The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&Dcompanies. Innovation in services will be increasingly important for economicgrowth and innovation processes differ from those in manufacturing. Servicesaccounted for 70 percent of total value added in the OECD in 2000. The share ofR&D in services was only 9 percent of total corporate R&D in Sweden 2003 (downfrom 12 percent in 2001) (NSF 2005b, OECD 2004, SCB 2004, Ruetsche 2005).Increasing R&D by small- and medium-sized companies. Large U.S. companies havegradually decreased their share of total industrial R&D. Companies with more than25,000 employees performed about 40 percent of total R&D in 2001, down from70 percent in 1981. At the same time, smaller companies (less than 1000 employees)increased their share from four to 25 percent (Figure 2-4, NSF 2005a). In Sweden, theshare of R&D by companies with less than 1000 employees was 26 percent in 2003(SCB 2004).Figure 2-4 Percentage of U.S. industrial R&D by size of company, number of employees.100%90%80%70%60%50%40%30%20%10%0%1981 1991 2001< 1,000 1,000- 5,000- 25,000+Source: NSF 2005a.Growth of external R&D. Companies are increasingly performing R&D outside theirown organizations (for example at other companies, institutes and universities). In theU.S., external manufacturing R&D (performed outside the company, but in the U.S.)grew faster than internal R&D during the last couple of years. External R&D grew withabout 5 percent annually between 1993 and 2001. External corporate R&D (performedoutside one’s own business unit, including abroad) increased with about 50 percent inSweden between 1997 and 2003. Of total external R&D, 65 percent was performed bydomestic or foreign affiliated companies (NSF 2004, SCB 2004).61