by Raymond M. Wolfe[1]

Companies spent $302 billion on research and development performed in the United States during 2012, 2.8% more than the $294 billion spent during 2011 (table 1). Funding from the companies’ own sources was $239 billion during 2011 and $247 billion during 2012, a 3.6% increase; funding from other sources was $55 billion in both years (table 1). Data for this InfoBrief are from the Business R&D and Innovation Survey (BRDIS), which was developed and cosponsored by the National Science Foundation and the U.S. Census Bureau.

R&D Performance, by Industrial Sector and Source of Funding

During 2012, companies in manufacturing industries performed $208 billion (69%) of domestic R&D, defined as R&D performed in the 50 states and Washington, D.C. (table 2). Most of the funding was from companies’ own funds (82%). Companies in nonmanufacturing industries performed $94 billion of domestic R&D (31% of total domestic R&D performance), 82% of which was paid for from companies’ own funds. The U.S. federal government was the chief source of outside funding (also referred to as R&D paid for by others) for R&D across all industries. Of the $55 billion paid for by others, the federal government contributed $31 billion, most of which came from the Department of Defense ($25 billion) (data not shown). Aerospace products and parts (North American Industry Classification System [NAICS] code 3364), professional, scientific, and technical services (NAICS 54), and computer and electronic products (NAICS 334) received 89% of federal government R&D funding. Next among outside funders were foreign companies ($12 billion), including foreign parent companies of U.S. subsidiaries, and other U.S. companies ($11 billion) (table 2) (see “Survey Information and Data Availability” for information on industry classification).

Sales, R&D Intensity, and Employment of R&D Performers

U.S. companies that performed or funded R&D reported domestic net sales of $9 trillion in 2012 (table 3).[2] For all industries, the R&D intensity (ratio of domestic R&D performance to domestic net sales) was 3.3%; for manufacturers, 3.8%; and for nonmanufacturers, 2.5%. Manufacturing industries with high levels of R&D intensity in 2012 were pharmaceuticals and medicines (NAICS 3254) (12.7%), aerospace products and parts (NAICS 3364) (10.1%), and computer and electronic products (NAICS 334) (9.8%). Among the nonmanufacturing industries, industries with high levels of R&D intensity were scientific R&D services (NAICS 5417) (23.2%), software publishers (NAICS 5112) (9.9%), and computer systems design and related services (NAICS 5415) (9.3%).

Businesses that performed or funded R&D employed 18.3 million people in the United States during 2012. Some 1.5 million (8.0%) were R&D employees.[3] Not surprisingly, industries with high levels of R&D intensity also had high numbers of R&D employees in 2012: computer and electronic products (NAICS 334) (267,000 R&D employees), pharmaceuticals and medicines (NAICS 3254) (114,000), and aerospace products and parts (NAICS 3364) (73,000). Nonmanufacturing industries with high numbers of R&D employees were software publishers (NAICS 5112) (146,000), computer systems design and related services (NAICS 5415) (101,000), and scientific R&D services (NAICS 5417) (75,000) (table 3).

R&D Performance, by Company Size

Small companies (from 5 to 499 domestic employees) performed 17% of the nation’s total business R&D in 2012 (table 1). In these companies, the R&D intensity was 4.7%, compared with 3.1% for all other companies (tables 1 and 3). Small companies accounted for 11% of sales and employed 17% of 18.3 million who worked for R&D-performing or R&D-funding companies. Of the 1.5 million R&D employees engaged in business R&D in the United States, 30% worked for small companies. By contrast, mid-size companies (from 500 to 24,999 domestic employees) performed 47% of the nation’s total business R&D in 2012, and their R&D intensity was 3.2%. They accounted for 49% of sales and employed 41% of those who worked for R&D-performing or R&D-funding companies, including 43% of R&D employees in the United States. The largest companies (25,000 or more domestic employees) performed 36% of the nation’s total business R&D in 2012, and their R&D intensity was 3.0%. The largest companies employed 42% of those who worked for R&D-performing or R&D-funding companies, including 27% of R&D employees in the United States.

R&D Performance, by State

Business R&D is concentrated in a relatively small number of states. During 2012, companies reported $247 billion of domestic R&D paid for by the company. Businesses in California alone accounted for 28.1% of this amount in 2012 (table 4). Other states with large amounts of company-funded business R&D, as reflected by the percentages of the national total they accounted for in 2012, were Illinois (4.8%), Massachusetts (5.7%), Michigan (5.4%), New Jersey (5.6%), New York (3.6%), Pennsylvania (3.5%), Texas (5.2%), and Washington (5.5%).

Survey Information and Data Availability

The sample for BRDIS was selected to represent all for-profit, nonfarm companies that are publicly or privately held and have five or more employees in the United States. Estimates produced from the survey and presented in this InfoBrief are restricted to companies that perform or fund R&D, either domestically or abroad. Because the statistics from the survey are based on a sample, they are subject to both sampling and nonsampling errors (see technical notes in the detailed statistical tables at http://www.nsf.gov/statistics/industry/).

In this InfoBrief, money amounts are expressed in current U.S. dollars and are not adjusted for inflation. Company is defined as a business organization located in the United States, either U.S. owned or a U.S. affiliate of a foreign parent, of one or more establishments under common ownership or control that performs or funds R&D.

For 2011, a total of 43,108 companies were sampled, representing 1,964,799 companies; for 2012, a total of 43,655 companies were sampled, representing 1,971,731 companies. The actual numbers of companies in the sample that remained within the scope of the survey between sample selection and tabulation were 39,624 for 2011 and 39,744 for 2012. These lower counts represent the number of companies that were determined to be within the scope of the survey after all data collected were processed. Reasons for the reduced counts include mergers, acquisitions, and instances where companies had gone out of business in the interim. Of these in-scope companies, 71.5% were considered to have met the criteria for a complete response to the 2011 survey; 77.1% met the 2012 survey response criteria. Industry classification was based on the dominant business activity for domestic R&D performance, where available. For reporting units that did not report business activity codes for R&D, the classification used for sampling was assigned.

The full set of detailed tables from this survey will be available in the report Business R&D and Innovation: 2012 (http://www.nsf.gov/statistics/industry/). Individual detailed tables and tables with relative standard errors and imputation rates from the 2012 survey may be available in advance of the full report. For further information, contact Raymond M. Wolfe.

Notes

[1] Raymond M. Wolfe, Research and Development Statistics Program, National Center for Science and Engineering Statistics, National Science Foundation, 4201 Wilson Boulevard, Suite 965, Arlington, VA 22230 (rwolfe@nsf.gov; 703-292-7789).

[2] Determining the amount of domestic net sales and operating revenues was left to the reporting company; however, guidance was given to exclude intracompany transfers and sales by foreign subsidiaries but to include transfers to foreign subsidiaries and export sales to foreign companies.

[3] Employment statistics in this InfoBrief are head counts. Full-time equivalent statistics are available in the detailed statistical tables. R&D employees include scientists and engineers, their managers, and the technicians, technologists, and support staff members who work on R&D or who provide direct support to R&D activities.