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none defined
ment levels for the year ahead. The survey also explores the averaging more than $50 million (Table 2). The majority
geographical dispersion of R&D facilities, the top concerns of respondents have global reach; taken together, surveyed
of R&D managers, their views about a variety of macro companies operate at least 378 labs outside the United
trends, and the factors leading to variance between actual States, spread across 49 countries. China continues to host
and projected spending levels for the year. the largest share of these labs, with 45 companies reporting
In the 2016 survey, respondents reported expecting labs located there, followed by Germany (33), the UK (25),
a period of inertia in 2017 or at least a slowing of the pre- India (21), France (19), and Canada (18).
vious year’s growth. This year’s survey, administered in late
2017 to ask about 2018 expectations, reveals a return to the Expectations for R&D Investment
optimistic sentiment seen in the 2015 forecast. The overall The data collected by IRI’s R&D Trends Forecast survey is
sense of this year’s results is that energy is high, with sur- broken down into several categories designed to offer
vey participants expecting to create new technologies and focused glimpses of specific areas of R&D investment. The
new businesses, hire more staff, and invest more heavily survey’s first and primary goal is to map expectations
in training that staff for the demands of an ever-changing regarding spending levels for the coming year. Historical
marketplace. data, viewed through the lens of IRI’s sea change index,
This year, the analysis is based on data from 95 gives this annualized snapshot a bit of context, and
respondent organizations, 63 of which are IRI member industry-specific analyses capture R&D spending
organizations. Some respondents left some questions expectations, and the forces driving them, for representa-
unanswered; the average number of responses to each tive industries. Analyses of R&D leaders’ views on the
question on the survey is approximately 86. Due to the forces shaping the business ecosystem over the coming
changing membership of IRI and the voluntary nature of years add context to the other data.
the survey, the mix of companies represented fluctuates After four consecutive years of mostly positive growth
each year. However, we believe there are enough responses expectations, with a minor slowdown heading into 2017,
from a large enough cross-section of industries to provide the 2017 survey results show R&D spending expectations
reliable insight into general trends. climbing again. Participants report a highly optimistic out-
look going into 2018, with strong focus on investing in
the creation of new technologies and new businesses and
Innovation Research Interchange (IRI) is an inclusive membership organ-
ization with nearly 200 global members in private-sector companies and a rising interest in big data analytics, artificial intelligence,
federally funded laboratories. Founded in 1938, we lead and advance the machine learning, and all things digital.
field of innovation management by creating contemporary practices. Some Overall, 59 percent of respondents reported expecting an
of the world’s most widely adopted models—including open innovation,
increase in R&D spending in 2018; only 29 percent reported
the front end of innovation, and Stage-Gate—were born from the work
of our members. We value strength in cooperation and partner with other anticipating little or no change, and 13 percent are expecting
organizations at the forefront of developments in innovation management, a decrease in total R&D spending (Table 3). Breaking spend-
creating a hub for all to convene and contribute in an experimental, non- ing projections down by focus reveals significant interest in
competitive, and noncommercial environment. For more information about
IRI, visit www.iriweb.org
support for new business ventures, with 67 percent of
respondents expecting an increase in spending in this
DOI: 10.1080/08956308.2018.1399021
Copyright © 2018, Innovation Research Interchange. category and only 2 percent expecting a decrease. Support
Published by Taylor & Francis. All rights reserved. for existing businesses is expected to take a hit this year, with
trends over time data both suggest an overall positive positive upswings from last year. The big change in this
sentiment in most spending categories, with a leveling year’s results is the large downturn in sentiment regarding
off of highly optimistic sentiment over the past three support for existing businesses.
years. Since 2015, the sea change for total R&D spending
indicates a strong rise in optimism (Figure 3). This opti- Trends by Industry Sector
mism continues going into 2018, although to a slightly The survey asks for information about participants’
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lesser degree for overall R&D spending than for other industry segment; the data are analyzed by industry
categories. This picture supports the annual analysis, which segment to examine where the biggest changes are taking
also shows an overall positive sentiment; it also supports place and which factors are most affecting particular
the notion that optimism is holding steady despite concerns industries. To be included in the segmentation data, an
about the state of innovation and the economy. industry sector must be represented by at least 5 percent
Breaking total R&D spending into its constituent parts of respondents. This year, qualifying industrial segments
provides a more detailed view of the changes taking place, included chemicals (24 companies), food/beverage (11),
showing where sentiment is changing and how (Figure 4). industrial equipment (11), consumer products (7), con-
In this year’s survey, anticipated total R&D spending can struction companies (7), and government/nonprofit (6).
be seen leveling off while anticipated spending on new The data on spending across these segments largely align
business projects and directed basic research both show with the overall survey results, with a few exceptions
(Figure 5). One of those exceptions is
in total spending. The overall sea
change index for total R&D spending
hovers just above þ40 percent, a highly
positive rating, but the segmentation
analysis shows consumer product and
government/nonprofit organizations
anticipating declines in 2018 R&D
budgets. These two sectors show a
similar downturn in sentiment around
capital spending for R&D as well.
Segmentation also offers some
interesting perspectives on the over-
all data. Some trends appear to make
a stronger showing when data are
segmented by industry, skewing
more strongly either positive or
negative in particular industries. For
instance, sentiment regarding sup-
port for existing businesses is nega-
tive in the overall data and in
almost every segment, but industrial
equipment manufacturers expect an
increase in this category. Similarly,
while there is rising optimism in
most industrial segments, and in
FIGURE 2. Anticipated effects of recent policy actions on 2018 R&D budgets
the sample as a whole (with the
TABLE 4. Most significant factors in differences between actual and projected 2017 spending, by industry
Changing Changed Lack of
business/ emphasis Strategy Lack of Schedule technical
market conditions on growth change personnel delays success
Construction 57% — — 29% 14% —
Consumer Products 72% 14% — 14% — —
Food/Beverage 27% 45% 19% — 9% —
Government/Nonprofit 66% — — — 17% 17%
Industrial Equipment 9% 28% 45% 9% 9% —
Chemicals 30% 26% 9% 13% 22% —
All 37% 23% 14% 12% 12% 2%
þ40 percent to around þ20 percent; these data suggested a rarely has either experienced the emergence and scaling
decline in sentiment towards collaboration. This year’s up of a new product in a short time.
results, however, show participation in alliances and Finally, the overall showing in sentiment toward
joint ventures rising again, surging to a five-year high of contracts with federal labs was positive, but very few
þ50 percent. industrial segments reported expecting an increase in
Analyzing collaboration data across industry segments such contracts—but neither did any segment expect a
reveals no significant differences from the overall picture decline in federal lab contracts. On the whole, sentiment
(Figure 8). Several sectors appear to expect no real change toward collaboration is highly positive heading into 2018,
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in collaborative stances in 2018, but in most cases, the among survey respondents as a whole and across industrial
nature of the industry offers a strong potential explanation sectors.
for the continued stability. The construction sector, for
example, shows little change in expectations for contracts Global R&D
with federal labs or academia; as construction firms do To track shifting global investment trends, we ask survey
not tend to rely on these institutions for R&D, this finding respondents in which countries their organizations
is not surprising. A similar explanation may account for the maintain R&D facilities. These data show that trends
lack of change in expectations for spinoffs in both construc- toward an increasingly globalized R&D approach continue.
tion companies and industrial equipment manufacturers. In 2017, responding organizations have labs in every
Both sectors work with long-term development cycles; region of the globe (Table 6), and in nearly 50 countries
Innovation Tactics
In addition to the analysis of R&D
leaders’ expectations for R&D invest-
ments, this year’s survey introduced
several new questions devised to
tease out the tactics these
companies use to innovate, as the
choice of tactics can offer insight
about how and where organizations
see themselves growing. To establish
context for these tactics, we first
asked about two key factors, one
internal and one external. First, we
asked about expected R&D budgets
over the next five years; a large
majority of respondents (88 percent)
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