Emory Corporate Governance and Accountability Review


In many countries, including the United States, governments have implemented regulations that aim to encourage expenditure on research and development ('R&D'). Often, the regulations used to encourage R&D can have the effect of stifling innovation. This is because the tax incentives available for R&D disproportionately benefit large multinational enterprises ('MNEs') and do little to benefit startups and small businesses. As a result of the disparate benefits received from R&D-related regulations, startups and small businesses, which often have very innovative and cutting-edge ideas, are unable to compete with large MNEs. Because of this inability to compete, innovative ideas are left unrealized. In the United States specifically, MNEs benefit much more from the R&D tax credit than startups and small businesses do, and this disparity results in an unlevel playing field. The U.S. Government has taken a step in the right direction through the changes made in the PATH Act in 2015, but there is still room for improvement. The implementation of a well thought-out IP box regime could significantly improve the ability of startups and small businesses to compete with MNEs.