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Persistence pays off

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Every year, thousands of companies across Canada take on R&D projects to advance science and develop new products and services. But according to the Research and Development in Canadian Industry Survey, only a minority of these companies maintain R&D programs over long periods.

Of the 31,200 companies doing some form of R&D from 1994 to 2002, only 5% (1,700 firms) were ‘persistent’ R&D performers. The survey grouped firms according to their annual R&D spending—a gauge of the strength of a firm’s R&D program. It found that the R&D spending group a firm belonged to influenced their persistence with R&D.

Firms that spent $10 million or more on R&D in 1994 had longer-lasting programs than firms that spent less than $100,000 that year. Nearly one-third of the highest annual spenders reported R&D activity in all nine years from 1994 to 2002; only 3% of the lowest spending group—less than $100,000—reported undertaking R&D for that long. This pattern reflects different R&D approaches firms take—large spenders view R&D as a program, whereas small spenders see it as a short-term project.

Average annual R&D spending by all firms was $1.7 million in 2001 and $1.6 million in 2002—a reflection of the market setbacks in the ‘dot-com’ and telecommunications equipment sectors. Still, this was nearly triple the average annual spending in 1994. Moreover, the total spent on R&D by industry was projected to reach $14.8 billion in 2006, 86% more than in 1996. From 1994 to 2002, the number of firms spending $10 million or more per year on R&D nearly doubled.