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Research and Development (view source)
Revision as of 17:32, 10 February 2016
, 17:32, 10 February 2016→Corporate R&D
==Corporate R&D==
===Status Quo===
Much of today's research is still dominated by the largest firms. Corporations with more than 10,000 employees account for more than half of research spending, while small businesses with less than 500 employees account for less than one-fifth of R&D expenditures. [http://iveybusinessjournal.com/publication/rethinking-corporate-research-and-development/]
Research today is dominated by the very largest of firms.[http://files.eric.ed.gov/fulltext/ED502863.pdf (Berkley)] Corporations with over 10,000 employees still account for more than half the research spending. Those with fewer than 500 employees, a traditional definition of small a business, account for less than one-fifth of the total expenditures. These same patterns hold internationally.[http://iveybusinessjournal.com/publication/rethinking-corporate-research-and-development/]
Josh Lerner, the Jacob H. Schiff Professor of Investment Banking at Harvard Business School, says companies have been too fickle in their commitment to new innovation initiatives. A historical lack of commitment in the corporate venture domain has made employees less likely to join a corporate venturing group they fund, entrepreneurs reluctant to accept their funds, independent venture funds hesitant to syndicate investments with these groups, and corporate funded start-ups find collaborations harder to arrange. In each case, the very real possibility that the rug will be pulled out from under the corporate venture initiative leads others to be reluctant to work alongside them.
A general problem for firms is figuring out how to offer appropriate rewards for those within research laboratories. Lerner says the key for finding these rewards is partially removing some of the stigma from the failure for corporate innovators. One of the reasons why failure is not an option in many corporate laboratories is that group leaders are loath to endanger continuing funding for their projects. A question which would reward both further research by economic theorists and real-world exploration is how to induce “truth telling” when evaluating high-risk innovative projects. Several examples exist of ways to address this problem, from venture groups who employ a “devil’s advocate” to make the case why a proposed investment should not be undertaken, to corporations who rely heavily on outside experts when making project funding decisions.
