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Corporate R&D Hits Record High, Does It Matter?

Mark Marich

The world’s largest 1,000 public corporate R&D spenders recently hit a record high of US$638 billion ensuring life-changing innovation at every turn. Or does it?

The latest edition of the Global Innovation 1000 study from Booz & Company argues that it ‘how the money is spent’ is much more important than ‘how much’. To back up the claim, it released a list of the world’s top 10 R&D spenders as well as a list of the world’s 10 most innovative companies.

There wasn’t much overlap.

Volkswagen of Germany tops the money list at $11.4 billion, followed by (in order): Samsung (South Korea—$10.4B), Roche (Switzerland—$10.2B), Intel (U.S.—$10.1B), Microsoft (U.S.—$9.8B), Toyota (Japan—$9.8B), Novartis (Switzerland—$9.3B), Merck (U.S.—$8.2B), Pfizer (U.S.—$7.9B) and Johnson & Johnson (U.S.—$7.7B). 

Contrast that list with the most innovative companies where, coincidentally, all but one are from the U.S. Apple comes out on top for the fourth straight year, followed by (in order): Google, Samsung, Amazon, 3M, General Electric, Microsoft, IBM, Tesla Motors and Facebook. 

The only two to make it on both lists are Samsung (from South Korea) and Microsoft.   

Other key findings from this year's Global Innovation 1000 study:

  • R&D spending in 2013 rose by 5.8 percent from the previous year, signaling a return to the long-term growth trend after two years of faster growth following the recession.
  • Regionally, companies headquartered in China increased R&D spending by 35.8 percent and added 50 percent more companies to the Global Innovation 1000 from 2012 to 2013 both the highest percentage increases of any major country. Although China's spending growth rate remains significantly higher than that of any other region, this is the second-lowest increase for the country in the last five years.
  • Ninety percent of R&D spending worldwide in 2013 was from companies headquartered in North America, Europe, and Japan.
  • R&D spending in Europe grew by 4.5 percent despite the region's ongoing economic pressures, slower than the global average.
  • Japan's R&D spending decreased by 3.6 percent in 2013, marking the first time since the 2008-09 recession that any major economy reported a decrease in R&D spending.
  • Computers & electronics, healthcare, and automotive remained the three largest industries in terms of total R&D spend in 2013, representing 65 percent of the global total.

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