Decline in corporate R&D Spending during 2009 downturn
By siliconindia   |   Thursday, 04 November 2010, 11:31 IST
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Decline in corporate R&D Spending during 2009 downturn
New York: Total R&D spending among the world's top spenders on innovation dropped in 2009 for the first time in the 13 years studied, according to a study by Booz named 2010 Global Innovation 1000. The study discovered that the 1,000 companies that exhausted most on research and development dwindled their total R&D spending by 3.5 percent to $503 billion in 2009. This went after a relatively strong 2008 during which R&D spending sustained to grow despite the recession. At the same time, revenues for the Innovation 1000 plunged 11 percent in 2008 than 2009 - nearly three times the rate of decline in R&D spending. As a result R&D spending as a percentage of revenue actually increased. Auto industry accounted for two-thirds of the overall spending decline with computing and electronics industry keeping top spot as biggest total spender on R&D. The survey which identifies the capabilities needed to innovate successfully also points out that Japan saw largest percentage drop in R&D spending among regions studied. "It's no surprise that the worldwide recession finally caught up with the world's top innovation spenders in 2009, causing them to trim their innovation budgets. However, the relatively modest cuts in R&D spending compared to much larger declines in revenues demonstrates the continued importance of innovation as a critical component of corporate strategy to companies in every industry," said Barry Jaruzelski, Partner at Booz. Some of the key findings of the study also reveals that more than half of all companies tracked cut their R&D spending in 2009 and nearly all the cuts came in just three industries: Auto, computing and electronics, and industrials. Despite a waning in R&D spending, computing and electronics preserved its top spot as the industry that spent the most on innovation, while auto stayed put at number three. Pharmaceutical giant Roche Holding took the top position for innovation spending, having boosted its R&D spend 11.6 percent to $9.1 billion, replacing Toyota Motor, which cut spending nearly 20 percent and fell to fourth place. But interestingly companies headquartered in China and India boosted R&D spending by 41.8 percent, although from a small base, as they account for only 1 percent of total Global Innovation 1000 corporate R&D spending. The study analyzes capabilities needed to successfully innovate and asserted that spending does not correlate with success.

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