sinceliquidsecuritiesandcashdividendsmeancashtoaninvestor.Tomoneymanagers,totalreturnisalsotheirreportcard.Insuchaworld,theMarketValueofastockisthefinalmetric,andEconomicValueisbutonecomponentofit.Investorsalsogaugeeachfirm'sstrategicposition,plusotherfactorscontributingtoMarketValuesuchasinvestorsentimentandmacroeconomictrends.Shareholdervaluehaslargelycometobesynonymouswithcurrentmarketvalue-stockprice-andexecutivesordirectorswhoignorethisrealitydosoatconsiderableperil.EconomicValueApartofthecrisisinvaluationarosefromthegrowingdifferencesbetweenmarketvalueandtheaccountant'sperspectiveofvaluationbasedonhistoricalcost.Whilethiscircumstancecould,inprinciple,haveresultedfromsmartmanagementdeliveringsuperiorcashflows,thisexplanationdidnotholdupwhentheactualcashflowprojectionsofthecompanieswereconsidered.Youngisbasedoncashflowanticipatedinthenextfiveyears-theouterlimitoftheproverbial"short-term".Thus,morethan75percentofthevaluationofthetotalstockmarketmustberelatedtosomethingotherthanshort-termeconomicvalue.Inthisscenario,aslongasperceptionsofopportunitygrewfasterthaneconomiccapital,thegrowthsectorwouldoutperformthe"value"sector,andhencewouldattractmoreinvestment.Thiscascadeeffectwouldresultinhigherprice-earningsratios,sincetheprice-to-earningsmetricistiedtocurrenteconomicperformance.Thatiswhatoccurredinthemarketplaceduringthedecadeofthe1990s.Investorsineffectequatedinvestmentin"value"stocksasinvestmentinstockswithlimitedopportunities,andfavoredthe"growth"sector.Duringthe1990s,asthevaluationgapwasgrowing,ahostofarticlesbegantoextendthevenerableconceptofintellectualpropertytotheconceptofintellectualorKnowledgecapital,whichaddedanimportantnewdimensiontointangibleassets.Somewritersevenchoosetodefineintellectualcapitalasthedifferencebetweenmarketvalueandthevalueofthetangibleassets.Thisapproachisexemplifiedbythisquotation:Thegreatestchallengefacinganyorganizationtodayisinunderstandingthehugedifferentialbetweenitsbalancesheetandmarketvaluation.Thisgaprepresentsthecorevalueofthecompany—itsIntellectualCapital.Fromthistraditionalbase,theconceptwasnowextendedtoincludetheknowledgeoftheorganizationanditsemployees,anditsabilitytolearn.Itthuswentfarbeyondthemorelimitedconceptsofknow-howandtradesecrets.Mostimportantly,therewasrecognitionthatintellectualandhumancapitalcouldfaroutweightangiblecapitalforvaluationpurposes.Thisinsightwasimportant,butyetnotverydefinitive."Buttheideaofintellectualcapitalisanewone,"wroteP.H.Sullivan,"itbringstotheforegroundthebrainpowerassetsoftheorganization,recognizingthemashavingadegreeofimportancecomparabletothetraditionalland,labor,andtangibleassets.Ifasurveywereconducted,therewouldbeagreementthatmanymoderncompaniesarefilledwithintellectualcapital:lawfirms,consultingfirms,softwarecompanies,computercompaniestonamebutafew.Butifthesurveywentontoaskpeopletodefinewhatintellectualcapitalis,therewouldbeawiderangeofanswers.Theseanswerswouldnotconvergeontoonestraightforwarddefinitionofintellectualcapital,butratheronmany.Therangeofviewsandthenumberoftermsusedtodescribeanddefineintellectualcapitalarebroad,withoutaclearfocus,andoftenconfusing TechnologyappraisalApracticalapplicationoftheeconomicvalueapproachtointellectualpropertydevelopedconsiderablyduringthe1990s.Ithasbeentermedtechnologyappraisal.TheapproachisbasicallyaDCFvaluationofaproformabusinessplanincorporatingthetechnologybeingappraised.Technologyappraisalhasbeenusedprimarilyfortaxpurposes:forexample,thevaluationofpatentsdonatedtouniversitiesbycompaniessuchasDowChemicalorthevaluationofin-processR&Dinmergersandacquisitions.DuPontpublishedadetaileddescriptionoftypicaltechnologyappraisalmethodologyinconnectionwiththecompletionofitsacquisitionsofPioneerInternationalandDuPontMerck.Anumberofconsultantsandaccountingfirmsnowoffertechnologyappraisalservices.Newtrendsincorporatefinance,andanewtoolkit,arenaturallytobeexpectedtocausestructuralchangesinindustrialR&D.Infact,thechangesthathavetakenplaceinthepasttwodecadeshavebeenremarkablyfar-reaching.TheImpactofLeveragedBuyouts(LBO,s)The1980smarkedtheadventoftheleveragedbuyouteraanditssibling,thehigh-yieldor'—junk"bond.TheeraculminatedspectacularlyintheRJRbiddingwar,depictedinthebookandsubsequentmovie,BarbariansatTheGate(38),thebook,ThePredator,sBall(39),andtheimprisonmentofprominentparticipantsforinsidertradingandsecuritiesviolations.About$400billionofLBO,swerefinancedinthedecadeofthe1980s.Excessivebids,suchasforRJR,causedabroadcollapseofthefirstjunkbondmarket,butthetechniqueisaliveandwellasamoresophisticatedgenerationofLBOfirms,backedbyinstitutionalfunds,trawlstheindustrialmarketplacefornewbuyoutopportunities.LBO,sweregenerallyfinancedwith10percentorlessequityputupbylimitedpartnersand90percentbybankloansandsubordinateddebt,typicallyintheformofHighyieldbondsfloatedbyDrexelBurnhamLambertandothers.AnLBObecomesaPossibilitywhenthesharepriceofthetargetcompanyhasfallentoalevelwheretherequireddebttopurchasethecompanycanbepaiddownquicklybyacombinationofassetsalesandcashflowfromoperations.Ideally,thecompanyispurchasedwithitsownassets,leavingtheinvestorswithalargeprofitafterthedebtburdeniseliminated.TheLBOstrategyisnotoneofmaximizingvalue;itisoneofmaximizingcashflow.Thetargetcompanymaybesubstantiallydepletedofphysicalandintellectualcapitalattheendofthegame.Ironically,however,anLBOcomesintoplaywhenmanagementseffortstoenhancevaluehaveeitherfailed,orareperceivedbythemarketplacetobefailing.Therewerelastingeffectsfromthistraumaticperiod,somebeneficialandsomelessso.Managementsrapidlybecamemoredisciplinedaboutvaluecreationwhenitbecameapparentthattheywerevulnerabletoaraid,orweremissingopportunitiestoenhanceshareholdervalue.Thenotionwasthatifshareholderscouldbenefitfromstreamlining,downsizing,etc.managementwoulddoitbeforetheraidersarrivedtodoitforthem.Corporationsshedexpensivefrills,suchascostlyheadquarters,unprofitabledivisions,andpetprojects,tofocusoncoreoperations,andtoscrutinizenewacquisitionsandcapitalinvestmentsfromaneconomicvalueviewpoint.Thewell-publicizedreignofJackWelchatGeneralElectricsymbolizedmanyoftheelementsofthisapproach.TheeffectsonR&Dfinanceweresignificant:long-termR&D,andR&Dnottargetedtoexistingbusinesses,wasoftencurtailedtoshoreupshort-termcashflow.ThisprocesstookplacenotonlywithincompaniesthatwereinLBOmode,butalsoincompaniesthatconsideredthemselvesLBOtargets.Manylargecentralresearchcentersweredownsizedoreliminated,andthosethatremainedweretieddirectlytostrategicbusinessunits(Sub‘s),whichhadnowbecomethefocusofvaluecreation.Inaddition,atypicalcorporatereactiontoexternalthreatswastomergewithothersintheindustry,andcreatevaluebyeliminatingduplicateheadquarters,salesorganizations,andR&Doperations.Theeliminationofthesecostsclearlygeneratedeconomicvalue;theissuewouldbehowmuchofitcameatacostinstrategicvalue.Source:F.PeterBoer.FinancialManagementofR&D.ResearchTechnologyManagement,2002,pp1-28译文:研发财务管理研发财务管理的思想演变发展远远超过基本的现金贴现现金流模型，财务的研发工具中已经发展到了智力资本的价值，其中包括定量价值的评估。解剖风险要素和实物期权理论的应用是财务研发新的特点，同时融资工具也在发生变化，风险资本和私人股本资金大量激增。分析师的工具箱已经被提高到了电子表格，网上数据库，蒙特卡罗软件，互联网，以及无处不在的个人电脑。工业研发是典型的递延收益与高风险投资的项目，这个对工业社会的公司尤其至关重要，发达国家50%的财富来自产品技术创造的研发。但是衡量价值创造和价值之间的差异是不容易区别的，其混乱的原因是在会计惯例中把这项财务费用当作一项开支，而不是一项投资，不把它作为一个基本的研发问题，也不把过去业绩作为未来指标。在过去的十五年，商业、金融和学术界在面对困难的测量问题面前，不断地改善和发展研发分析和管理的测量问题，在战后的第一阶段，产业研发被认为是一项具有研发创造性的管理事业。其中主要财务指标是年度预算（一个工具基本上不足以评估一个投资）。预算是按行业基准确定的，比如研发作为费用占收入的比例来确定一部分的。因此研发人员的财务技能主要集中在成本会计和成本控制。在许多公司，高层管理人员（通常是缺乏研发人员的经验）没有对价值关系到成本进行探索，并试图以管理一个简洁描述为“管理经验出来功能”的管理。换言之，穷人的研发返回被看做比对一个公司的战略，这个解决方案导致的后果是产品的管理不善，更是经常被形容为一个新聘请来的男孩。第二阶段，在20世纪70年代，越来越多的投资风险评估被金融分析师引入研发，可以形容为“明显的胜利DCF法（贴现现金流）。DCF法在评估投资的使用是一个重要的步骤，因为它引入了商业计划纪律中的风险因素的概念，并帮助协调了技术和非技术人员的沟通分歧。工具包中包含净现金流量折现现值（NPV）的回报率（内部收益率）和风险加权资本成本内部收益率。但它是在实践过程中过度使用贴现率，以及过度和保守终值相结合，谴责任何长期研发的项目。结果是违背了行业中认为创新是长期酝酿的最赚钱的这一共同经验。在过去二十年，这个词的价值已成为固定的业务词汇。不幸的是，这俩个无所不在的词语有很不同的背景：经济价值和市场价值。这俩种价值形式并不是完全相同的，这种区别是深刻的研发因为最初是科斯廷创新的经济价值，但它往往也是市场价值驱动。经济价值明确经济价值这一词的概念，调用商业行话，是作为经济增加值（EVA），并含蓄地对“价值链”和价值命题的讨论。一个企业的经济价值是取决于它的自由现金流量预测总结其资本成本贴现。EVA的概念，虽然可以追溯到斯隆，通用汽车公司的传奇总裁，但重新被引入到企业是在20世纪90年代的戴尔公司，具有相当的影响。EVA是指净营业利润对在企业全部资本投资的机会成本的适当收取。（EVA与经济之间的价值关系很简单：经济仅仅是价值的EVA的款项，则每连续三年在企业相加QEVA是一个真正的经济利润，或者死收入数额超过投资所要求的最低回报率，且与其他证券的投资风险相比，股东和贷款人的收入周期比较短。市场价值对于证券专业投资者来说，底线不是经济回报，而是股东回报（TSR），即股价加分红。这是“现金为王”的推理，因为液体证券和现金股利平均现金的总回报是基金经理的成绩单。在这样的一个世界，股票的市场价值作为它的组成部分是最后的度量和经济价值。投资者同时还衡量每个企业的战略地位，以及在加上其他因素造成的市场价值，如投资者情绪和宏观经济趋势。股东价值在很大程度上与当前的市场价值型股票价格是同义词，无论是行政人员还是董事，谁无视这个现实都有相当大的风险。经济价值价值危机的一部分源于历史成本为基础的市场价值与会计的估值角度日益增大的差别。从提供卓越的智能管理来看，在这种情况下有可能产生现金流量，但这种解释并不能成立，需要公司对实际现金流量进行预测和审议。年轻，是基于在未来5年中的众所周知的“短期”，一次，超过75%的股票市值总额比其他外部界限预期的经济现金流价值要短。在这种情况下，只要认识的机会增长速度快于经济资本，“成长部门”将跑赢“价值”产业，从而吸引更多的投资。这种连带效应将导致较高的市盈率，因为价格的市盈率指标是联系在一起的经济表现，这就是发生在上世纪90年代的十年间的市场。实际上，投资者等同于“价值”的股票投资，在有限的机会内进行股票投资并主张“增长”部门。在20世纪90年代，随着估值差距越来越大，主流文章开始扩大古老的知识产权理念，增加了智力和知识资本这一重要的新层面，无形资产的概念。有些学者甚至选择市场价值与有形资产的智力资本价值的差额作为定义。这种方法是报价来例证的：任何组织在今天面临的最大挑战是了解资产负债表之间的估值和市场的巨大差别，这个差别代表了公司的核心价值-智力资本。从这个传统基础上，现在这一概念已经扩大到了包括员工的组织能力和学习知识的能力。因此它远远超过了技术诀窍和商业秘密这比较有限的概念。最重要的是，人们认识到致死与人力资本可能远远超过对有形资本估价的目的。这一见解是重要的，但不是很明确。“但是智力资本是个新的想法，”沙利文说，它带来的前景是承认组织的智力资产比传统的土地、劳动力、有形资产重要。如果进行一项调查，一致认为会有许多现代公司与智力资本填补，比如律师事务所、咨询公司、软件公司，一些的电脑公司等。但是如果接着调查什么是知识资本的定义时，将会有广泛的答案。这些答案不会收敛到一个简单的智力资本的定义，但存在着许多的比较。对于描述和界定智力资本方面数量存在着不同的意见且比较广泛，没有一个明确的重点，所以常常令人困惑••…技术鉴定在20世纪90年代，一种有关知识产权的实际应用的经济价值方法得到了很大的发展。它被称为技术鉴定，这种方法在备考业务计划中被评为DCF估值。技术鉴定被用于税收的主要目的有：专利估价捐赠，兼并和收购公司的研发估值。杜邦详细描述了与先锋海兰国际公司的收购连接时的典型技术鉴定方法。在过去二十年里，企业融资工具发生了深远的变化，可以预期导致工业研发结构性变化这意义趋势。杠杆收购的影响（LBO）20世纪80年代标志着杠杆收购时代，高收益或“垃圾债券”的到来。尤其以雷诺竞购战这个案例，正如书籍和电影所描述的由于证券内幕交易这一违法行为产生的影响尤为突出。雷诺在80年代投标了约400亿美元的杠杆收购，虽然这十年的资助引起了广泛的第一个垃圾债券市场的崩溃，但是这一杠杆收购技术还活着，在一个更复杂的杠杆收购企业的收购资金支持下，产生了工业市场的新收购机会。杠杆收购的资金一般是通过百分之十或更少的股票卖给有限合伙，另外90%是银行贷款及百分之次级贷款，通常的形式是高收益债券。成为一个杠杆收购的可能性时，目标公司的股价下降到需要购回本公司的债务来支付销售下跌带来的资产经营活动所需的现金流量的支持的水平。杠杆收购不是价值最大化的问题，而是现金流量最大化。目标公司可能耗费了体力和智力在资本上，但是当一个杠杆收购进入市场时，管理层努力提升价值可能会失败或被市场视为失败，这样可能会对公司产生重创。因此，这个持久的效果可能会使管理层错过创造价值，提高股东价值的机会。这一概念是，如果股东能够受益于精简，管理人员可能早就做了裁员之类的事情。企业摆脱昂贵的装饰，如昂贵的总部，无利可图的项目，专注于核心业务，并审查经济价值观的新收购和资本投资。财务管理研发对资金的影响比较显著：长期研发，往往是缩减现有的业务，以支撑短期的现金流量。这一过程不仅发生在有杠杆收购模式的公司内部，也在债务杠杆收购的公司。中央研究中心表示，缩减或淘汰规模来创造价值，已经被直接运用连接到那些战略业务单位。此外，一个企业受到外部威胁典型的反应是与行业的其他人合并，并消除重复创建总部带来的资本消耗，提高销售组织和研发业务的价值。这些费用明显消除了产生的经济价值，成为了战略价值的一个很大的成本问题。出处：彼得波尔，2002«财务管理的研发》.研究技术管理，《研究技术管理》，原文：R&DandFirmPerformanceinaTransitionEconomyINTRODUCTIONAccordingtointernationalcomparativestatisticstheEasternEuropeancountriesshowmuchlessinnovativeactivitythane.g.theEUaverageThismightbegoodorbad.IfthefirmsarenotcapableenoughtohandleR&Dprocessesitisgoodthattheyrecognizethis.Duringacountry,stransformationprocesstoamarketeconomy,adoptionofestablishedprocessesandproductsinconnectionwithproductvariationandcompetitiveproductionpossibilitiesareanattractivealternativetoinnovation.HowevermostobserversaskformoreR&Dinthesecountriesandforpolicieseasinginnovationinordertoincreasegrowth.Thosepolicyinterventionsarenotonlysubjectoftheoreticaldiscussions.SubsidiesgrantedbytheEuropeanCommissioninmembercountries,likethesixthframeworkprogram,arealsorelevantfortheaccessioncountriesoftheEuropeanUnion.PerhapsR&Dsubsidiesarepartlywastedifgrantedinanearlystageofthetransformationprocessandcouldbeusedinamoreproductiveway.ItmightbethecasethatinsteadofconductingresearchanddevelopmentfirmsintheseareasarebetteroffbytheproductionofestablishedproductsatlowercoststhanintheWesterncountries.Answerstothesequestionswouldsurelybehelpfulforthepolicydesignfortransformationprocesses.ThepurposeofourarticleistocomparethesuccessofinnovativeactivityinEasternandWesternGermanyinordertoinvestigatewhethertherearedifferenceswithrespecttoR&DperformancebetweenthetwopartsofreunifiedGermany.EasternGermanyisaveryspecialexampleofatransitioneconomy.ThemovementfromtheformerGermanDemocraticRepublictostatesoftheGermanFederalRepublicwasaccompaniedbytheintroductionofawellestablishedcurrency,astableandreliablelegalframeworkandahighlydevelopedsystemofindustrialrelations.AlthoughdifferencesbetweenbothpartsofthereunifiedGermanyaroseinthemeantime,thesearecertainlysmallerthanthosewithrespecttoothertransitioneconomics.Hencethisistheunparalleledopportunitytocompareanestablishedmarketeconomywithatransitioneconomyonthebasisofverysimilarenvironmentalconditions.Hence,theceterisparibusconditionapplies.R&DconductedbyEast-Germanfirmsisheavilysubsidizedasthepolicydecisionmakersregarditasbeingveryimportantthatthecompetitivenessofthesecompaniesisimprovedbytechnologicalleadership.Itremainstobeshownthatthesesubsidiesarenotwasted.WeintendtoanswerthisquestionbycomparingtheperformanceofEasternandWesternGermanenterprises.InnovationinatransitioneconomylikeEasternGermanymightsufferfromlackingexperiencewithboththecurrenttechnologicalfrontierandmechanismsatplaceinamarketeconomy.Forexample,outdatedhumancapitalmayoftenleadtoduplicateresearch(byaccident),orfirmscouldrelyonlyonimitation(onpurpose).Incombinationwithhighdemanduncertaintyandlackingexperienceinmarketingstrategy,investmentsinR&Dmaynotleadto(expected)returns.Reasonablereturnscouldbenecessarytosurviveforstartupfirms,though.Thepurposeofthispaperhastwodimensions:Ononehand,wecompareWesternandEasternGermanmanufacturingfirmsbyrelatingacreditratingindexasmeasureofperformancetoR&Dspendingandotherfirmcharacteristics.Ontheotherhand,weextendtheratingmodelbyasecondequationdealingwithfinancialdistressandbankruptcy.ThisisparticularlyinterestingbecauseEasternGermanmanufacturingispredominantlycomposedofsmallandmedium-sizedenterprisesthatwerenewlyfoundedaftertheGermanreunificationin1990.WeaskthequestionwhetherinvestmentinR&DisvaluedasinWesternGermany,orifagenciesratesuchfirmsmoreconservative,becauseyoungfirmslackacorrespondingtrackrecordonwhichtheratingcouldbebased.Thisstudycouldbehighlyrelevantforinnovationpolicy.EasternGermanfirmsreceiverelativelymoresubsidiesthantheirWesternGermancounterparts.TheGermangovernmentintendstofosterthetransformationprocessfromaplannedeconomytoaviablemarketeconomybyamongotherpolicies,anintensivesupportforinnovativeactivitiesinordertostrengthenthecompetitivenessoftheEasternGermanregions.If,however,innovationactivitiesintheEastdonotleadtosuccessfulproductsandmarketsuccess,butfailor,intheworstcase,putfirmsattheriskofbankruptcy,thispolicystrategymaybeaninefficientallocationofresources.Ourstudyisanextensionofthe(few)existingstudiesontheeffectsofinnovationsintransitioneconomies.Aghionetal.(2002)aswellasCarlinetal.(2004)investigatetheeffectofinnovationsongrowthofasampleof2,245respectively3,288firmsfrom24EasternEuropeancountriesandtheyfindthatsomecompetitivepressureisgoodforinnovativeness,buttoomuchcanbecounterproductive(Carlinetal.2004).Innovativenesshasapositiveimpactongrowth.However,itisnottestedwhetherinnovationshavealsoapositiveeffectonprofitability.KoningsandXavier(2002)utilizeinformationconcerninginnovationandusetheratioofintangibleassetstototalfixedassetsasanexogenousvariableexplainingsurvivalandgrowthforasampleof2,813Slovenianfirmsoverthetimeperiodfrom1994to1998.Itturnsoutthattheinnovationvariablehasnegative,yetinsignificant,coefficientsbothinthegrowthandthesurvivalequations.However,thisisafirstindicationthatinnovationmightnotsupportgrowthandsurvivaloffirmsinatransitioneconomy.Thisstandsincontrasttotheempiricalresultsestimatedforfirmsinnon-transitioncountries(seee.g.Hall1987,CefisandMarsili2006).Wearenotawareofastudythatdirectlycomparesnon-transitionandtransitioncountries.CONCEPTUALFRAMEWORKFirmperformancewithrespecttoR&Dhasbeenmeasuredbyavarietyofindicatorssuchasproductivity,profitability,andfirm,sstockmarketvaluations.Inthispaperweemployabroadmeasureencompassingproductivity,profitabilityandstockmarketvalue.Weapproximatetheoverallfirmvaluebyfirmscreditratings.Thefirmvalueisexpectedtoreflectthevalueofbothtangibleassetsandintangibleassets,inparticularknowledgecapital,theintangibleassetscreatedbyR&Dactivity.Itaccountsforbusinessandfinancialrisks,suchasindustrycharacteristics,competitiveposition,management,productivity,profitability,liquidityaswellasfinancialpolicyandflexibility.Thusitreflectsbothcurrentlyobservablefirmcharacteristicsandexpectationsregardingfuturedevelopments.Thestatementthatinnovativeactivityisariskyundertakingisclosetotriviality.Riskisexpectedtoaffectfirmvaluenegatively,astheprobabilityofabankruptcyoratleastpaymentdelayswillincrease.However,duetothefactthatinnovationisadrivingforceforeconomicsuccess,atrade-offbetweenriskandfuturesuccessexists.Theremightwellbeaninternaloptimumwhichmeansthat'some‘R&Disuseful,whilsttoomuchR&Ddoesnotmaximizethepresentfirmvalue.Thusa"moderately5successfullyR&Dperformingfirmisexpectedtohavehighrevenuesandagoodfinancialperformance.Inthelongrunaninnovativefirmmayhavebetterchancestosurvive,ifinvestmentsintotheseactivitiesarenottoolarge.AsideofthegeneralrelevanceofevaluatingtheeffectofR&Dactivityonfirmvalue,itisofspecificinterestinthecaseofEasternGermany.WeareabletocomparethemarketeconomyofWesternGermanywithaneconomyintransitionwherebothhavethesamecurrencyunit,thesamelegalsystem,thesameeconomicsystemandallotherimportantcontributionstothebusinessenvironment.Itshouldbenoted,though,thatinEasternGermanyamuchsmallershareofallworkersiscoveredbycollectivebargainingagreementsandthatmorethan15yearsaftertheunification,wagesarestilllowerinEasternGermany,onaverage.However,thisshouldimprovethecompetitivenessoftheaffectedcompanies.AftertheGermanreunificationin1990,theEastGermanindustrialsectormoreorlesscollapsed.Theexistinglargerfirmsweresoldtonewownersandarestructuringprocesstookplace.Amongintroductionsofotherpolicymeasures,R&Dhasbeenheavilysubsidizedinordertospeeduptheconvergenceprocess.Fosteringinnovationisclearlyintendedtoimprovethecompetitivenessofthecompaniesinquestionandthiswashighlyneededfortheformerproducersinacentrallygovernedplanningsociety.Inordertobeasuccessfulstimulustothecatching-upprocess,thesubsidiesmustbeusedefficientlywithinthefirm.Assaidaboveweusecreditratingsasthevariablereflectingeconomicperformanceofafirm.Inasecondstepofouranalysisweinvestigatewhethertheresultswefindwithrespecttotheratingarealsoreflectedinotherperformanceindicators.SinceEasternGermanfirmsare,onaverage,muchyoungerandsmallerthanWesternGermanfirms,theyfacehighermarketuncertainty.Thiscouldresultinmoreconservativeratingssimplyduetolackingtrackrecordsandexperiencewithsuchbusinesses.Inordertoassessapotentialdownwardbiasfornon-economicallymotivatedreasonsbytheratingagency,weverifyourfindingonthecreditratingbyanestimationofasecondequation.Asanalternativetotherating,weconsiderfinancialdistress.Althoughweobserveactualbankcruptcy,too,weprefertouseabroadermeasureoffinancialdistress,becausefirmbankruptciesarerareevents,andtheeconometricanalysisofsuchisdifficult.Financialdistressisdescribedbythepaymentbehavioroffirms.Adefaultiscertainlyanincidencethatalenderdefinitelywantstoavoid,butlatepaymentsarealsoaproblemandusuallyrelatedtofinanciallossesand,inaddition,itmaybeawarningthatmoreseriousproblemscouldariseinthenearfuture.Therefore,webelievethatpaymentbehaviorisanobjectivemeasureconcerningtheriskof