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The R&D economy

 

At times like the present, when the economic system is the main factor to be determined in all kinds of production calculations, the interest in studying the causes and effects resulting from the direct and indirect costs of private sector economic activities would not go amiss. Seeking to reduce costs to the minimum is becoming the main task of companies’ management teams. This reduction of outflows leads to cutbacks in non-productive systems, such as research on products and processes.

 

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Research or R&D should not be solely construed as a system used to seek out new products or technologies that can provide greater profits or low-cost production processes or materials, rather they should also be understood as including non-technological search models, such as commercialisation systems or means to increase market share. In 2012, 20.5% of the innovation that came about in companies was based on non-technological systems. Organisational systems accounted for 16.9% of this figure (of which 52% was aimed at seeking a response to client needs and 56.8% to quality) and commercial systems accounted for 11.2%, of which 48.1% was earmarked to increasing market share. The aeronautical industry was one of the industrial sectors which invested most heavily in non-technological systems, with 54.4% of total investment.

A study of productive sectors and the investments made in research reveals that it is high and medium-high-technology companies dedicated to production which have placed a firm wager on development and the search for new elements that offer competitiveness and profitability in both manufacturing as well as in commercial and management systems.

 

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Expenditure on research should not only be earmarked to the cost of manufactured products, as it also consists of a variety of other important variables that should be taken into account.

Principally, the costs deducted for the personnel needed to carry out R&D have to be addressed. In 2012, 12.1 per thousand of the working population were exclusively dedicated to R&D.

 

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As regards obtaining the resources to address the needs produced by research, funding tends to come mainly from within companies, though the public administrations often provide funding for research and can be of great help. The aid obtained and the business funding in the country can be broken down in 2012 as follows: the public administrations accounted for 43.1%, funds from abroad amounted to 6.6%, higher education accounted for 3.9% and private non-profit institutions for 0.6%. At a national level, funding by companies amounted to 45.6% of the total. In addition, it is significant to note that 80.4% of R&D funding in the private sector came from within companies themselves.

One of the main values that is often taken into account when research is conducted in the private sector is attaining commercial competitiveness for the company, providing it with the means and resources to make production effective and profitable, thereby increasing the profit / expenditure ratio as much as possible. However, a company’s expenditure on research involves an effort it has to undertake before reaching definitive results that can provide it with profits, an analysis of which is therefore quite important for the company’s management team.

The company’s management has to seriously address the question of up to what extent it should prime the profit factor over research. The percentage of a company’s profits is the main aim of its operations. Hence, its management team sets the limits of that percentage in order to determine the profitability of its production and processes. That percentage has to fall when the company takes the decision to fund an R&D project, taking into account the data on where the funding comes from, by what percentage, what the necessary expenditure for it is and profitability.

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