**TECHNICAL NOTES FOR 1969**

**Scope of Study**

The National Science Foundation sponsored its first survey of industrial
research and development in 1953. Since then, the scope of the survey
has gradually been expanded and refined in response to an increasing
need for more detailed information on the Nation's R&D effort.

The 1969 industry survey is the 13th in the annual series sponsored by
the Foundation and conducted by the Bureau of the Census, U.S.
Department of Commerce. The Foundation also sponsored two industry
surveys covering the 1953--56 period, which were conducted by the Bureau
of Labor Statistics (BLS), U.S. Department of Labor.[^1] Data obtained
in the BLS surveys are not directly comparable with the Census figures
for 1957--69 because of methodological and other differences in the
surveys conducted by the two agencies. In addition, the Census surveys,
beginning in 1957, have collected data on the R&D activities of
Federally Funded Research and Development Centers (FFRDCs) operated by
business firms, whereas the earlier BLS surveys did not. To account for
the R&D performance of these research centers in 1956, Census adjusted
data for that year (collected in the 1957 survey) to provide comparable
trend data for 1956 and earlier years.

The statistics, presented in this report are subject to response and
concept errors caused by differences between survey and industry
concepts and definitions of R&D activities and by variations in company
accounting procedures. Consequently, the accuracy of the data provided
by respondents is subject to some variation.

Since the first industry survey in 1953, the quality of the data has
improved substantially. This is due mainly to more accurate and
sophisticated accounting procedures adopted by respondents. In addition,
the Foundation and the Bureau of the Census have continued their efforts
to reduce response and concept errors arising from difficulties in
interpreting or applying survey definitions.

**Survey Definitions**

*Research and development---*Basic and applied research in the sciences
and engineering and the design and development of prototypes and
processes. This definition excludes quality control, routine product
testing, market research, sales promotion, sales service, research in
the social sciences or psychology, and other nontechnological activities
or technical services.

*Basic research---*Original investigations for the advancement of
scientific knowledge not having specific commercial objectives, although
such investigations may be in fields of present or potential interest to
the reporting company.

*Applied research---*Investigations directed to the discovery of new
scientific knowledge having specific commercial objectives with respect
to products or processes. This definition differs from that of basic
research chiefly in terms of the objectives of the reporting company.

*Development---*Technical activities of a nonroutine nature concerned
with translating research findings or other scientific knowledge into
products or processes. Does not include routine technical services to
customers or other activities excluded from the above definition of
research and development.

*Funds for R&D performance---*Operating expenses incurred by a company
in the conduct of research and development in its own laboratories or
other company‑owned or ‑operated facilities. Includes wages and
salaries, materials, and supplies consumed, property and other taxes,
maintenance and repairs, depreciation, and an appropriate share of
overhead, but excludes capital expenditures. Funds for R&D performance
are expressed in current dollars rather than in constant dollars.

*Federally-financed R&D performance---*Receipts for work done by the
company on R&D contracts or subcontracts and R&D portions of procurement
contracts and subcontracts.

*Company‑financed R&D performance---*Cost of the company‑sponsored
research and development performed within the company. Does not include
company‑financed research and development contracted to outside
organizations, such as research institutions, universities and colleges,
or other nonprofit organizations.

*R&D scientists and engineers---*Those engaged full time in research and
development and the full-time equivalent of those working part time.
Scientists and engineers are defined as persons engaged in scientific or
engineering work at a level which requires a knowledge of physical,
life, engineering, or mathematical sciences equivalent at least to that
acquired through completion of a 4‑year college course with a major in
one of those fields.

*Total employment---*Total number of persons employed by the company in
all activities during the pay period which includes the 12th of March.
These data are not completely comparable with employment of R&D
scientists and engineers data which are collected (1) as of January and
(2) on a man‑year basis.

*Net sales and receipts---*Recorded dollar values for goods sold or
services rendered by a company to customers outside the company,
including the Federal Government, less such items as returns,
allowances, freight charges, and excise taxes. Excludes domestic
intracompany transfers as well as sales by foreign subsidiaries, but
includes transfers to foreign subsidiaries. Net sales and receipts
figures are expressed in current dollars rather than constant dollars.

*R&D concentration---*Tables showing R&D concentration ranked by size of
R&D program, not by volume of sales.

*Geographic area covered---*Includes only those operations located in
the 50 States and the District of Columbia.

**Explanation of Tabular Data**

*Industry classification---*Industries and industry groups shown
separately in statistical tables are classified according to their
*Standard Industrial Classification Manual*[^2] codes as follows:

Food and kindred products (20)

Textiles and apparel (22, 23)

Lumber, wood products, and furniture (24, 25)

Paper and allied products (26)

Chemicals and allied products (28)

Industrial chemicals (281‑82)

Drugs and medicines (283)

Other chemicals (284‑89)

Petroleum refining and extraction (29, 13)[^3]

Rubber products (30)

Stone, clay, and glass products (32)

Primary metals (33)

Ferrous metals and products (331‑32, 3391, 3399)

Nonferrous metals and products (333‑36, 3392)

Fabricated metal products (34)

Machinery (35)

Electrical equipment and communication (36, 48)^3^

Radio and TV receiving equipment (365)

Communication equipment and electronic components (366‑67, 48)

Other electrical equipment (361‑64 and 369)

Motor vehicles and other transportation equipment (371, 373‑75, 379)

Aircraft and missiles (372, 19)[^4]

Professional and scientific instruments (38)

Scientific and mechanical measuring instruments (381‑82)

Optical, surgical, photographic, and other instruments (383‑87)

Other manufacturing industries---Tobacco manufactures (21), printing and
publishing (27), leather products (31), and miscellaneous manufacturing
industries (39)

Nonmanufacturing industries---Agriculture, forestry, and fisheries
(07‑09); mining (10‑12, 14); contract construction (15‑17);
transportation and other public utilities (41‑47, 49); wholesale and
retail trade (5059); finance, insurance, and real estate (60‑67); and
selected service industries (739, 807, 891).

*Company size‑class---*The size of a company as determined by the total
number of its employees. The four company size-classes used in this
report are less than 1,000 employees; 1,000‑4,999 employees; 5,000‑9,999
employees; and 10,000 or more employees.

*Classification, of reporting units---*The company or corporate family
which includes all establishments under common ownership or control.
Similarly, each company was classified in a single size-category on the
basis of its total employment.

*Cost per R&D scientist or engineer---*The number of R&D scientists and
engineers used to estimate the cost per R&D scientist or engineer for
196--79 is the number of man‑years; between 1957 and 1966, the
arithmetic mean of the numbers of R&D scientists and engineers reported
in each industry for January in 2 consecutive years was used.

*Nonavailability of certain statistics---*Estimates withheld for not
meeting publication standards for reasons such as excessively high
associated sampling error of estimate; high rate of imputation because
of failure of companies to report; possible disclosure of data of an
individual company; or cases where data were inconsistent for inclusion
in a time series. In tables, the term "not separately available but
included in total" indicates statistics could not be published for any
of these reasons.

*Method of* computation---Detailed statistics in the tables may not add
to totals or subtotals because of rounding. Also, percentages were
calculated on the basis of thousands of dollars and may differ from
those based on the rounded figures shown.

**Methodology of Survey**[^5]

The sample used for the 1969 Survey of Industrial Research and
Development represented all manufacturing industries, and those
nonmanufacturing industries shown in earlier, more detailed samples to
conduct or finance research and development. As in previous years, the
survey was a mail canvass. However, for the 1969 survey, approximately
1,100 companies which reported less than \$200,000 in R&D expenditures
in 1968 were not required to report. Data for these companies were
estimated at their 1968 levels. These companies accounted for less than
2 percent of total R&D expenditures.

In manufacturing, the sampling unit was the company, defined as all
establishments under common ownership or control. All manufacturing
companies with greater than 1,000 employees in 1963 were included in the
sample with certainty.[^6] The source for sampling multi‑unit
manufacturing companies was the 1963 Census Enterprise Statistics
multi‑unit file. Single‑unit manufacturing companies were sampled from
the 1963 Census universe file. The nonmanufacturing sample was drawn
from the 1966 records of the Social Security Administration.

Approximately 8,000 manufacturing and nonmanufacturing companies are
included in the sample. More than 1,800 of these are certainty companies
(those with greater than 1,000 employees and others in selected
industry‑size strata) and they accounted for almost 95 percent of the
total R&D performance funds. Tables A-1 and A-2 show the probabilities
of selection applied for each industry-size stratum.

Each year the annual Department of Defense and National Aeronautics and
Space Administration lists of R&D contractors are reviewed to insure
that the large contractors are included in the sample. For the 1969
survey, the 80 largest companies from the Department of Defense list and
the 50 largest National Aeronautics and Space Administration contractors
were included in the sample with certainty regardless of their industry
class and employment size. The 80 largest companies from the Department
of Defense list accounted for 94 percent of the total funds of all
companies listed. The 50 largest companies from the National Aeronautics
and Space Administration list accounted for 96 percent of the total
funds of all companies listed.

The particular sample selected is one of a large number of samples of
the same type and size that, by chance, might have been selected.
Estimates from each of the different samples would differ somewhat from
each other, and from the results of a complete canvass conducted under
essentially the same conditions as the survey. This variation among the
possible estimates is defined by the sampling error, measured in
standard error units. The complete canvass total would be included in
the range---

\(1\) From one standard error below to one standard error above the
derived estimate for about two-thirds of all possible samples.

\(2\) From two standard errors below to two standard errors above the
derived estimate for about 95 percent of all possible samples.

\(3\) From three standard errors below to three standard errors above
the derived estimate, almost always.

These values may be interpreted as defining approximate probabilities
that the estimate shown would differ from a complete canvass total by as
much as one, two, or three standard errors, respectively.

For example, if an estimate is shown as 400, with an associated relative
standard error of 2 percent, the chances are roughly two out of three
that the complete canvass total would lie between 392 and 408; the
chances are roughly 19 out of 20 that the complete canvass total would
lie between 384 and 416; and it is almost certain that the complete
canvass total would lie between 376 and 424.

As stated, the standard error refers only to sampling variations. In
addition to the sampling errors as measured by the standard error, the
estimates are subject to errors in response, coding, processing, and
imputation for nonresponse. These nonsampling errors would also occur if
a complete canvass were to be conducted under the same conditions as the
survey.

The 1969 standard errors of estimates for each industry, for all
companies and for those with less than 1,000 employees, are shown in
Table A‑3.

The forms for the survey were mailed in April 1970, and nonrespondents
were followed up by mail. The basic form used was the Form RD‑1, but
since total R&D performance funds and total Federal funds expended by
industry for research and development are included in the Census
Bureau\'s statistical program, the very few large companies that did not
reply were mailed the census mandatory Form MA‑121. Less than 1 percent
of total R&D funds were obtained in this way and included in this
report.

Table A‑4 shows the percent of total research and development funds for
which a distribution by basic research, applied research, and
development was estimated by the Bureau of the Census in the absence of
respondent distributed data for 1968. This information is not available
for 1969, but since these figures have changed little from year to year
in past surveys, it is believed that the 1968 data will provide
reasonable estimates for 1969.

**Comparability of Data Over a Period of Several Years**[^7]

In the surveys of industrial research and development, there has been
substantial comparability over any two‑year period. This is because the
respondent has had before him, on the same report form used in filing
current data, the figures for the previous year entered on the form by
the Census Bureau before mailing; the respondent has been asked to
adjust the data for the previous year as necessary to make it comparable
to those of the current year. Such adjustments have been made to
reflect, for example, changes in reporting concepts or changes in
company structure such as mergers or acquisitions. To further insure
comparability, the industry and size classification have been adjusted
so that they are the same for a company for the two adjacent years.

Some measure of the degree of change reflecting these adjustments in
contrast to an actual change in research and development activity, can
be gained by comparing figures for the same year reported in two
succeeding forms, e.g., 1968 R&D statistics in the final report of the
1968 survey and the revised 1968 R&D statistics in the final report of
the 1969 survey. The totals for broad classification are likely to be
very close in the two reports, but in the finer detail larger
differences are noticeable. The results underscore the point that the
measures are approximate and indicative rather than precise.

When tables covering more than two years were prepared for this report,
it was not considered feasible to carry most revisions back more than
one year.

**Industry Codes in These Historical Tables^7^**

The industry codes appearing in the\' tables are based on the 1967
Standard Industrial Classification (SIC) Manual. The SIC classifications
for individual companies for 1958--1962 were based upon data reported in
the 1958 Economic Censuses; for 1963 to date, the SIC codes for each
company were determined by data reported in the 1963 Economic Censuses.
Between 1958 and 1963, the SIC code for a company generally remained
fixed and reflected that company\'s principal activity in 1958. However,
under certain circumstances---such as the merger of two or more
companies; the acquisition of one company by another; or the formation
of "conglomerates"---the 1958 SIC code for a company could change.

Most industry groups were characterized by relatively minor changes in
the SIC codes for companies classified in those groups, and the
tabulated data for such groups remained substantially comparable between
1958 and 1963. However, some industry groups were characterized by
significant changes in the SIC codes for companies originally classified
in those groups in 1958. The effect of these changes became most
noticeable toward the end of the 5-year intercensal period, with the
result that revisions to industry totals resulting from these code
changes tended to reflect disproportionately large fluctuations between
the data for 1963 and the year immediately preceding. To remedy these
apparent discrepancies, the data for affected industries were adjusted
as follows: For companies changing industry codes between 1958 and 1963,
the industry data for each of the five years affected (1958 through
1962) were estimated to have changed at a constant rate (20 percent per
year). Accordingly, the data for the industry in which such a company
had been classified in 1958 were deflated by 20 percent per year for
each of the affected years. Similarly, the data for the industry in
which such a company was classified in 1963 were inflated by 20 percent
per year for each of the intervening years. For the period 1963--1969,
no changes have been made in company industry codes. The codes are those
assigned as part of the 1963 Economic Census.

The following measures were adjusted in this manner: Number of
scientists and engineers; funds for research and development---total,
Federal, and company; net sales; total employment; and basic research
expenditures. These historical data appear, for example, in tables B‑2,
B‑6, B‑8, B‑12, B‑19, B‑31, B‑45, B‑52, and B‑53 of the 1969 NSF
publication on research and development in industry. No adjustments were
made in the data for other measures.

[^1]: National Science Foundation, *Science and Engineering in American
    Industry, Final Report on a 1953--54 Survey* (NSF 56‑16) and
    *Science and Engineering in American. Industry, 1956* (NSF 59‑50)
    (Washington, D.C. 20402; Supt. of Documents, U.S. Government
    Printing Office.)

[^2]: Executive Office of the President, Bureau of the Budget, *Standard
    Industrial Classification Manual; 1967.* (Washington, D.C. 20402;
    Supt. of Documents, U.S. Government Printing Office). Industry group
    code numbers are shown in parentheses.

[^3]: For the purposes of this study, crude petroleum and extraction
    (13) is grouped with petroleum refining (29), and communication (48)
    is grouped with electrical equipment (36), in the manufacturing
    group of industries.

[^4]: Companies primarily engaged in the manufacture of ordnance and
    accessories, including complete guided missiles, are grouped with
    companies primarily engaged in the manufacture of aircraft and parts
    because of close similarity of R&D activities carried out by major
    companies in the two industries.

[^5]: This section was prepared by the U.S. Bureau of the Census, the
    collecting and compiling agent for the National Science Foundation
    in this survey.

[^6]: This indicates that a sampling ratio of 1:1 (or 1.000) was
    employed in the selection of companies in this particular size
    class.

[^7]: This section was prepared by the U.S. Bureau of the Census, the
    collecting and compiling agent for the National Science Foundation
    in this survey.