Who has an R&D investment opportunity? Who goes ahead? How much do they invest?

Abstract

We know a lot about how much firms invest in R&D, but less about the critical first step which is a potential R&D opportunity. We use a large UK survey and detailed case study evidence to establish the chain of events from opportunity to the investment choice. Our results show that 34% of firms had identified an R&D investment opportunity. Realised R&D investment projects were typically between £100,000 and £1/2 m over a 5‐year window. The dominant factors were firm size, industry, equity investment, knowledge and absorptive capacity. The process of R&D management also had an outward, market facing aspect, and an inward, engineering and financial aspect that were often conducted in parallel.