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.[1]Research and development constitutes the first stage of development of a potential new service or the production process.
Europe is a continent located entirely in the Northern Hemisphere and mostly in the Eastern Hemisphere. It is bordered by the Arctic Ocean to the north, the Atlantic Ocean to the west, Asia to the east, and the Mediterranean Sea to the south. It comprises the westernmost part of Eurasia.
Research is "creative and systematic work undertaken to increase the stock of knowledge, including knowledge of humans, culture and society, and the use of this stock of knowledge to devise new applications." It is used to establish or confirm facts, reaffirm the results of previous work, solve new or existing problems, support theorems, or develop new theories. A research project may also be an expansion on past work in the field. Research projects can be used to develop further knowledge on a topic, or in the example of a school research project, they can be used to further a student's research prowess to prepare them for future jobs or reports. To test the validity of instruments, procedures, or experiments, research may replicate elements of prior projects or the project as a whole. The primary purposes of basic research are documentation, discovery, interpretation, or the research and development (R&D) of methods and systems for the advancement of human knowledge. Approaches to research depend on epistemologies, which vary considerably both within and between humanities and sciences. There are several forms of research: scientific, humanities, artistic, economic, social, business, marketing, practitioner research, life, technological, etc. The scientific study of research practices is known as meta-research.
R&D activities differ from institution to institution, with two primary models[1] of 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.[1]
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.
Applied science is the application of existing scientific knowledge to practical applications, like technology or inventions.
Return on investment (ROI) is a ratio between the net profit and cost of investment resulting from an investment of some resources. A high ROI means the investment's gains favorably to its cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments. In purely economic terms, it is one way of relating profits to capital invested. Return on investment is a performance measure used by businesses to identify the efficiency of an investment or number of different investments.
Background
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 strategic alliance is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. A strategic alliance will usually fall short of a legal partnership entity, agency, or corporate affiliate relationship. Typically, two companies form a strategic alliance when each possesses one or more business assets or have expertise that will help the other by enhancing their businesses. Strategic alliances can develop in outsourcing relationships where the parties desire to achieve long-term win-win benefits and innovation based on mutually desired outcomes.
A system driven by marketing is one that puts the customer needs first, and produces goods that are known to sell.[2]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.[citation needed]
Marketing is the study and management of exchange relationships. Marketing is the business process of creating relationships with and satisfying customers. With its focus on the customer, marketing is one of the premier components of business management.
Market research is an organized effort to gather information about target markets or customers. It is a very important component of business strategy. The term is commonly interchanged with marketing research; however, expert practitioners may wish to draw a distinction, in that marketing research is concerned specifically about marketing processes, while market research is concerned specifically with markets.
A niche market is the subset of the market on which a specific product is focused. The market niche defines the product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that it is intended to target. It is also a small market segment.
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.[citation needed] 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.[3]
In international law, a sovereign state, sovereign country, or simply state, is a nonphysical juridical entity that is represented by one centralized government that has sovereignty over a geographic area. International law defines sovereign states as having a permanent population, defined territory, one government, and the capacity to enter into relations with other sovereign states. It is also normally understood that a sovereign state is neither dependent on nor subjected to any other power or state.
Commerce relates to "the exchange of goods and services, especially on a large scale". It includes legal, economic, political, social, cultural and technological systems that operate in a country or in international trade.
Statistics on organizations devoted to "R&D" may express the state of an industry, the degree of competition or the lure of progress.[4] 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.
Statistics is a branch of mathematics working with data collection, organization, analysis, interpretation and presentation. In applying statistics to a scientific, industrial, or social problem, it is conventional to begin with a statistical population or a statistical model to be studied. Populations can be diverse groups of people or objects such as "all people living in a country" or "every atom composing a crystal". Statistics deals with every aspect of data, including the planning of data collection in terms of the design of surveys and experiments. See glossary of probability and statistics.
An industry is the production of goods or related services within an economy. The major source of revenue of a group or company is the indicator of its relevant industry. When a large group has multiple sources of revenue generation, it is considered to be working in different industries. Manufacturing industry became a key sector of production and labour in European and North American countries during the Industrial Revolution, upsetting previous mercantile and feudal economies. This came through many successive rapid advances in technology, such as the production of steel and coal.
Competition arises whenever at least two parties strive for a goal which cannot be shared: where one's gain is the other's loss.
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[5] 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.[6]
Business R&D
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".[7]
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.[8] 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.[9]
Benefit by sector
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.[10][11] 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.[12] 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.[13]
Global
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.[14]
Government expenditures
United States
President Barack Obama requested $147.696 billion for research & development in FY2012, of which 21% was destined to fund basic research.[15]
European Union
Research and innovation in Europe are financially supported by the programme Horizon 2020, which is open to participation worldwide.[16]
A notable example is the European environmental research and innovation policy, based on the Europe 2020 strategy which will run from 2014 to 2020,[17] a multidisciplinary effort to provide safe, economically feasible, environmentally sound and socially acceptable solutions along the entire value chain of human activities.[18]
↑ Ortega-Argiles, Raquel; Potters, Lesley; Vivarelli, Marco (2011). "R&D and productivity: testing sectoral peculiarities using micro data". Empirical Economics. 41 (3): 817–839. doi:10.1007/s00181-010-0406-3. hdl:10419/35059.
↑ 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): 1–22.
↑ Crespi, Francesco; Antonelli, Cristiano (2011). "Matthew Effects and R&D Subsidies: Knowledge Cumulability in High-Tech and Low-Tech Industries". Working Papers. Università degli Studi Roma Tre (140): 1–24.
↑ Mendonca, Sandro (2009). "Brave Old World: Accounting for 'High-Tech' Knowledge in 'Low-Tech' Industries". Research Policy. 38 (3): 470–482. doi:10.1016/j.respol.2008.10.018.
↑ Chiesa, V. (2001). R&D Strategy and Organisation, Imperial College Press
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.
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.
Technology transfer, also called transfer of technology (TOT), is the process of transferring (disseminating) technology from the person or organization that owns or holds it to another person or organization. It occurs along various axes: among universities, from universities to businesses, from large businesses to smaller ones, from governments to businesses, across geopolitical borders, both formally and informally, and both openly and surreptitiously. Often it occurs by concerted effort to share skills, knowledge, technologies, methods of manufacturing, samples of manufacturing, and facilities among governments or universities and other institutions to ensure that scientific and technological developments are accessible to a wider range of users who can then further develop and exploit the technology into new products, processes, applications, materials, or services. It is closely related to knowledge transfer. Horizontal transfer is the movement of technologies from one area to another. At present transfer of technology (TOT) is primarily horizontal. Vertical transfer occurs when technologies are moved from applied research centers to research and development departments.
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.
Productivity describes various measures of the efficiency of production. Often, a productivity measure is expressed as the ratio of an aggregate output to a single input or an aggregate input used in a production process, i.e. output per unit of input. Most common example is the (aggregate) labour productivity measure, e.g., such as GDP per worker. There are many different definitions of productivity and the choice among them depends on the purpose of the productivity measurement and/or data availability. The key source of difference between various productivity measures is also usually related to how the outputs and the inputs are aggregated into scalars to obtain such a ratio-type measure of productivity.
A science park is defined as being a property-based development that accommodates and fosters the growth of tenant firms and that are 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 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 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.
Clean technology is any process, product, or service that reduces negative environmental impacts through significant energy efficiency improvements, the sustainable use of resources, or environmental protection activities. Clean technology includes a broad range of technology related to recycling, renewable energy, information technology, green transportation, electric motors, green chemistry, lighting, Greywater, and more. Environmental finance is a method by which new clean technology projects that have proven that they are "additional" or "beyond business as usual" can obtain financing through the generation of carbon credits. A project that is developed with concern for climate change mitigation is also known as a carbon project.
The Agency for Science, Technology and Research is a statutory board under the Ministry of Trade and Industry of Singapore.
Although the European Union has legislated in the area of energy policy for many years, the concept of introducing a mandatory and comprehensive European Union energy policy was only approved at the meeting of the informal European Council on 27 October 2005 at Hampton Court. The EU Treaty of Lisbon of 2007 legally includes solidarity in matters of energy supply and changes to the energy policy within the EU. Prior to the Treaty of Lisbon, EU energy legislation has been based on the EU authority in the area of the common market and environment. However, in practice many policy competencies in relation to energy remain at national member state level, and progress in policy at European level requires voluntary cooperation by members states.
Pardis Technology Park (PTP) is a technology park, based in Pardis, a satellite city 20 kilometres (12 mi) outside of the Tehran metropolitan area, in Iran. The park has been proclaimed the "Silicon Valley of Iran".
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 Aho Group Report on Creating an Innovative Europe was published in 2006. The report was written by a four-member group chaired by Esko Aho, former Finnish Prime Minister. The committee was created at the Hampton Court summit in the United Kingdom (UK) in October 2005. The report focuses on the creation of innovation friendly markets, strengthening of R&D resources, increasing the structural mobility in Europe and to foster a culture which celebrates innovation.
Innovation economics is a growing economic theory that emphasizes entrepreneurship and innovation. In his 1942 book Capitalism, Socialism and Democracy, economist Joseph Schumpeter introduced the notion of an innovation economy. He argued that evolving institutions, entrepreneurs and technological changes were at the heart of economic growth. However, it is only in recent years that "innovation economy," grounded in Schumpeter's ideas, has become a mainstream concept".
The Norwegian paradox is a dilemma of Norway's economic performance where economic performance is strong despite low R&D investment.
EurObserv'ER is a consortium dedicated to the monitoring of the development of the various sectors of renewable energies in the European Union.
Professor Xiaolan Fu (傅晓岚), is a British-based Chinese economist. She is the Founding Director of the Technology and Management Centre for Development (TMCD), She is a Professor of Technology and International Development and Fellow of Green Templeton College.
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.
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