A digest from Frascati Manual

for a quick approach to R&D definition

by Carlos Figueira
Futurcapital, November 2010

Frascati Manual
Proposed Standard Practice for Surveys on Research and Experimental Development
OECD
2002

About Frascati

Frascati is a town and comune in the province of Rome in the Latium region of central Italy. It
is located 20 km south-east of Rome, on the Alban Hills close to the ancient city of Tusculum.
Frascati is closely associated with science, being the location of several international scientific
laboratories.

During the latter half of the 1950s, the first Italian accelerator was developed in Frascati by
INFN, and the INFN still has its high energy physicslaboratory in the town. Frascati now also
hosts the following laboratories:
• Earth Observation missions of the European Space Agency are based in ESRIN in
Frascati.
• Research facilities of ENEA are on the INFN site.
• The Spaceguard Foundation is based here.
• Frascati Tokamak Upgrade is a tokamak based here.

The OECD's Frascati Manual, a methodology for research and development statistics,
originated in a meeting at the Villa Falconieri in June 1963.

Organisation for Economic Co-operation and Development (OECD)

Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and
which came into force on 30th September 1961, the Organisation for Economic Co-
operation and Development (OECD) shall promote policies designed:
• to achieve the highest sustainable economic growth and employment and a
rising standard of living in Member countries, while maintaining financial
stability, and thus to contribute to the development of the world economy;
• to contribute to sound economic expansion in Member as well as nonmember
• countries in the process of economic development; and

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 • to contribute to the expansion of world trade on a multilateral,
nondiscriminatory basis in accordance with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada, Denmark,
France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the
United States. The following countries became Members subsequently through
accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th
January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th
May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland
(22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14th
December 2000). The Commission of the European Communities takes part in the
work of the OECD (Article 13 of the OECD Convention).

OECD Methodological Manuals

R&D
Frascati Manual: Proposed Standard Practice for Surveys of Research and Experimental
Development (OECD 2002)

Innovation
OECD Proposed Guidelines for Collecting and Interpreting Technological Innovation
Data – Oslo Manual (OECD, 1997a)

Research and experimental development (R&D) Input and Output

• Innovation surveys are an attempt to measure outputs and the effects of the
innovation process in which R&D plays an important role.
• Technological innovation activities are all of the scientific, technological,
organisational, financial and commercial steps, including investments in new
knowledge, which actually, or are intended to, lead to the implementation of
technologically new or improved products and processes.
• Data on the utilisation of scientific and technical personnel provide
• concrete measurements for international comparisons of resources devoted
• to R&D.
• R&D facilities are standardised equipment, library facilities, laboratory space,
journal subscriptions and
• standardised computer time would all be possible measures.

Research and experimental development (R&D) comprise creative work undertaken on

a systematic basis in order to increase the stock of knowledge, including knowledge of
man, culture and society, and the use of this stock of knowledge to devise new
applications.

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Basic research is experimental or theoretical work undertaken primarily to acquire new
knowledge of the underlying foundation of phenomena and observable facts, without
any particular application or use in view. Applied research is also original investigation
undertaken in order to acquire new knowledge. It is, however, directed primarily
towards a specific practical aim or objective.

Experimental development is systematic work, drawing on existing knowledge gained

from research and/or practical experience, which is directed to producing new
materials, products or devices, to installing new processes, systems and services, or to
improving substantially those already produced or installed. R&D covers both formal
R&D in R&D units and informal or occasional R&D in other units.

Activities to be excluded from R&D

For survey purposes, R&D must be distinguished from a wide range of related activities
with a scientific and technological basis. These other activities are very closely linked to
R&D both through flows of information and in terms of operations, institutions and
personnel, but as far as possible, they should be excluded when measuring R&D.

These activities will be discussed here under four headings:

– Education and training
– Other related scientific and technological activities
– Other industrial activities
– Administration and other supporting activities

All education and training of personnel in the natural sciences, engineering, medicine,
agriculture, the social sciences and the humanities in universities and special
institutions of higher and post-secondary education should be excluded.

The specialised activities of Collecting, Coding, Recording, Classifying, Disseminating,

Translating, Analysing, Evaluating by Scientific and technical personnel, Bibliographic
services, Patent services, Scientific and technical information, extension and advisory
services, Scientific conferences are to be excluded, except when conducted solely or
primarily for the purpose of R&D support (e.g. the preparation of the original report of
R&D findings should be included in R&D).

The boundaries of R&D

The basic criterion for distinguishing R&D from related activities is the presence in R&D
of an appreciable element of novelty and the resolution of scientific and/or
technological uncertainty, i.e. when the solution to a problem is not readily apparent
to someone familiar with the basic stock of common knowledge and techniques for the
area concerned.

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Supplementary criteria for separating R&D from related scientific, technological and
industrial activities:

A. What are the objectives of the project?

B. What is new or innovative about this project?
• Is it seeking previously undiscovered phenomena, structures or
relationships?
• Does it apply knowledge or techniques in a new way?
• Is there a significant chance that it will result in new (extended or deeper)
understanding of phenomena, relationships or manipulative principles of
interest to more than one organisation?
• Are the results expected to be patentable?
C. What staff is working on the project?
D. What methods are being used?
E. Under what programme is the project funded?
F. How general are the findings or results of the project likely to be?
G. Does the project fall more naturally into another scientific, technological or
industrial activity?
Source: OECD

In small and medium-size enterprises (SMEs)

There is usually no special R&D department, and R&D problems are mostly dealt with
under the general heading “design and drawing”. If calculations, designs, working
drawings and operating instructions are made for the setting up and operating of pilot
plants and prototypes, they should be included in R&D. If they are carried out for the
preparation, execution and maintenance of production standardization (e.g. jigs,
machine tools) or to promote the sale of products (e.g. offers, leaflets, catalogues of
spare parts), they should be excluded from R&D.

“If the primary objective is to make further technical improvements on the product or
process, then the work comes within the definition of R&D. If, on the other hand, the
product, process or approach is substantially set and the primary objective is to
develop markets, to do pre-production planning or to get a production or control
system working smoothly, the work is no longer R&D.”

Prototypes
A prototype is an original model constructed to include all the technical characteristics
and performances of the new product.

Trial production
After a prototype has been satisfactorily tested and any necessary modifications made,
the manufacturing start-up phase may begin. It is related to full-scale production; it
may consist of product or process modification or retraining personnel in the new
techniques or in the use of new machinery.
Unless the manufacturing start-up phase implies further design and engineering, it
should not be counted as R&D, since the primary objective is no longer to make further
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improvements to the products but to start the production process. The first units of a
trial production run for a mass production series should not be considered as R&D
prototypes even if they are loosely described as such.

Trouble-shooting
Trouble-shooting occasionally shows the need for further R&D, but more frequently it
involves the detection of faults in equipment or processes and results in minor
modifications of standard equipment and processes. It should not, therefore, be
included in R&D.

“Feedback” R&D
After a new product or process has been turned over to production units, there will
still be technical problems to be solved, some of which may demand further R&D. Such
“feedback” R&D should be included.

Industrial design
The vast bulk of design work in an industrial area is geared towards production
processes and as such is not classified as R&D. There are, however, some elements of
design work which should be considered as R&D. These include plans and drawings
aimed at defining procedures, technical specifications and operational features
necessary to the conception, development and manufacturing of new products and
processes.

Identifying R&D in software development

The model on which the Manual was originally based was that of institutionally
structured R&D in the natural sciences and engineering leading to tangible
technological innovations in primary and secondary industries.

Software development has since become a major intangible innovation activity with a
high R&D content. In addition, an increasing share of relevant activities draws on the
social sciences and humanities and, together with advances in computing, leads to
intangible innovations in service activities and products, with growing contributions
from service industries in the business enterprise sector.

For a software development project to be classified as R&D, its completion must be

dependent on a scientific and/or technological advance, and the aim of the project
must be the systematic resolution of a scientific and/or technological uncertainty.

Software development is an integral part of many projects which in themselves have

no element of R&D. The software development component of such projects, however,
may be classified as R&D if it leads to an advance in the area of computer software.
Such advances are generally incremental rather than revolutionary. Therefore, an
upgrade, addition or change to an existing programme or system may be classified as
R&D if it embodies scientific and/or technological advances that result in an increase in
the stock of knowledge. Use of software for a new application or purpose, however,
does not by itself constitute an advance.
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The following examples illustrate the concept of R&D in software.

Should be included in R&D:

– R&D producing new theorems and algorithms in the field of theoretical computer
science.
– Development of information technology at the level of operating systems,
programming languages, data management, communications software and software
development tools.
– Development of Internet technology.
– Research into methods of designing, developing, deploying or maintaining software.
– Software development that produces advances in generic approaches for capturing,
transmitting, storing, retrieving, manipulating or displaying information.
– Experimental development aimed at filling technology knowledge gaps as necessary
to develop a software programme or system.
– R&D on software tools or technologies in specialised areas of computing (image
processing, geographic data presentation, character recognition, artificial intelligence
and other areas).

Software-related activities of a routine nature which do not involve scientific and/or

technological advances or resolution of technological uncertainties are not to be
included in R&D.

Examples are:
– Business application software and information system development using known
methods and existing software tools.
– Support for existing systems.
– Converting and/or translating computer languages.
– Adding user functionality to application programmes.
– Debugging of systems.
– Adaptation of existing software.
– Preparation of user documentation.

In the systems software area, individual projects may not be considered as R&D but
their aggregation into a larger project may qualify for inclusion. For example, changes
in file structure and user interfaces in a fourth-generation language processor may be
made necessary by the introduction of relational technology. The individual changes
may not be considered R&D if viewed in their own right, but the entire modification
project may result in the resolution of scientific and/or technological uncertainty and
thus be classified as R&D.

Criteria for identifying R&D in services

The following are among the criteria that can help to identify the presence of R&D in
service activities:

– Links with public research laboratories.

– The involvement of staff with PhDs, or PhD students.
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– The publication of research findings in scientific journals, organisation of scientific
conferences or involvement in scientific reviews.
– The construction of prototypes or pilot plants

Examples of R&D in some other service activities:

– Analysis of the effects of economic and social change on consumption and leisure
activities.
– Development of new methods for measuring consumer expectations and
preferences.
– Development of new survey methods and instruments.
– Development of tracking and tracing procedures (logistics).
– Research into new travel and holiday concepts.
– Launch of prototype and pilot stores.

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