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(Adds expenditure data including R&D outsourced from other U.S. companies and executed at domestic locations in 2008 and 2007 in the second section of a discourse.)

The fragile state of the U.S. economic recovery has left ~ persons companies hoarding cash, deferring hiring, and keeping a close eye on their spending. At such times, research and development budgets can experience cuts as companies curtail outlays on the creation of new products and services—or enhancement of existing ones—to ride finished the economic uncertainty.

Domestic R&D spending by all U.S. companies inhuman 13.1 percent, to $233.92 billion, in 2008, the principally recent year for which data are available, from $269.27 billion in 2007, according to the National Science Foundation. (Including R&D paid by reason of by other U.S. concerns, but performed in U.S. companies’ domestic locations, spending rose to $283 billion in 2008 from $269 billion in 2007, according to the NSF.) During the prior recession, which was far milder, domestic R&D spending was from a thin to a dense state 0.5 percent, to $198.51 billion, in 2001 from $199.54 billion in 2000.

Yet equal amid the sharpest economic downturn since the Great Depression, the 232 companies in the Standard & Poor’s 500 exponent for which data were available increased their aggregate research and disclosure expenditures to $163.37 billion in 2008 and $166.42 billion in 2009 from $154.44 billion in 2007, in the sight of the recession began, according to Bloomberg data. (Of those 232 companies, 115 worn out more on R&D in both 2008 and 2009 than they did in 2007.)

The Technology Component

The gambol-up in R&D investment during the most recent downturn isn’t marvellous, given how technology is becoming a more integral component of products from quite manufacturers, not just within the technology sector.

"Modern corporations of whole kinds are more committed to innovation than they may have been 10 years ~ne," says Mark Blaxill, co-author of The Invisible Edge: Taking Your Strategy to the Next Level Using Intellectual Property. "A assign of the functionality from the technology industry is penetrating other industries. The car is flexure into a high-technology device." Yet even as spending is rise, companies increasingly are forming alliances in an effort to make their R&D dollars extent further.

Cuts in R&D may not signal a reduced pledged relation to innovation. Even outfits noted for their heavy emphasis on R&D, so as 3M (MMM), have pared their R&D budgets because that before the 2008-09 recession. (3M’s $1.29 billion R&D packet in 2009 was down 5.8 percent from 2007.) R&D expenditure often ebbs and flows as specific projects are launched and completed. Declines in R&D in the ended couple years may reflect deep cuts that many companies made in employee bonuses for the time of the recession, rather than an actual reduction in headcount for a congregation’s most highly skilled personnel, says Scott Davis, an equity analyst at Morgan Stanley who covers 3M and other R&D-serving to add force companies. "Confidence in R&D comes down to the [sum up] of heads you’re willing to hire," he says.

More Support Efforts

Even as more industries are becoming dependent on technology, a major shift in R&D spending has taken place from true innovation to product support—the incremental modifications to existing products that are conferred to serve the changing needs of an established customer base, says Michael Brown, president of StrategyMark, a cunning practice consulting firm in Wilmington, Del., that specializes in the chemical activity.

The flat rate of U.S. patent filings over the gone by three years would seem to confirm that companies are tilting more toward product support R&D and away from innovation, says Blaxill. Companies are other thing likely to file patents on so-called transformative R&D, that looks beyond existing technologies to future needs and requirements, while a smaller graduate of products that can be classified as support R&D are deemed virtuous of a patent, he says.