Research and development definition

Research and development definition includes characterization of two interrelated processes in the company or whole industry, which result in the application of technological innovations, new products or improvements of the products. According to the official nomenclature research & development (R&D) is systematic creative work undertaken to increase the knowledge of man, culture and society, and the search for new solutions based on this knowledge.

Areas of research and development activity

To define research and development, three areas of activity should be distinguished:

• basic Research,
• applied research,
• development work (prototypes making, testing).

Basic research performed at the level of theory and experiments have the goal to increase knowledge concerning the causes of phenomena and events, and their results can be applied in practice or not. Basic research does not apply to the economic primacy of their usefulness.

Applied research, in contrast to the previous category, uses knowledge to enable the achievement of practical goals or seeking applications for the results of basic research,

Development work consist in the use of the existing body of knowledge for the development of new or significantly improve existing products, processes or services. This is also the production of prototypes and pilot plants.

Research and development is related to the development of new products (product innovation) and processes (process innovation), performed by company's development team or acquired from other units should be seen as a kind of innovative activity. Research and development are the first stage of product life cycle.

Research and development facilities

Following organizations are involved in various research and development activities:

• R & D units - units separated in terms of organizational, legal and financial state.
• Public and private universities, carrying out research and development,
• Research libraries and archives
• Industrial companies, usually with their own R & D facilities (laboratories, offices, engineering, technology development facilities, etc.) leading R & D next to their core business,
• Other, including hospitals conducting research and development alongside its core business.

Objectives of research & development processes

Expenditures on Research and Development activities include current expenditure incurred for basic research, applied research and development and capital expenditures on fixed assets associated with R & D activities, regardless of source of funds. The measure used to determine their size is the ratio of GERD (Gross Domestic Expenditure on R & D).

Concluding remarks on research and development definition

According to a study commissioned by the European Commission in 2005 the companies issued on research and development a total of 371 billion EUR, i.e. about 7% more than in 2004. European companies increased their spending for this purpose in the previous year by 5.5%. Most investments in R & D takes place in industries such as automotive, pharmaceutical and IT.

Advantages of Research and development

• Research and development (R&D) provides a platform for companies to stay competitive in their respective industries by offering innovative solutions and products.
• R&D helps to reduce costs associated with development of new products and services.
• Companies can explore new opportunities and reach new markets by leveraging their R&D capabilities.
• R&D can help to increase the knowledge base of the company, which can then be used to create new products and services.
• It can enable companies to develop more efficient and effective processes, leading to improved operational efficiency.
• R&D allows companies to stay ahead of the competition by utilizing cutting-edge technologies.
• It can help to create a culture of innovation within the organization, leading to improved productivity.

Limitations of Research and development

• Research and Development (R&D) is a broad field of activity and can encompass activities such as product design, market research, testing and evaluation, process development and improvement. As such, it can be difficult to define and measure the results of R&D activities.
• Research and Development can involve high levels of risk as it is difficult to predict the outcomes of innovations. Firms may invest in R&D but may not see any immediate return on their investments.
• Research and Development is a costly process and many firms may find it difficult to commit the necessary capital to R&D.
• Research and Development can be a slow process, with the outcomes of R&D activities not being realised for several years.
• Research and Development is subject to the changing trends and preferences of customers, meaning that firms must be continuously adapting their R&D efforts to meet customer needs.
• Research and Development can be difficult to manage and control, as the outcomes may be uncertain and difficult to measure.
• Research and Development can also be difficult to protect, as firms may find it difficult to protect their intellectual property and maintain their competitive advantage.

Other approaches related to Research and development

Research and development definition can also include:

• The systematic process of exploration, experimentation, analysis and implementation to create new technologies, products and services.
• The process of exploring, understanding and improving existing products, services or processes.
• The process of exploring and understanding new or existing markets and the products and services that meet those needs.
• The process of developing and testing new products or services to meet customer needs.
• The process of creating new products, services or processes to meet customer needs.

In summary, research and development definition includes the systematic process of exploration, experimentation, analysis and implementation to create new technologies, products and services; the process of exploring, understanding and improving existing products, services or processes; the process of exploring and understanding new or existing markets and the products and services that meet those needs; the process of developing and testing new products or services to meet customer needs; and the process of creating new products, services or processes to meet customer needs.

Research and development definition — recommended articles

Innovation — Functional strategy — Innovation management — Development cost — Methods of restructuring — Measurement of innovation — Innovative research — Innovation and change — Transformational outsourcing

References

• Bass, B. M. (1999). Two decades of research and development in transformational leadership. European journal of work and organizational psychology, 8(1), 9-32.
• Bhagat, S., & Welch, I. (1995). Corporate research & development investments international comparisons. Journal of Accounting and Economics, 19(2), 443-470.
• Cantwell, J., & Piscitello, L. (2005). Recent location of foreign-owned research and development activities by large multinational corporations in the European regions: the role of spillovers and externalities. Regional Studies, 39(1), 1-16.
• Levin, R. C., Klevorick, A. K., Nelson, R. R., Winter, S. G., Gilbert, R., & Griliches, Z. (1987). Appropriating the returns from industrial research and development. Brookings papers on economic activity, 1987(3), 783-831.

Author: Katarzyna Mizera