by Raymond M. Wolfe [1]

Business research and development performance in the United States reached $341 billion in 2014, a 5.6% increase over the $323 billion spent in 2013 (table 1). Funding from the companies' own sources was $283 billion in 2014, a 6.7% increase from the $265 billion spent in 2013. Funding from other sources was $58 billion in both years (table 1). Data for this InfoBrief are from the Business R&D and Innovation Survey (BRDIS), which was developed and is cosponsored by the National Science Foundation and the Census Bureau.

TABLE 1. Funds spent for business R&D performed in the United States, by type of R&D, source of funds, and size of company: 2013–14
(Millions of U.S. dollars)

i = more than 50% of value imputed.

a R&D is planned, creative work aimed at discovering new knowledge or developing new or significantly improved goods and services. This includes (1) activities aimed at acquiring new knowledge or understanding without specific immediate commercial applications or uses (basic research), (2) activities aimed at solving a specific problem or meeting a specific commercial objective (applied research), and (3) systematic use of research and practical experience to produce new or significantly improved goods, services, or processes (development).
b Includes foreign subsidiaries of U.S. companies.
c Includes companies located inside and outside the United States, U.S. state government agencies and laboratories, foreign government agencies and laboratories, and all other organizations located inside and outside the United States.

NOTES: Detail may not add to total because of rounding. Statistics are representative of companies located in the United States that performed or funded R&D. Excludes data for federally funded research and development centers. The Business R&D and Innovation Survey does not include companies with fewer than five employees.

SOURCE: National Science Foundation, National Center for Science and Engineering Statistics, Business R&D and Innovation Survey.

Table 1 Source Data: Excel file
Selected characteristic and company size 2013 2014
Domestic R&D performance 322,528 340,728
Type of R&D a
Basic research 19,508 21,936
Applied research 51,014 53,415
Development 252,007 265,377
Paid for by the companyb 264,913 282,570
Basic research 15,275 16,107
Applied research 38,105 39,012
Development 211,532 227,451
Paid for by others 57,615 58,158
Basic research 4,233 5,829
Applied research 12,908 14,403
Development 40,475 37,927 i
Source of funds
Federal 29,362 i 26,554 i
Otherc 28,253 31,604
Size of company (number of domestic employees)
5–9 3,402 i 3,295 i
10–24 6,895 7,177 i
25–49 7,941 8,428 i
50–99 8,910 10,178 i
100–249 13,666 13,492
250–499 12,189 12,203
500–999 12,002 13,262
1,000–4,999 55,517 57,551
5,000–9,999 31,514 38,202
10,000–24,999 51,218 54,445
25,000 or more 119,275 122,495

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

In 2014, of the $341 billion companies spent on R&D, $22 billion (6%) was spent on basic research, $53 billion (16%) on applied research, and $265 billion (78%) on development. The distribution was unchanged from 2013 (table 1). In 2014, companies in manufacturing industries performed $233 billion (68%) 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 these companies' own funds (83%). Companies in nonmanufacturing industries performed $108 billion of domestic R&D (32% of total domestic R&D performance), 84% of which was paid for from companies' own funds.

TABLE 2. Funds spent for business R&D performed in the United States, by source of funds and selected industry: 2014
(Millions of U.S. dollars)

D = suppressed to avoid disclosure of confidential information; i = more than 50% of value imputed.

NAICS = North American Industry Classification System; nec = not elsewhere classified.

a Includes foreign subsidiaries of U.S. companies ($5.3 billion).
b Includes foreign parent companies of U.S. subsidiaries ($13.4 billion) and unaffiliated companies ($3.8 billion).
c Includes U.S. state government agencies and laboratories ($0.1 billion), foreign government agencies and laboratories ($0.4 billion), and all other organizations located inside ($0.5 billion) and outside the United States ($0.1 billion).

NOTES: Detail may not add to total because of rounding. Statistics are representative of companies located in the United States that performed or funded R&D. Industry classification was based on dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned. Excludes data for federally funded research and development centers. The Business R&D and Innovation Survey does not include companies with fewer than five employees.

SOURCE: National Science Foundation, National Center for Science and Engineering Statistics, Business R&D and Innovation Survey, 2014.

Table 2 Source Data: Excel file
Paid for by others
Companies All other
organizationsc
Industry, NAICS code, and company size All R&D Paid for by
the companya		 Total Federal Domestic Foreignb
All industries, 21–33, 42–81 340,728 282,570 58,158 26,554 13,227 17,246 1,131
Manufacturing industries, 31–33 232,815 192,160 40,655 21,303 5,062 13,573 717
Chemicals, 325 66,301 56,488 9,813 404 1,660 7,674 75
Pharmaceuticals and medicines, 3254 56,612 47,646 8,966 272 1,600 7,022 72
Other 325 9,689 8,842 847 132 60 652 3
Machinery, 333 12,128 11,458 670 78 199 i 385 i 8 i
Computer and electronic products, 334 73,891 64,695 9,195 4,456 1,467 3,028 244
Electrical equipment, appliance, and components, 335 4,365 4,178 187 i 48 i 15 i 117 i 7 i
Transportation equipment, 336 46,746 27,261 19,485 i 16,153 i 1,398 1,666 268 i
Automobiles, trailers, and parts, 3361–63 18,404 15,900 2,504 254 i 625 1,619 6
Aerospace products and parts, 3364 26,181 i 10,300 15,881 i 14,826 i 747 47 261 i
Other 336 2,161 1,061 1,100 1,073 26 0 1
Manufacturing nec, other 31–33 29,384 28,080 1,305 164 323 703 115
Nonmanufacturing industries, 21–23, 42–81 107,913 90,409 17,504 5,251 8,165 3,673 i 415 i
Information, 51 63,773 62,296 1,477 162 517 775 23
Software publishers, 5112 36,052 34,781 1,270 99 463 707 1
Other 51 27,721 27,515 207 63 54 68 22
Finance and insurance, 52 4,122 4,090 32 0 D 0 D
Professional, scientific, and technical services, 54 30,975 i 16,061 i 14,914 5,016 7,189 2,391 i 318 i
Computer systems design and related services, 5415 11,019 i 8,644 i 2,375 i 471 i 690 i 1,095 i 119 i
Scientific R&D services, 5417 12,807 2,668 10,139 2,954 6,105 941 139
Other 54 7,149 4,749 2,400 1,591 394 355 60
Nonmanufacturing nec, other 21–23, 42–81 9,043 7,962 1,081 73 D 507 D
Size of company (number of domestic employees)
5–9 3,295 i 2,426 i 868 i 318 i 353 i 103 i 94 i
10–24 7,177 i 5,506 i 1,671 i 617 i 752 i 244 58 i
25–49 8,428 i 6,237 i 2,191 i 528 394 i 1,244 i 25 i
50–99 10,178 i 7,526 2,652 i 480 753 i 1,339 i 80 i
100–249 13,492 11,006 2,486 950 726 699 111
250–499 12,203 10,188 2,015 507 568 863 77
500–999 13,262 11,736 1,525 247 364 i 887 27
1,000–4,999 57,551 47,807 9,744 1,336 2,430 i 5,914 64
5,000–9,999 38,202 30,680 7,522 992 i 3,692 2,773 65
10,000–24,999 54,445 46,904 7,542 3,724 1,187 2,593 38
25,000 or more 122,495 102,555 19,941 i 16,858 i 2,008 588 487 i

The U.S. federal government was the chief source of external funding for R&D (also referred to as R&D paid for by others) across all industries. Of the $58 billion paid for by others, the federal government accounted for $27 billion, most of which came from the Department of Defense ($19 billion) (data available in full set of detailed tables). Ninety-two percent of federal government funding went toward 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). Next among external funders were foreign companies ($17 billion)—including foreign parent companies of U.S. subsidiaries—and other U.S. companies ($13 billion) (table 2). (See "Survey Information and Data Availability" for information on industry classification.)

R&D Performance, by Company Size

Small- and medium-sized companies (5 to 499 domestic employees) performed 16% of the nation's total business R&D in 2014 (table 1). In these companies, the R&D-to-sales ratio (or R&D intensity) was 5.0%, compared with 3.5% for all companies overall (tables 1 and 3). These companies accounted for 11% of sales, employed 14% of the 21.5 million who worked for R&D-performing or R&D-funding companies, and employed 28% of the 1.5 million R&D employees engaged in business R&D in the United States.

TABLE 3. Sales, R&D intensity, and employment for companies that performed or funded business R&D, by selected industry and company size: 2014

D = suppressed to avoid disclosure of confidential information.

NAICS = North American Industry Classification System; nec = not elsewhere classified

a Includes domestic net sales of companies that performed or funded R&D. Includes transfers to foreign subsidiaries and export sales to foreign companies; excludes intracompany transfers and sales by foreign subsidiaries.
b R&D intensity is domestic R&D paid for by the company and others and performed by the company divided by domestic net sales of companies that performed or funded R&D.
c Data recorded on 12 March represent employment figures for the year.
d Includes researchers, R&D managers, technicians, clerical staff, and others assigned to R&D groups.

NOTES: Detail may not add to total because of rounding. Sales, R&D intensity, and total domestic employment statistics are representative of companies located in the United States that performed or funded R&D; R&D employment statistics are representative of companies located in the United States that performed R&D. Industry classification was based on dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned. Excludes data for federally funded research and development centers. The Business R&D and Innovation Survey does not include companies with fewer than five employees.

SOURCE: National Science Foundation, National Center for Science and Engineering Statistics, Business R&D and Innovation Survey, 2014.

Table 3 Source Data: Excel file
Domestic employment
(thousands)c
Industry, NAICS code, and company size Domestic net sales
(US$millions)a		 R&D intensity
(%)b		 Total R&Dd
All industries, 21–33, 42–81 9,754,470 3.5 21,540 1,514
Manufacturing industries, 31–33 5,743,154 4.1 10,645 914
Chemicals, 325 1,355,762 4.9 1,753 172
Pharmaceuticals and medicines, 3254 423,380 13.4 543 122
Other 325 932,382 1.0 1,210 50
Machinery, 333 D D 899 75
Computer and electronic products, 334 727,065 10.2 1,488 273
Electrical equipment, appliance, and components, 335 155,531 2.8 369 33
Transportation equipment, 336 1,143,014 4.1 1,858 167
Automobiles, trailers, and parts, 3361–63 711,564 2.6 933 94
Aerospace products and parts, 3364 371,259 7.1 753 61
Other 336 60,191 3.6 172 12
Manufacturing nec, other 31–33 D D 4,278 194
Nonmanufacturing industries, 21–23, 42–81 4,011,316 2.7 10,896 600
Information, 51 1,103,940 5.8 2,236 296
Software publishers, 5112 D D 613 163
Other 51 D D 1,623 133
Finance and insurance, 52 609,972 0.7 1,216 24
Professional, scientific, and technical services, 54 435,030 7.1 1,713 223
Computer systems design and related services, 5415 120,189 9.2 441 77
Scientific R&D services, 5417 56,382 22.7 225 71
Other 54 258,459 2.8 1,047 75
Nonmanufacturing nec, other 21–23, 42–81 1,862,374 0.5 5,731 57
Size of company (number of domestic employees)
5–9 32,734 10.1 118 27
10–24 81,680 8.8 309 66
25–49 141,781 5.9 431 69
50–99 189,422 5.4 573 81
100–249 362,909 3.7 953 100
250–499 289,020 4.2 710 76
500–999 378,580 3.5 822 70
1,000–4,999 1,274,714 4.5 2,593 254
5,000–9,999 895,882 4.3 1,524 150
10,000–24,999 2,047,688 2.7 3,848 219
25,000 or more 4,060,062 3.0 9,659 403

By contrast, companies with 500 to 24,999 domestic employees performed 48% of the nation's total business R&D in 2014, and their R&D intensity was 3.6%. They accounted for 47% of sales, employed 41% of those who worked for R&D-performing or R&D-funding companies, and employed 46% 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 2014, and their R&D intensity was 3.0%. They accounted for 42% of sales, employed 45% of those who worked for R&D-performing or R&D-funding companies, and employed 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. In 2014, companies reported $283 billion of domestic R&D paid for by the company. Businesses in California alone accounted for 30% of this amount (table 4). Other states with large amounts of business R&D paid for by companies' own funds in 2014, as reflected by the percentages of the national total they accounted for, were Massachusetts (6%), Michigan (5%), Washington (5%), Texas (5%), Illinois (4%), New Jersey (4%), New York (4%), and Pennsylvania (3%).

TABLE 4. Funds spent for business R&D performed in the United States, by state and source of funds: 2014
(Millions of U.S. dollars)

e = more than 50% of the cell value is imputed due to raking of state data; i = more than 50% of value is imputed due to reasons other than raking of state data.

a Includes data reported on Form BRDI-1 not allocated to a specific state, as well as data reported on Form BRD-1(S) by multi-establishment companies. For single-establishment companies, data reported on Form BRD-1(S) were allocated to the state in the address used to mail the survey form.

NOTES: Detail may not add to totals because of rounding. Statistics are representative of companies located in the United States that performed or funded R&D. Excludes data for federally funded research and development centers.

SOURCE: National Science Foundation, National Center for Science and Engineering Statistics, Business R&D and Innovation Survey, 2014.

Table 4 Source Data: Excel file
State All R&D Paid for by
the company		 Paid for
by others
United States 340,728 282,570 58,158
Alabama 1,961 1,299 662
Alaska 57 e 37 e 20
Arizona 5,499 4,307 1,191
Arkansas 317 277 41
California 98,488 85,750 12,738 i
Colorado 4,551 3,829 723
Connecticut 9,093 6,819 2,274
Delaware 2,520 1,839 i 681
District of Columbia 338 183 154
Florida 5,783 3,877 1,906 i
Georgia 4,635 3,843 791 i
Hawaii 196 138 i 58
Idaho 1,448 1,223 225
Illinois 12,371 11,196 1,175
Indiana 5,901 5,015 887
Iowa 2,098 1,513 585
Kansas 1,934 1,325 609
Kentucky 1,158 768 391
Louisiana 386 299 87 i
Maine 373 308 65
Maryland 5,124 3,445 1,679
Massachusetts 21,105 17,101 4,004
Michigan 17,077 15,421 1,656
Minnesota 6,975 6,403 571
Mississippi 269 198 71
Missouri 6,720 i 4,037 2,683 i
Montana 205 188 17 e
Nebraska 590 543 46 e
Nevada 631 576 55 e
New Hampshire 2,041 869 1,171
New Jersey 13,743 11,027 2,716
New Mexico 499 270 228
New York 13,818 10,794 3,024 i
North Carolina 8,091 6,125 1,966 i
North Dakota 271 247 24
Ohio 8,945 6,137 2,808
Oklahoma 607 543 64 e
Oregon 6,434 6,160 275
Pennsylvania 10,816 9,635 1,181 i
Rhode Island 542 479 63
South Carolina 1,089 936 153
South Dakota 135 121 14 e
Tennessee 1,586 1,365 221
Texas 16,373 13,674 2,700
Utah 2,809 2,275 533 i
Vermont 302 259 43
Virginia 4,994 i 2,877 2,116 i
Washington 15,699 15,195 504
West Virginia 279 252 28 i
Wisconsin 4,287 3,677 610
Wyoming 59 44 15
Undistributed fundsa 9,506 7,852 1,654

Sales, R&D Intensity, and Employment of Companies that Performed or Funded R&D

U.S. companies that performed or funded R&D reported domestic net sales of $10 trillion in 2014 (table 3).[2] For all industries, the R&D intensity was 3.5%; for manufacturers, 4.1%; and for nonmanufacturers, 2.7%. Manufacturing industries with high levels of R&D intensity in 2014 were pharmaceuticals and medicines (NAICS 3254) (13.4%), computer and electronic products (NAICS 334) (10.2%), and aerospace products and parts (NAICS 3364) (7.1%). Among the nonmanufacturing industries, industries with high levels of R&D intensity were scientific R&D services (NAICS 5417) (22.7%), computer systems design and related services (NAICS 5415) (9.2%), and information (NAICS 51) (5.8%).

Businesses that performed or funded R&D employed 21.5 million people in the United States in 2014. Approximately 1.5 million (7.0%) were R&D employees.[3] Not surprisingly, industries with high levels of R&D intensity also had high numbers of R&D employees in 2014: computer and electronic products (NAICS 334) (273,000 R&D employees), pharmaceuticals and medicines (NAICS 3254) (122,000), and aerospace products and parts (NAICS 3364) (61,000). Nonmanufacturing industry groups with high numbers of R&D employees were software publishers (NAICS 5112) (163,000), computer systems design and related services (NAICS 5415) (77,000), and scientific R&D services (NAICS 5417) (71,000) (table 3).

Capital Expenditures

Companies that performed R&D in the United States in 2014 spent $638 billion on assets with expected useful lives of more than 1 year (table 5). Of this amount, $28 billion (4.4%) was spent on structures, equipment, software, and other assets used for R&D: $17 billion by manufacturers and $10 billion by companies in nonmanufacturing industries. Manufacturing industry groups with high levels of capital expenditures on assets used for R&D in 2014 were semiconductor and other electronic products (NAICS 3344) ($3.5 billion), pharmaceuticals and medicines (NAICS 3254) ($2.8 billion), autombiles, bodies, trailers, and parts (NAICS 3361–63) ($1.2 billion), and aerospace products and parts (NAICS 3364) ($1.2 billion). Among the nonmanufacturing industries were software publishers (NAICS 5112) ($1.8 billion), telecommunications services (NAICS 517) ($1.5 billion), and computer systems design and related services (NAICS 5415) ($1.2 billion).

TABLE 5. Capital expenditures in the United States and for domestic R&D paid for and performed by the company, by type of expenditure, by industry and company size: 2014
(Millions of U.S. dollars)

* = amount < $500,000; i = more than 50% of value imputed.

NAICS = North American Industry Classification System; nec = not elsewhere classified.

a Capital expenditures are payments by a business for assets that usually have a useful life of more than 1 year. The value of assets acquired or improved through capital expenditures is recorded on a company’s balance sheet. BRDIS statistics exclude the cost of purchased land and assets acquired through mergers and acquisitions.
b Capital expenditures for long-lived assets used in a company's R&D operations are not included in its R&D expense, but any depreciation recorded for those assets is included in its R&D expense. For 2014, depreciation associated with domestic R&D performed and paid for by the company was $10.9 billion and with domestic R&D performed by the company and paid for by others was $1.2 billion.
c Includes the cost of purchased or improved buildings and other facilities that are fixed to the land.
d Includes the cost of other capital expenditures, including purchased patents and other intangible assets, and expenditures not distributed among the categories shown.

NOTES: Detail may not add to total because of rounding. Statistics are representative of companies located in the United States that performed R&D. Industry classification was based on dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned. Excludes data for federally funded research and development centers. The Business R&D and Innovation Survey does not include companies with fewer than five employees.

SOURCE: National Science Foundation, National Center for Science and Engineering Statistics, Business R&D and Innovation Survey, 2014.

Table 5 Source Data: Excel file
Used for domestic R&D
Selected industry, NAICS code, and company size Totala Totala,b Structuresc Equipment Capitalized
software		 All other and
undistributedd
All industries, 21–33, 42–81 638,268 27,775 2,599 11,564 6,094 i 7,518
Manufacturing industries, 31–33 261,798 17,465 2,049 8,833 1,602 i 4,981
Pharmaceuticals and medicines, 3254 16,560 2,801 700 1,371 247 i 483
Communication equipment, 3342 7,196 i 1,097 i 205 469 63 i 360 i
Semiconductor and other electronic products, 3344 13,632 i 3,461 i 75 i 1,914 i 353 i 1,119 i
Automobiles, bodies, trailers, and parts, 3361–63 34,055 i 1,192 112 452 173 i 455
Aerospace products and parts, 3364 19,912 1,181 297 765 37 i 82
Manufacturing nec, other 31–33 170,443 7,733 660 3,862 729 i 2,482
Nonmanufacturing industries, 21–23, 42–81 376,470 10,310 550 2,731 4,492 i 2,537
Software publishers, 5112 11,327 1,794 250 1,098 210 i 236
Telecommunications services, 517 73,536 1,508 * 390 i 843 i 274
Computer systems design and related services, 5415 7,773 i 1,227 i 10 128 302 i 787 i
Nonmanufacturing nec, other 21–23, 42–81 283,834 5,781 290 1,115 3,137 i 1,239
Size of company (number of domestic employees)
5–499 78,069 i 5,396 i 329 1,642 449 i 2,976 i
500–999 16,090 1,097 70 451 193 i 383
1,000–4,999 77,535 i 4,254 588 1,658 1,034 i 974
5,000–9,999 56,588 2,839 354 1,472 486 i 527
10,000–24,999 166,934 i 4,875 495 1,518 1,372 i 1,490
25,000 or more 243,052 9,313 764 4,823 2,559 i 1,167

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 2013, a total of 45,089 companies were sampled to represent the population of 1,971,959 companies; for 2014, a total of 44,162 companies were sampled, representing 1,998,858 companies. The actual numbers of reporting units in the sample that remained within the scope of the survey between sample selection and tabulation were 41,588 for 2013 and 40,953 for 2014. These lower counts represent the number of reporting units 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 fewer than five paid employees in the United States or had gone out of business in the interim. Of these in-scope reporting units, 73.6% were considered to have met the criteria for a complete response to the 2013 survey; 72.5% met the 2014 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: 2014 (http://www.nsf.gov/statistics/industry/). Individual detailed tables and tables with relative standard errors and imputation rates from the 2014 survey will be available in advance of the full report. For further information, contact Raymond M. Wolfe.

Note

[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.