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Research and development (R&D,R+D, or R'n'D), known in Europe as research and technological development (RTD), refers to innovative activities undertaken by corporations or governments in developing new services or products, or improving existing services or products.Research and development constitutes the first stage of development of a potential new service or the production process.
R&D activities differ from institution to institution, with two primary modelsof an R&D department either staffed by engineers and tasked with directly developing new products, or staffed with industrial scientists and tasked with applied research in scientific or technological fields, which may facilitate future product development. R&D differs from the vast majority of corporate activities in that it is not intended to yield immediate profit, and generally carries greater risk and an uncertain return on investment. However R&D is crucial for acquiring larger shares of the market through the marketisation of new products.
New product design and development is often a crucial factor in the survival of a company. In a global industrial landscape that is changing fast, firms must continually revise their design and range of products. This is necessary as well due to the fierce competition and the evolving preferences of consumers. Without an R&D program, a firm must rely on strategic alliances, acquisitions, and networks to tap into the innovations of others.
A system driven by marketing is one that puts the customer needs first, and produces goods that are known to sell. [ citation needed ]Market research is carried out, which establishes the needs of consumers and the potential niche market of a new product. If the development is technology driven, R&D is directed toward developing products to meet the unmet needs.
In general, research and development activities are conducted by specialized units or centers belonging to a company, or can be out-sourced to a contract research organization, universities, or state agencies.In the context of commerce, "research and development" normally refers to future-oriented, longer-term activities in science or technology, using similar techniques to scientific research but directed toward desired outcomes and with broad forecasts of commercial yield.
Statistics on organizations devoted to "R&D" may express the state of an industry, the degree of competition or the lure of progress.Some common measures include: budgets, numbers of patents or on rates of peer-reviewed publications. Bank ratios are one of the best measures, because they are continuously maintained, public and reflect risk.
In the United States, a typical ratio of research and development for an industrial company is about 3.5% of revenues; this measure is called "R&D intensity".[ citation needed ] A high technology company, such as a computer manufacturer, might spend 7% or a pharmaceutical companies such as Merck & Co. 14.1% or Novartis 15.1%. Anything over 15% is remarkable, and usually gains a reputation for being a high technology company such as engineering company Ericsson 24.9%, or Allergan a biotech company, tops the spending table with 43.4% investment Such companies are often seen as credit risks because their spending ratios are so unusual.[ citation needed ]
Generally such firms prosper only in markets whose customers have extreme high technology needs, like certain prescription drugs or special chemicals, scientific instruments, and safety-critical systems in medicine, aeronautics or military weapons. [ citation needed ]The extreme needs justify the high risk of failure and consequently high gross margins from 60% to 90% of revenues.[ citation needed ] That is, gross profits will 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.[ citation needed ]
On a technical level, high tech organizations explore ways to re-purpose and repackage advanced technologies as a way of amortizing the high overhead.[ citation needed ] They often reuse advanced manufacturing processes, expensive safety certifications, specialized embedded software, computer-aided design software, electronic designs and mechanical subsystems.[ citation needed ]
Research from 2000 has shown that firms with a persistent R&D strategy outperform those with an irregular or no R&D investment program.
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".Research is the most risky financing area because both the development of an invention and its successful realization carries uncertainty including the profitability of the invention. One way entrepreneurs can reduce these uncertainties is to buy the licence for a franchise, so that the know-how is already incorporated in the licence.
In general, it has been found that there is a positive correlation between the research and development and firm productivity across all sectors, but that this positive correlation is much stronger in high-tech firms than in low-tech firms.In research done by Francesco Crespi and Cristiano Antonelli, high-tech firms were found to have "virtuous" Matthew effects while 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. While the strength of the correlation 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.
Business R&D is risky for at least two reasons. The first source of risks comes from R&D nature, where R&D project could fail without residual values. The second source of risks comes from takeover risks, which means R&D is appealing to bidders because they could gain technologies from acquisition targets.Therefore, firms may gain R&D profit that co-moves with takeover waves, causing risks to the company which engages in R&D activity.
Global R&D management is the discipline of designing and leading R&D processes globally, across cultural and lingual settings, and the transfer of knowledge across international corporate networks.
President Barack Obama requested $147.696 billion for research & development in FY2012, of which 21% was destined to fund basic research.According to National Science Foundation in U.S., in 2015, R&D expenditures performed by federal government and local governments are 54 and 0.6 billions of dollars.
Research and innovation in Europe are financially supported by the programme Horizon 2020, which is open to participation worldwide.
A notable example is the European environmental research and innovation policy, based on the Europe 2020 strategy which will run from 2014 to 2020,a multidisciplinary effort to provide safe, economically feasible, environmentally sound and socially acceptable solutions along the entire value chain of human activities.
In 2015, research and development constituted an average 2.2% of the global GDP according to the UNESCO Institute for Statistics.
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In business theory, a disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances. The term was defined and first analyzed by the American scholar Clayton M. Christensen and his collaborators beginning in 1995, and has been called the most influential business idea of the early 21st century.
A startup or start-up is a company or project initiated by an entrepreneur to seek, effectively develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend to become registered, startups refer to the new businesses that intend to grow large beyond the solo founder. Startups face high uncertainty and have high rates of failure, but a minority of them do go on to be successful and influential. Some startups become unicorns, i.e. privately held startup companies valued at over US$1 billion.
Innovation in its modern meaning is "a new idea, creative thoughts, new imaginations in form of device or method". Innovation is often also viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. Such innovation takes place through the provision of more-effective products, processes, services, technologies, or business models that are made available to markets, governments and society. An innovation is something original and more effective and, as a consequence, new, that "breaks into" the market or society. Innovation is related to, but not the same as, invention, as innovation is more apt to involve the practical implementation of an invention to make a meaningful impact in the market or society, and not all innovations require an invention. Innovation often manifests itself via the engineering process, when the problem being solved is of a technical or scientific nature. The opposite of innovation is exnovation.
In business and engineering, new product development (NPD) covers the complete process of bringing a new product to market. A central aspect of NPD is product design, along with various business considerations. New product development is described broadly as the transformation of a market opportunity into a product available for sale. The product can be tangible or intangible, though sometimes services and other processes are distinguished from "products." NPD requires an understanding of customer needs and wants, the competitive environment, and the nature of the market. Cost, time and quality are the main variables that drive customer needs. Aiming at these three variables, innovative companies develop continuous practices and strategies to better satisfy customer requirements and to increase their own market share by a regular development of new products. There are many uncertainties and challenges which companies must face throughout the process. The use of best practices and the elimination of barriers to communication are the main concerns for the management of the NPD.
The New Economy referred to the on-going development evolved from the notions of the classical economy as a result not only from the transition from a manufacturing-based economy to a service-based economy, but also meant the new horizons resulted from the constant emerging of new parameters of new technology and innovations. This popular use of the term started from the dot-com bubble of the late 1990s, where high growth, low inflation and high employment of this period led to overly optimistic predictions and many flawed business plans.
A science park is defined as being a property-based development that accommodates and fosters the growth of tenant firms and that is affiliated with a university based on proximity, ownership, and/or governance. This is so that knowledge can be shared, innovation promoted, and research outcomes progressed to viable commercial products. Science parks are also often perceived as contributing to national economic development, stimulating the formation of new high-technology firms, attracting foreign investment and promoting exports.
Company competition, or competitiveness, pertains to the ability and performance of a firm, sub-sector or country to sell and supply goods and services in a given market, in relation to the ability and performance of other firms, sub-sectors or countries in the same market. It involves one company trying to figure out how to take away market share from another company.
Science and technology in Brazil has entered the international arena in recent decades. The central agency for science and technology in Brazil is the Ministry of Science and Technology, which includes the CNPq and Finep. This ministry also has a direct supervision over the National Institute for Space Research, the National Institute of Amazonian Research, and the National Institute of Technology (Brazil). The ministry is also responsible for the Secretariat for Computer and Automation Policy, which is the successor of the SEI. The Ministry of Science and Technology, which the Sarney government created in March 1985, was headed initially by a person associated with the nationalist ideologies of the past. Although the new minister was able to raise the budget for the science and technology sector, he remained isolated within the government and had no influence on policy making for the economy.
In marketing strategy, first-mover advantage (FMA) is the advantage gained by the initial ("first-moving") significant occupant of a market segment. First-mover advantage may be gained by technological leadership, or early purchase of resources.
Venture capital financing is a type of funding by venture capital. It is private equity capital that can be provided at various stages or funding rounds. Common funding rounds include early-stage seed funding in high-potential, growth companies and growth funding. Funding is provided in the interest of generating a return on investment or ROI through an eventual exit such as a merger and acquisition,, or Initial public offering, of the company.
A business cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. Clusters are considered to increase the productivity with which companies can compete, nationally and globally. Accounting is a part of the business cluster. In urban studies, the term agglomeration is used. Clusters are also important aspects of strategic management.
The Agency for Science, Technology and Research is a statutory board under the Ministry of Trade and Industry of Singapore.
In business management theory, the smiling curve is a graphical depiction of how value added varies across the different stages of bringing a product on to the market in an IT-related manufacturing industry. The concept was first proposed around 1992 by Stan Shih, the founder of Acer Inc., an IT company headquartered in Taiwan. According to Shih's observation, in the personal computer industry, the two ends of the value chain – conception and marketing – command higher values added to the product than the middle part of the value chain – manufacturing. If this phenomenon is presented in a graph with a Y-axis for value-added and an X-axis for value chain, the resulting curve appears like a "smile".
The technology life-cycle (TLC) describes the commercial gain of a product through the expense of research and development phase, and the financial return during its "vital life". Some technologies, such as steel, paper or cement manufacturing, have a long lifespan while in other cases, such as electronic or pharmaceutical products, the lifespan may be quite short.
Research and development intensity or simply R&D intensity, is generally defined as expenditures by a firm on its research and development (R&D) divided by the firm's sales. There are two types of R&D intensity: direct and indirect. R&D intensity varies, in general, according to a firm's industry sector, product knowledge, manufacturing, and technology, and is a metric that can be used to gauge the level of a company's investment to spur innovation in and through basic and applied research. A further aim of R&D spending, ultimately, is to increase productivity as well as an organization's salable output.
The Agricultural Technology Research Program (ATRP) is part of the Aerospace, Transportation and Advanced Systems Laboratory of the Georgia Tech Research Institute. It was founded in 1973 to work with Georgia agribusiness, especially the poultry industry, to develop new technologies and adapt existing ones for specialized industrial needs. The program's goal is to improve productivity, reduce costs, and enhance safety and health through technological innovations.
The Norwegian paradox is a dilemma of Norway's economic performance where economic performance is strong despite low R&D investment.
Financial technology, often shortened to fintech, is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It is an emerging industry that uses technology to improve activities in finance. The use of smartphones for mobile banking, investing services, and cryptocurrency are examples of technologies aiming to make financial services more accessible to the general public. Financial technology companies consist of both startups and established financial institutions and technology companies trying to replace or enhance the usage of financial services provided by existing financial companies.
Innovation in Malaysia describes trends and developments in innovation in Malaysia.
Science and technology in Kazakhstan outlines government policies to develop science, technology and innovation in Kazakhstan.