Definitions of R & D : report with evidence.
- Great Britain. Parliament. House of Lords. Science and Technology Committee.
- Date:
- 1990
Licence: Open Government Licence
Credit: Definitions of R & D : report with evidence. Source: Wellcome Collection.
73/148 (page 71)
![7 December 1989] [Continued [Chairman contd.] that we were asking the right questions. We then sent out a list of questions to 31 different organisations and at that time the sub-committee turned its attention to another subject, the greenhouse effect. We have now come back to this after having had all the answers to the questions in writing which have been worked on and digested. We are now trying to deal with the main points and we have not yet really tackled the Ministry of Defence. I do not know whether you would like to make some opening statement. Perhaps you could tell us just how important you think it is that definitions of R&D spending should be more accurate than perhaps they are today. First of all, that the definition should be right and that the revisions to them should be more accurate than they are because one has to ask oneself the question: for what purpose are we collecting all these figures and that will determine whether they are satisfactory or not. Perhaps you could give your views on that and finish up by saying whether you think the SSAP13 will make a significant difference to the accuracy of public knowledge of the research and development going on in industry? (Dr Tidd) The first thing is I think we would all agree that R&D is just one element of innovation or industrial innovation. There is only a tenuous link between R&D and competitiveness. It is not established in academia if there is any direct link. I think we all suspect intuitively there is a link and that link is probably the process of innovation. Again you are aware the OECD identifies seven stages in the innovation process but of those traditionally the only one you can measure easily (and it is still not easy to measure that) is R&D and one of the others is the number of scientific and technically trained personnel which OECD also ask for. These are two factors which are easy to quantify if not to define. In the case of R&D, yes measuring R&D is important therefore it follows that the definition should be as consistent as possible for the sake of international comparisons and comparisons across sectors but I think if our remit is to examine that question that is fine and we can discuss that. Perhaps a more important question is trying to get a handle on how important innovation is and measuring activity in that area; that is very difficult. We appreciate the initiative to try and improve the consistency of R&D and that is very important. It is only one factor, we believe, in the whole process of innovation. We feel having established R&D expenditure we need to move on perhaps and start looking at a broader picture of innovation, the general process of development, things like marketing, all these things that are in the same process and I think it is perhaps artificial to look at that one element in isolation. I am not sure whether we need to broaden the discussion or remit or focus on the definition of R&D. I think it is a worthwhile remit. Having said that, we believe in this country at least it is important to get across to decision makers there is more to innovation than R&D. Historically, the UK has been fairly efficient at performing R&D, although the actual sums spent are not that great compared with international competitors. It is translating R&D results into products and processes that the UK has been historically very weak at and that is another area of major concern. R&D is important but it is one element of this entire process of innovation. That is what the CBI is looking at, that is what we are trying to raise awareness of. There is more to innovation than R&D or technology. It is an entire process and perhaps the weakest link is downstream of formal R&D. To come to the second point, the accounting practice, again the focus is on R&D. That is very worthwhile because it is a thing which has been measured internationally for many years. In the US it has been a requirement to give expenditure on R&D since the 1970s. It has done companies no harm and there are signs of other benefits. This has become public knowledge. Yes, the revised accounting practices will benefit public knowledge of R&D, shareholders, analysts, research workers but I think it must be appreciated there are limitations, they are partial inputs to the process of innovation. They do not measure output or efficiencies and they are only one of the many inputs into the process of innovation. I think it would be wrong if we judged countries on their R&D expenditure. It must be useful but it is not the whole picture. 162. It is important that there should be an accurate reflection of what effort the firm is putting into research and development and important for the firm itself, important to shareholders and investors, important to Government but how important is it between one industry and another? (Dr Acres) If I could answer that one for you. In our experience it is very useful to be able to compare what a company is spending compared with its competitors in a given sector and also to compare sector to sector when one is discussing in-house how much one is spending, what one is spending it on, etc., etc.. Having a definition that is acceptable to one’s accountants on the one hand and maybe one’s sales and production people on the other in our experience has been very valuable. It gives us that opportunity to compare what we are doing with what maybe our competitors overseas are doing off a similar base. 163. So it is important the definition should be one which is common to different industries, common to different countries? (Dr Acres) For that purpose, yes. What one does with that figure and how it is broken down, whether that is by Frascati or by some modification of Frascati, that is the sort of second phase that Joe Tidd was talking about. So you have a number which is universally recognised as being a number related to R&D. Lord Nelson of Stafford 164. What you are saying is comparative values are more important than absolute values? (Dr Acres) They are at that first phase. There are various surveys being done, as some of you are well aware, within European industry by EIRMA, and in the States by IRI and similar organisations. There is a great deal of information available on how one industry compares with another, how individual companies within the individual sectors compare and where people have taken the trouble to classify R&D expenditure either into the three bands that Frascati](https://iiif.wellcomecollection.org/image/b32218540_0073.jp2/full/800%2C/0/default.jpg)
