R&D (Research and Development)

Research and development process commonly referred to as the R&D process is a model of numerous innovative and out of the box activities powered by science and technology to develop or enhance the products and services in private, public, and social sectors of the industries [1].

Contents

1. History of Research & Development
2. How Does R&D Model Work?
3. Global Size of Research & Development Industry
4. Risks and Benefits of Setting R&D Center
4.1 Benefits
4.2 Risks
5. Types of Research and Development
5.1 Basic Research
5.2 Applied Research
5.3 Experimental Research
6. Major Companies That Used R&D Successfully
7. R&D Cost Worldwide
References

History of Research & Development

The term research and development has evolved through many decades of the 20th century. The first time, the term ‘research workers’ was introduced in 1906 by James M Cattell [2], the editor of Science magazine. Until the 1930s, the term research or science was common, but later on, the US National Research Council’s report mentioned that research is development, nothing else [2]. In 1945, the acronym R&D for research and development was first coined but the R&D meaning was explained as two separate entities by the National Research Council report. With the start of General Electric GE company in 1890 [3], the concept of corporate R&D began, but at that time the term ‘research and development’ was not used as a recognized term. At present, R&D is a well-known concept in all private and public sector organizations and many of them have at least one research and development center worldwide.

How Does R&D Model Work?

Different R&D models are applied in different technological spheres such as electronics, information technology, and others. The basic concept of R&D working model is based on three major activities as listed below [4]:

  • Developing technical knowledge
  • Finding supporting areas of business
  • Developing and implementing new technologies

The entire process of research and development can be carried out through a comprehensive cycle of software research and development consisting of four major phases.

  • Synthesizing and theorizing
  • Exploring and clarifying
  • Designing and developing
  • Implementing and assessing

To implement the basic working models of research and development, two major models are chosen. In the first model, the engineers and scientists are hired directly to develop a product based on an innovative idea or a theory. This type of research takes more vigorous technical research to find out the right technical solution required for the desired product. In the other model, industrial scientists are hired who are tasked to use applied research in the field of science and technology to devise a new solution. In this model, the research and development team uses the existing technologies and scientific knowledge for building an innovative product or service. Both of those models follow either previously adopted processes [5] or devising local processes about their respective research and development projects.

Global Size of Research & Development Industry

The total size of the research and development industry is about $1.7 trillion [6]. The major contributors to this huge industry are developed countries like the US, Japan, Korea, UK, and other European countries. China is also investing significantly nowadays. The average R&D spending of the world is about 2.218% of the global GDP [7]. South Korea is the top country that spends about 4.55% of its GDP followed by Israel with 4.55% spending. Many Western European and North American countries spend more than 2% to 3% of their respective GDPs. The United States spends about 2.79% of its GDP on research and development.

Risks and Benefits of Setting R&D Center

Setting up an R&D center is a risky, unpredictable, and vague return on investment ROI projects. Long-term gains are possible in R&D work, but the risks are also high. A few major risks and benefits are listed below.

Benefits

  • Develops competitive edge
  • Long-term regular returns
  • Company reputation
  • Helping the domain of industry
  • Pioneering growth and development
  • Increased productivity

Risks

  • Over 50% project failure rate
  • Vague ROI
  • Uncertainty in outcome
  • Intellectual property theft
  • Risk of alternative technology
  • Patent and regulatory issues

Types of Research and Development

Research and development R&D has transformed into a standard domain of industry, which is governed by the proper industrial standards, documentation, methodologies, and types. There are three types of research and development mentioned below [8].

Basic Research

The basic research is a fundamental type of R&D, which started when people started thinking of new things and ideas of learning. In this type of research, the theories and experiments are carried out to gain knowledge of basic scientific principles, observable facts, and phenomena. This type of research is not designed to achieve some kind of business application from the knowledge acquired through this type of research. The research and development consulting experts believe that the majority of the research works carried out centuries ago were based on this type of research.

Applied Research

This form of research deals with a deeper investigation into the existing technology, process, or system for achieving further knowledge. The applied research is driven by the properly defined objectives and goals of the research.

Experimental Research

Consistent and systematic activities to obtain more knowledge from past researches, which were conducted through experiments and practical observations. In this research type, the research and development consultant or engineer focuses mainly on improving the existing products, processes or services.

Major Companies That Used R&D Successfully

Almost all major companies in computer technology, software development [9], electronics, pharmaceutical, and other major industries are using their respective R&D centers effectively for creating innovation and developing new technologies and products. The share of big corporations working in the field of software, defense computer, telecom, and pharmaceutics is huge as compared to the other industries. For example, Lockheed Martin spent over $1.2 in 2017 [10].

A few major companies that have their dedicated R&D center are listed below.

  • Lockheed Martin
  • Pfizer Pharma
  • Microsoft Corporation
  • Cisco Systems
  • And many others

R&D Cost Worldwide

The standard recommendation for research and development expenditure for a country is about 2% to 3% of the GDP, but most developing countries allocated much lower budgets for R&D than the recommended amount [11]. A few countries like Israel, Japan, Germany and others spend more than 3 to 4 percent of their respective GDPs. The research and development salary of an R&D engineer in a few major countries is shown in the table.

USA UK Germany Israel Japan Ukraine
$ annual $98,833 [12] $47,502 [13] $77,448 [14] $71,006 [15] $55,374 [16] $19,447 [17]

If we look at the average salaries of an R&D engineer in different countries, we will conclude that opening a research and development center in Ukraine is the best option in terms of cost, quality, and location.

See Also

References

  1. https://www.investopedia.com/terms/r/randd.asp
  2. http://www.csiic.ca/PDF/Gegenworte.pdf
  3. https://saylordotorg.github.io/text_international-business/s17-01-an-introduction-to-research-an.html
  4. https://www.bmc.com/blogs/innovation-r-and-d
  5. https://www.researchgate.net/publication/225251613_Communities_of_development_A_new_model_for_RD_work
  6. http://uis.unesco.org/apps/visualisations/research-and-development-spending
  7. https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS
  8. https://www.nsf.gov/statistics/randdef/rd-definitions.pdf
  9. https://mobilunity.com/blog/research-and-development-in-software
  10. https://www.statista.com/statistics/270233/percentage-of-global-rundd-spending-by-industry
  11. https://eml.berkeley.edu/~bhhall/papers/BHH06_IESS_R&D.pdf
  12. https://www.indeed.com/salaries/r&d-engineer-Salaries
  13. https://www.indeed.co.uk/salaries/r&d-engineer-Salaries
  14. https://www.payscale.com/research/DE/Job=Senior_Research_%26_Development_(R%26D)_Engineer/Salary
  15. https://www.glassdoor.com/Salaries/israel-rd-mechanical-engineer-salary-SRCH_IL.0,6_IN119_KO7,29.htm
  16. https://www.glassdoor.com/Salaries/japan-rd-engineer-salary-SRCH_IL.0,5_IN123_KO6,17.htm
  17. https://www.salaryexpert.com/salary/job/randd-engineer/ukraine
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