OuMSWpQVI4omN4scFmBMjeResearch and developmentFrom Wikipedia, the free encyclopediaThis articleneeds additional citations forverification.Please helpimprove this articlebyadding citations to reliable sources. Unsourced material may be challenged and removed.(August 2013)

Cycle of research and developmentResearch and development(R&D), also known inEuropeasresearch and technical(ortechnological)development(RTD), is a general term for activities related to the enterprise of corporate or governmental innovation. The activities that are classified as R&D differ from company to company, but there are two primary models, with an R&D department being either staffed byengineersand tasked with directlydeveloping new products, or staffed withindustrial scientistsand tasked withapplied researchin scientific or technological fields which may facilitate future product development. In either case, R&D differs from the vast majority of corporate activities in that it is not often intended to yield immediate profit, and generally carries greater risk and an uncertainreturn on investment.Contents[hide] 1Background 2Business 2.1Benefit of research and development by sector 3Government expenditures 3.1United States 3.2European Union 4See also 5Notes 6External linksBackground[edit]New product design and development is more often than not a crucial factor in the survival of a company. In an industry that is changing fast, firms must continually revise their design and range of products. This is necessary due to continuous technology change and development as well as other competitors and the changing preference of customers. Without an R&D program, a firm must rely onstrategic alliances,acquisitions, and networks to tap into the innovations of others.A system driven bymarketingis one that puts the customer needs first, and only produces goods that are known to sell. Market research is carried out, which establishes what is needed. If the development is technology driven then R&D is directed toward developing products that market research indicates will meet an unmet need.In general, R&D activities are conducted by specialized units or centers belonging to a company, or can be out-sourced to a contract research organization,universities, orstateagencies. In the context ofcommerce, "research and development" normally refers to future-oriented, longer-term activities inscienceortechnology, using similar techniques toscientificresearch but directed toward desired outcomes and with broad forecasts of commercial yield.Statisticson organizations devoted to "R&D" may express the state of anindustry, the degree ofcompetitionor the lure ofprogress. Some common measures include:budgets, numbers ofpatentsor on rates of peer-reviewedpublications. Bank ratios are one of the best measures, because they are continuously maintained, public and reflect risk.In the U.S., a typical ratio of research and development for an industrial company is about 3.5% of revenues; this measure is called "R&D intensity". A high technology company such as a computer manufacturer might spend 7%. AlthoughAllergan(abiotechcompany) tops the spending table with 43.4% investment, anything over 15% is remarkable and usually gains a reputation for being a high technology company. Companies in this category includepharmaceutical companiessuch asMerck & Co.(14.1%) orNovartis(15.1%), and engineering companies likeEricsson(24.9%).[1]Such companies are often seen as credit risks because their spending ratios are so unusual.Generally such firms prosper only in markets whose customers have extreme needs, such as medicine, scientific instruments, safety-critical mechanisms (aircraft) or high technology military armaments. The extreme needs justify the high risk of failure and consequently high gross margins from 60% to 90% of revenues. That is,gross profitswill be as much as 90% of the sales cost, with manufacturing costing only 10% of the product price, because so many individual projects yield no exploitable product. Most industrial companies get 40% revenues only.On a technical level, high tech organizations explore ways to re-purpose and repackage advanced technologies as a way ofamortizingthe high overhead. They often reuse advanced manufacturing processes, expensive safety certifications, specialized embedded software, computer-aided design software, electronic designs and mechanical subsystems.Research has shown that firms with a persistent R&D strategy outperform those with an irregular or no R&D investment program.[2]Business[edit]Present-day R&D is a core part of the modern business world. Major decisions in firms are made on base of research and development.Research and development is of great importance in business as the level of competition, production processes and methods are rapidly increasing. It is of special importance in the field of marketing where companies keep an eagle eye on competitors and customers in order to keep pace with modern trends and analyze the needs, demands and desires of their customers.Unfortunately, research and development are very difficult to manage, since the defining feature of research is that the researchers do not know in advance exactly how to accomplish the desired result. As a result, higher R&D spending does not guarantee "more creativity, higher profit or a greater market share".[3]Benefit of research and development by sector[edit]In general, it has been found that there is a positive relationship between research and development and firm productivity across all sectors, but that this positive relationship is much stronger in high-tech firms than in low-tech firms.[4][5]In research done by Francesco Crespi and Cristiano Antonelli, high-tech firms were found to have "virtuous"Matthew effectswhile low-tech firms experienced "vicious" Matthew effects, meaning that high-tech firms were awarded subsidies on merit while low-tech firms most often were given subsidies based on name recognition, even if not put to good use.[6]While the strength of the relationship between R&D spending and productivity in low-tech industries is less than in high-tech industries, studies have been done showing non-trivial carryover effects to other parts of the marketplace by low-tech R&D.[7]Government expenditures[edit]United States[edit]PresidentBarack Obamarequested $147.696 billion for research & development inFY2011.[8]Much of this spending is devoted to basic research on the mechanisms of disease.European Union[edit]The funding from government organizations, like the European Union'sSeventh Framework Program(FP7), and their alliance with R&D has made their research more efficient. However, government-funded research that paid for the work in discovering the human genetic code (DNA) has patent-restrictions.See also[edit] Basic research Demonstration Innovation List of countries by research and development spending List of business and finance abbreviations Neglected Tropical Disease Research and Development Science of science policy Science policy Technological revolution Technology life cycleNotes[edit]1. Jump up^All figuresUK R&D Scoreboardas of 2006.2. Jump up^Johansson; Lf (December 2008)."The Impact of Firm's R&D Strategy on Profit and Productivity".3. Jump up^"Aerospace and Defense: Inventing and Selling the Next Generation"(PDF). Center for Strategic and International Studies.4. Jump up^Ortega-Argiles, Raquel; Potters, Lesley; Vivarelli, Marco (2011). "R&D and productivity: testing sectoral peculiarities using micro data".Empirical Economics41(3): 817839.doi:10.1007/s00181-010-0406-3.5. Jump up^Ortega-Argiles, Raquel; Piva, Mariacristina; Vivarelli, Marco (2011). "Productivity Gains from R&D Investment: Are High-Tech Sectors Still Ahead?".IZA Discussion Papers(IZA) (5975): 122.6. Jump up^Crespi, Francesco; Antonelli, Cristiano (2011). "Matthew Effects and R&D Subsidies: Knowledge Cumulability in High-Tech and Low-Tech Industries".Working Papers(Universit degli Studi Roma Tre) (140): 124.7. Jump up^Mendonca, Sandro (2009). "Brave Old World: Accounting for 'High-Tech' Knowledge in 'Low-Tech' Industries".Research Policy38(3): 470482.doi:10.1016/j.respol.2008.10.018.8. Jump up^http://www.fas.org/sgp/crs/misc/R41098.pdfExternal links[edit]Wikimedia Commons has media related toResearch and development.

Levy, David M. (2002)."Research and Development". InDavid R. Henderson(ed.).Concise Encyclopedia of Economics(1st ed.).Library of Economics and Liberty.OCLC317650570,50016270and163149563 U.S. Federal Investments in Energy R&D: 1961-2008 R&D Magazine: R&D 100 Awards. DOE Funded Research Projects Win 30 R&D Awards for 2008 USA Today May 2008 Q&A with Texas Instruments CEO about Bayh-Dole Act OECD Science, Technology and Industry Outlook 2008 2010 Science and Engineering Indicators Research and Development: National Trends and International Linkages Scientific Grant Awards DatabaseContains details of over 2,000,000 scientific research projects conducted over the past 25 years. RAND R&D Methods Used by Federal Agencies in USA Crossing the Border to the Future of Education Center for Strategic and International Studies | Defense Industrial Initiatives Group | Internal R&D Productivity in Aerospace and Defense[show] v t eTechnology

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