2.2R&D expenditure in business enterprises: BERD

By Felix Bracht (KU Leuven), Julie Delanote (KU Leuven), Machteld Hoskens (KU Leuven), Wytse Joosten (KU Leuven), and Laura Verheyden (KU Leuven).

In this chapter we give an overview of expenditure for in-house R&D by business enterprises in Flanders. The numbers reported are derived from the R&D 2018 survey for business enterprises in Flanders.

It should be noted that the results presented in this chapter do not constitute the full BERD (Business Expenditures on Research & Development), but only the share contributed by business enterprises themselves. The results of the collective research centers serving business enterprises are omitted in the discussions in this chapter even though they formally belong to BERD. The contribution of those collective research centers serving business enterprises to BERD is usually fairly limited and their results will be discussed together with those of other non-profit institutions, such as government institutions, higher education institutions, and private non-profit institutions in a separate chapter on expenditure for in-house R&D in non-profit institutions.

Chapter 2.2.1 briefly describes the methodology used in the R&D 2018 survey for business enterprises in Flanders. The survey followed international guidelines as set out in the OECD Frascati Manual (2002, 2015) and in European Commission Regulation EC 995/2012. It also followed national guidelines established by the federal working group CFS-STAT.

In chapter 2.2.2 expenditure for in-house R&D of business enterprises in Flanders is broken down by economic sector. Two types of economic sector breakdowns are considered: the economic sector for which those R&D activities are performed (named “product field” in Eurostat publications) and the economic sector of the main activities of the enterprises performing them. Sometimes the main activity and the product field of enterprises differ. For example, some enterprise groups have their R&D activities conducted by head offices or by separate R&D service centers. The main activities of those separate entities are then “head office” or “R&D services” respectively, but the product field of their R&D activities then corresponds to the branch in which the group is active (e.g. pharmaceutical industry, manufacturing of soaps and detergents, car manufacturing, …). In both classifications four sectors account for roughly three quarters of the total expenditure on in-house R&D by business enterprises in Flanders: Chemical/Pharmaceutical industry (NACE 20-21), Movie and music business/Telecom/ICT/Engineering/Technical tests/R&D (NACE 59-63, 71-72), Computer/Electronic and optical products (NACE 26-27), and Machines/Vehicles (NACE 28-30).

Chapter 2.2.3 presents expenditure for in-house R&D of business enterprises in Flanders by enterprise size. One observes that the largest enterprises (500 or more employees) account for roughly half of the total expenditure on in-house R&D of business enterprises in Flanders.

Chapter 2.2.4 presents expenditure for in-house R&D of business enterprises in Flanders by a broad typology of R&D activities of those enterprises (top 50; remaining enterprises with permanent R&D; enterprises with occasional R&D; all other enterprises not yet included in the register of known or assumed R&D performers). The top 50 R&D performers account for more than half of the total expenditure for in-house R&D by business enterprises in Flanders.

Chapters 2.2.5 and 2.2.6 describe the R&D intensity of business enterprises in Flanders by considering expenditure on in-house R&D relative to the turnover of those enterprises. In chapter 2.2.5 the results of R&D intensity in financial terms (as a percentage of turnover) are broken down by economic sector. Again, two types of economic sector breakdowns are considered: the economic sector for which those R&D activities are performed (named “product field” in Eurostat publications) and the economic sector of the main activities of the enterprises performing them. In both breakdowns, R&D intensity in financial terms is highest in Chemical/Pharmaceutical industry (NACE 20-21), Movie and music business/Telecom/ICT/Engineering/Technical tests/R&D (NACE 59-63, 71-72), and Computer/Electronic and optical products (NACE 26-27). In chapter 2.2.6 the results of R&D intensity in financial terms (as a percentage of turnover) are broken down by enterprise size. It can be seen that especially micro firms with fewer than 10 employees are relatively R&D intensive, i.e. even though in absolute terms their contribution to the total expenditure for in-house R&D of business enterprises in Flanders is low, in relative terms, when related to their turnover, their expenditure for in-house R&D is considerable, compared to what is observed for larger business enterprises.