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China was an equally common location for intangible assets as North America.
It was also common for Finnish companies to have intangible assets in Russia. Perhaps slightly surprisingly, India, which is known as a provider of services related to information technology, had not attracted intangible as- sets from Finnish companies. Only a few per cent of respondents reported that they had relocated intangible assets to India.
RESEARCH AND DEVELOPMENT ACTIVITIES CARRIED OUT GLOBALLY
Intangible assets are not created automat- ically; they are often a result of strenuous efforts and expertise of the personnel. The innovation potential that Finnish compa- nies have in their subsidiaries abroad can be assessed roughly according to what kind of operations the personnel in their foreign subsidiaries perform. Research and develop- ment activities – which also include techni- cal services – is such a key operation from the point of view of intangible assets.
Almost one half of companies with subsid- iaries abroad produced R&D or technical services in the old EU countries (Figure 2). About one third of companies carried out similar operations in the new EU12 coun- tries and about one fth in China. The share of the United States was also signi cant and very close to that of China.
Therefore it seems that in addition to Fin- land, Finnish companies also possess con- siderable potential abroad to create and develop intangible assets such as patents. This may partly be due to implemented relo- cations of R&D activities to other countries but also to factors related to markets and competitiveness.
OWNERSHIP DOES NOT NECESSARILY FOLLOW WORK
Companies may have intangible assets in different countries, even if they did not have personnel who develop it in those countries. The product and technological development may be primarily located in Finland, but the patents created as a result of that work may
nevertheless be owned by a unit located in another country.
One possible reason for this different loca- tion is taxation. The ownership of intangible assets may have been relocated to a country with lower corporate taxation. In that case pro ts created by intangible assets are taxed according to the tax rates in that country.
Another reason for different locations is the practice in some companies to concentrate all intangible assets to one speci c country.
SUPPORTERS OF R&D ACTIVITY MUST BENEFIT FROM THE RESULTS
Although expanding to international markets is no longer limited to production, Finland is still the most important location for an over- whelming majority of Finnish companies that have entered international markets. Patents, copyrights as well as intangible as- sets that are not protected legally are usually owned by units in Finland.
From the point of view of the national economy, ownership of intangible assets becomes increasingly important as a con- siderable part of the added value of many products is based on intangible assets.
The location of intangible assets is also signif- icant from the point of view of business and innovation policy. When nancing research and development activities, the public sec- tor bears some of the risks in R&D projects. Some projects will naturally fail, but some will be successful. Successful projects create new or improved products as well as services, which are outputs of R&D activities.
Good business and innovation policy en- sures that the fruits of successful projects are also mainly received by the national economy that has nanced them, i.e., Fin- land. Thus, if the public sector invests in the development and increase of companies' innovation activities in Finland, the output, i.e., the intangible assets created in those projects should also remain in possession of the units in Finland.
Based on an article by Jyrki Ali-Yrkkö and Samuli Rikama published in 2013. Jyrki Ali-Yrkkö is a re- search director at Etlatieto. Samuli Rikama is an economist at the Ministry of Employment and the Economy.
29 Maliranta, M. & Rouvinen, P. (2007). Aineettomat investoinnit Suomen yrityksissä vuonna 2004: Kokeilu yritysaineistoilla. Discussion papers
no 1109. Elinkeinoelämän tutkimuslaitos, Etla, Helsinki - See more at: http://tietotrendit.stat.fi/ mag/article/28/. van Ark, B., Hao, J. X., Corrado, C. & Hulten, C. (2009): Measuring intangible capital and its contribution to economic growth in Europe, EIB Papers, ISSN 0257-7755, Vol. 14, Iss. 1, p. 62–93.
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