Profitability determinants of Portuguese knowledge-intensive business services: empirical evidence using panel data models

This article studies the profitability determinants of knowledge-intensive business services (KIBS). To do so, we consider a sample of 187 Portuguese KIBS for the period 2002 to 2009, using dynamic panel estimators as estimation method. The results indicate that size, age, liquidity, long-term debt and R&D expenditure are determinants stimulating the profitability of Portuguese KIBS, with risk being a restrictive determinant. In addition, profitability is found to be persistent over time. The empirical evidence lets us make important suggestions for political decision-makers and the owners/managers of Portuguese KIBS.