Businesses engage in R&D with a variety of objectives and partners on a global basis. Most business R&D is aimed at developing new and improved goods, services, and processes; maintaining or increasing market share; and improving operating efficiency. Such activities reflect firms' perceptions of the market's demand and expectations about the profitability of new or newly applied technology.
Businesses located in the United States, both domestic- and foreign-owned, performed $290.7 billion in R&D in the United States in 2008 (table
U.S. business R&D performance can be paid with funds from company-owned units, other businesses not owned by the company, and other external sources. Internal and external funders may be located in the United States or abroad.
U.S. business R&D performance totaled $290.7 billion in 2008, including $232.5 billion (80%) from businesses' own funds and $58.2 billion (20%) paid for by others not owned by the company, regardless of the location of funders (table
Companies in manufacturing industries performed $203.8 billion of R&D domestically representing 70% of all business R&D performed in the United States in 2008; nonmanufacturing industries performed $86.9 billion. The split between own company funds and funding by others for manufacturing and nonmanufacturing industries was similar to the split for overall business R&D (about 80% and 20%).
Businesses vary in R&D intensity—how much R&D they do relative to production, value added, or sales—across industry and size. In this section, business R&D intensity is the ratio of domestic R&D performed and paid for by the company to domestic net sales. In 2008, the ratio across all businesses within scope of the Business R&D and Innovation Survey (BRDIS) was 3.0%; 3.5% for manufacturers and 2.2% for companies in nonmanufacturing industries (appendix table
Of the $58.2 billion (20% of $290.7 billion) in funding by others outside of individual companies, the U.S. federal government accounted for $36.4 billion, independent domestic firms $12.2 billion, and $8.9 billion was funded by companies located outside of the United States (both independent companies and foreign parents). Other nonfederal sources accounted for less than $1 billion.
Federal R&D funding figures prominently in two defense-related industries. The aerospace products and parts industry performed $25.8 billion in federally funded R&D, almost 70% of their $36.9 billion in domestically performed R&D in 2008. The navigational, measuring, electromedical, and control instruments industry performed $3.6 billion in federally funded R&D, almost a quarter of its $15.5 billion of domestic R&D performance (table
Small companies, those with 5–499 domestic employees, performed $58.1 billion (20%) of $290.7 billion in U.S. business R&D performance; 80% ($46.4 billion) of the domestic R&D performance by small companies was paid for with their own funds, the remainder by other business or organizations, regardless of location (table
Business R&D intensity is generally greater in the manufacturing sector (3.5% overall) than in nonmanufacturing (2.2%). Nonetheless, R&D plays a large role in some service industries and R&D intensity in some manufacturing sectors is relatively low (appendix table
Six industry groups—four in manufacturing (chemicals, computer and electronic products, aerospace and defense manufacturing, and automotive manufacturing) and two in services (software and computer-related products, and R&D services)—accounted for three-quarters of both 2008 total business R&D performed in the United States ($225.8 billion) and company-funded/company-performed R&D ($173.3 billion) in the United States. They also accounted for 96% ($34.8 billion) of federally funded U.S. business R&D in 2008 (table
The chemical industries accounted for the largest share of business R&D performed in the United States—20% or $58.2 billion of $290.7 billion in 2008 (figure
Software and computer-related services industries—software publishing, computer systems design and Internet service providers, web search portals and data processing services industries—performed $46.9 billion of domestic R&D in 2008, making it the second largest industry group for domestic R&D performance, and $8.5 billion abroad. The R&D of these industries, 16% of business R&D performance in the United States, combined with that of the computer and electronic product manufacturers (below), accounted for 32% of all business R&D performed in the United States in 2008 (table
Companies in the computer and electronic product manufacturing industries include producers of communications equipment, semiconductors, computers and computer peripherals, and components for such products. The design and use of integrated circuits and the application of highly specialized miniaturization technologies are common elements in the production processes of the computer and electronic products sector. In 2008, companies in this industry group performed $45.0 billion of R&D, or 15% of all domestic business R&D, and $13.0 billion abroad. Funds for domestic R&D came mostly from the companies themselves ($42.4 billion) and relatively little ($2.6 billion) came from other sources. Two relatively high R&D-intensive 4-digit NAICS (North American Industry Classification System) industries are included in this group, semiconductor and communications equipment manufacturing. Their domestic R&D/domestic sales ratios were 20% and 13%, respectively (appendix table
Although it is common to refer to the "defense industry," the NAICS system does not include such a classification. Thus, to approximate the cost of defense-related R&D, included here are data on aerospace products and parts plus federally funded R&D in the following industries: navigational, measuring, electromedical, and control instruments, as well as other transportation manufacturing industries. Companies in this "defense sector" perform the majority of the Department of Defense's (DOD's) extramural R&D (table
The R&D and related services group includes companies that provide scientific R&D, engineering, and architectural services to other firms or for their own use. Companies in this group performed $21.3 billion of R&D in the United States during 2008; $10.1 billion paid for from company funds and $11.2 billion paid for by others. Of the $11.2 billion paid for by others, $3.0 billion was funded by the U.S. federal government, the highest amount outside the aerospace and defense manufacturing group (table
Companies in automotive manufacturing industries reported performing $14 billion of company-funded R&D in 2008, accounting for 5% of all such R&D performed by businesses in the United States (table
Industry-based data above are the result of classifying each company's R&D in only one industry. However, companies in different industries and even in the same industry perform R&D relating to a variety of different business lines of activities. For example, a company classified as a pharmaceutical company may also perform R&D in medical equipment. A feature of BRDIS is the collection of information on R&D performed by business activity—both R&D paid for by the company and paid for by others. See sidebar, "U.S. Business R&D and Innovation Survey." The number of these activities is large, as indicated in appendix table
The top 10 business activities for which companies used their own funds to perform R&D in the United States accounted for 60% of these companies' R&D funds ($140.6 billion of $232.5 billion) (table