**TECHNICAL Notes for 1984**

**GENERAL NOTES**

Data in this report were collected by the Bureau of the Census for the
National Science Foundation (NSF) in the Annual Survey of Industrial
Research and Development and cover the periods 1956--84 for funding data
and January 1957--January 1985 for personnel data.

The footnote "Not separately available but included in total" indicates
that data are being withheld for either of two reasons: to avoid
disclosing the operations of an individual company; or, because the
imputation rate---the percentage of the statistic that is estimated by
the Bureau of the Census (Census)---exceeds 50 percent because some
companies failed to supply the requested data. See table A‑1 for the
imputation rates of specific items.

The industry survey does not cover trade associations. Although their
primary mission is to serve industry, trade associations are established
as nonprofit organizations and are covered in the NSF survey of
independent nonprofit institutions. Research and Development (R&D)
expenditures of trade associations are estimated at less than 1 percent
of the industry R&D total.

**Technical Notes**

# Scope of Study

The National Science Foundation (NSF) 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 research
and development (R&D) effort.

The 1984 industry survey is the 28th in the annual series sponsored by
NSF and conducted by the Bureau of the Census (Census), Department of
Commerce. NSF also sponsored two industry surveys covering the 1953--56
period, which were conducted by the Bureau of Labor Statistics (BLS),
Department of Labor.[^1] Data obtained in the BLS survey are not
directly comparable with the Census figures for 1957--84 because of
methodological and other differences in the surveys conducted by the two
agencies. In addition, beginning in 1957, the Census surveys have
collected data on the R&D activities of federally‑funded research and
development centers (FFRDC's) operated by business firms, whereas the
earlier BLS surveys did not. FFRDC's are organizations administered by
industrial, educational, or other institutions on a nonprofit basis;
they conduct R&D activities almost exclusively for the use of the
Federal Government. R&D expenditures of industry‑administered FFRDC's
are included in the Federal R&D data under the classifications of the
administering firms. Total R&D expenditures and selected personnel data
for FFRDC's are shown in table B‑12. To account for the 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.

Data on scientific personnel are not directly comparable with data in
surveys formerly conducted by BLS. Census uses the company---defined to
include all establishments under common ownership or control---as the
basic reporting unit for these surveys of industrial research and
development. The surveys of scientific and technical personnel conducted
by BLS were on an establishment‑reporting-unit basis. Further, the
Census surveys obtain data on the number of R&D scientists and engineers
on a full‑time‑equivalent (FTE) basis, unlike the BLS surveys in which
data were provided in terms of scientists and engineers primarily
employed in research and development.

Other variations in the two sets of data may have occurred because the
estimate might have been prepared by different offices in the same
company or because the response rates of the two surveys varied.

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.

Data quality has improved substantially since the first industry survey
in 1953, mainly as a result of more accurate and sophisticated
accounting procedures adopted by respondents. In addition, NSF and
Census have endeavored to reduce response and concept errors arising
from difficulties in interpreting or applying survey definitions.

NSF has been aware of the increased reporting burden placed on industry
from all sources in recent years. In an effort to alleviate this burden,
the detailed questionnaire (which has been in use with slight
modifications since the beginning of the survey) is now mailed only
biennially; an abbreviated form containing only the most crucial data
elements is sent to survey respondents in the intervening years.

The shortened survey form was used for the first time to collect
industrial R&D data for 1978. Because all data elements were not
collected in even-numbered years, some historical tables do not contain
data for these years and other tables were not printed. The main tables
affected are those that give detailed breakdowns of R&D expenditures for
basic research, applied research, and development by industry and by
product field. Tables showing company‑financed research and development
contracted to outside organizations, Federal funds by agency, R&D
expenditures by geographic area, and some detailed data on energy and
pollution abatement R&D activities are also deleted in those years.

(Beginning in 1984, the survey resumed collecting basic, applied, and
development data annually.)

# 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. Not included are routine technical services to
customers or other activities excluded from the above definition of
research and development.

*Funds for research and development*---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. All funds for R&D
performance are expressed in current rather than constant dollars.

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

*Company‑financed research and development*---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*---The January number of those engaged
full time in research and development and the full‑time equivalent of
those working part time in research and development. 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 program with a major in
one of those fields.

*Employment*---Total number of persons domestically employed by the
company in all activities during the pay period that includes the 12th
of March. These data are not completely comparable with employment of
R&D scientists and engineers data which are collected as of January.

*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 and export sales to foreign
companies.

*Geographic area covered*---Includes only those operations located in
the 50 States and the District of Columbia.[^2]

# Explanation of Tabular Data

*Industry classification*---Industries and industry groups shown
separately in statistical tables are classified according to their
Standard Industrial Classification (SIC) Manual[^3] 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, 286)[^4]

Drugs and medicines (283)

Other chemicals (284--85, 287--89)^4^

Petroleum refining and related industries (29)[^5]

Rubber products (30)

Stone, clay, and glass products (32)

Primary metals (33)

Ferrous metals and products (331--32, 3398--99)

Nonferrous metals and products (333--36)

Fabricated metal products (34)

Machinery (35)

Office, computing, and accounting machines (357)

Other machinery, except electrical (351--56, 358--59)

Electrical equipment (36)^5^

Radio and TV receiving equipment (365)

Communication equipment (366) ^5^

Electronic components (367)

Other electrical equipment (361--64, 369)

Motor vehicles and motor vehicles equipment (371)

Other transportation equipment (373--75, 379)

Aircraft and missiles (372, 376)[^6]

Professional and scientific instruments (38)

Scientific and mechanical measuring instruments (381--82)

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

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

Nonmanufacturing industries---agriculture, forestry, and fisheries
(07--09); mining and extraction (10--14); contract construction
(15--17); transportation, communications, and other public utilities
(41--49); wholesale and retail trade (50--59); 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 following are the five company size‑classes
used in this report: fewer than 1,000 employees; 1,000 to 4,999
employees; 5,000 to 9,999 employees; 10,000 to 24,999 employees; and
25,000 or more employees.

*Classification of reporting units*---The company or corporate family,
which includes all establishments under common ownership or control, is
the basic reporting unit. Each company was similarly classified into 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
1957--84 is the arithmetic mean of the numbers of R&D scientists and
engineers reported in each industry for January in two consecutive
years. This number is then divided into total R&D expenditures in each
industry. For example, the mean of the numbers of R&D scientists and
engineers in January 1984 and January 1985 is divided into total 1984
R&D expenditures for a total cost per R&D scientist or engineer in 1984.

*Nonavailability of certain statistics*---Tables in section B use
footnotes stating, "Not separately available but included in total,"
indicating that statistics are withheld because they do not meet
publication standards for the following reasons: (1) Extremely high
associated sampling error of estimate; (2) high rate of imputation (over
50 percent) because of failure of companies to supply data: (3) possible
disclosure of data on an individual company; or, (4) data inconsistent
for inclusion in a time series. In some instances, withheld data can be
derived by subtraction from higher level totals. Where this is possible,
the data user should be aware that the derived numbers are statistically
unreliable. In no instance, however, can any data be derived that would
disclose the operations of an individual company.

*Questionable data*---Data where over 50 percent of the total has been
estimated are not published. Users should consult table A‑1 for
imputation rates for specific items.

*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[^7]

The sample used for the 1984 Survey of Industrial Research and
Development represents all manufacturing industries and those
nonmanufacturing industries known, on the basis of earlier, more
detailed samples, to conduct or to finance research and development. The
sampling unit for the survey was the company, defined as a business
organization consisting of one or more establishments under common
ownership or control. A new panel for the R&D survey is selected
approximately every five years. The newest sample was selected for the
1981 survey (the first since the 1976 survey). Approximately 11,500
manufacturing and nonmanufacturing companies are included in this
sample, which consists of about 4,500 certainty companies (those with
500 or more employees that have a 100‑percent chance of inclusion in the
panel) and about 7,000 noncertainty companies.

The basic tool for the survey is Form RD‑1, which is used to collect
detailed R&D information. Companies in the new panel that received an
RD‑1 form in the old panel once again received an RD‑1 form in 1981
(about 1,200 companies). The remaining certainty companies (about 3,300)
and noncertainty companies (about 7,000) in the new panel received an
RD‑1A survey form for 1981. Form RD‑1A is an abbreviated version of RD‑1
and is generally mailed only to companies in the year in which a new
sample is drawn. The purpose of Form RD‑1A is to canvass, with a minimum
of reporting burden, smaller R&D performers. Once the RD‑1A forms were
received and tabulated from the survey respondents in 1981, they were
reviewed for total R&D expenditures. Those companies which reported R&D
expenditures exceeding \$1,000,000 on the RD‑1A form were added to the
survey panel consisting of those firms that receive the RD‑1 form
annually---about 575 such companies in 1981. Data for remaining RD‑1A
companies in subsequent years are estimated by Census based upon their
1981 reports.

The universe frame from which the latest sample panel was selected was
created from two sources---the 1981 Standard Statistical Establishment
List (SSEL) for single units and the 1981 Enterprise Statistics
Multiunits file.

There are about 3.5 to 4 million single‑unit firms in the 1981 SSEL file
(including nonmanufacturing firms). There are 5.6 million multiunit
companies in the 1981 Enterprise file, of which 296,146 companies have
identified themselves as being primarily in manufacturing. All
manufacturing industries and selected nonmanufacturing industries (SIC's
49, 7391, 7392, 7399, and 8911) were considered within the scope of the
survey.

Companies in these industries with 500 or more employees were included
in the panel with certainty. For the companies with fewer than 500
employees, a measure of size was assigned to each company based on an
estimate of its total R&D expenditures. Probabilities of selection were
then assigned based on the measure of size. Finally, a sample selection
process gave each company an independent chance of being included in the
sample.

Each year Census reviews the annual lists of R&D contractors published
by the Department of Defense (DoD) and the National Aeronautics and
Space Administration (NASA) to ensure that the lane contractors are
included in the sample. For the 1984 survey, the R&D‑performing
manufacturing companies from the largest DoD and NASA contractors were
included in the reporting panel with certainty.

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.

An inference that the comparable complete canvass total would be within
the indicated ranges would be correct in approximately the relative
frequencies shown. Those proportions, therefore, may be interpreted as
defining the confidence that the estimates from a particular sample
would differ from complete coverage results by as much as one, two, or
three standard errors, respectively.

For example, suppose an estimated total is shown as 400 with an
associated relative standard error of 2 percent. Then, there is
approximately 67‑percent confidence that the interval 392 to 408
includes the complete canvass total, about 95‑percent confidence that
the interval 384 to 416 includes the complete canvas total, and almost
certain confidence that the interval 376 to 424 includes the complete
canvass total.

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 (table A‑2).

The forms for the survey were mailed in January 1985, and nonrespondents
received followup letters by mail. Since total R&D performance funds,
total Federal R&D funds, total net sales, and total employment are
included in the Census's mandatory statistical program, the few
companies that did not reply to Form RD‑1 for 1984 were mailed the
Census Form MA‑121, which collects these mandatory items.

In the absence of respondent‑distributed data, Census has estimated data
for items as required in accordance with past performance and industry
averages. Table A‑1 shows imputation rates for many survey items.

# Comparability of Data over a Period of Several Years

In the survey of industrial research and development, there is
substantial comparability over any 2‑year period. Before mailing the
survey forms each year, Census enters on each one the previous year's
figures as reported by the respondent. The respondent is asked to adjust
data for the previous year as necessary to make them comparable to those
data being reported for the current year. Such adjustments are made to
reflect, for example, changes in reporting concepts or changes in
company structure such as mergers or acquisitions. To maintain some
measure of consistency, the employment‑size classification of any
company affected by such changes has been adjusted so that the company
is tabulated in the same employment‑size category for two consecutive
years.

Some measure of the degree of change reflecting these adjustments in
contrast to an actual change in R&D activity can be gained by comparing
figures for the same year reported for two succeeding reporting periods,
e.g., R&D statistics in the final report of the 1983 survey and the
revised 1982 R&D statistics in the final report of the 1984 survey. The
totals for broad classifications are likely to be very close in the two
reports; larger differences are noticeable in the finer detail. The
results underscore the point that the measures are approximate and
indicative rather than precise.

# Industry Codes for 1967--84[^8]

The industry codes appearing in the tables are based on the 1972 SIC
Manual. The SIC code for individual companies for 1967--74 (which were
utilized in the publications for those years) were originally determined
by data reported in the 1967 Economic Censuses. The SIC classifications
for individual companies for 1977--79 (which were utilized in the
publications for those years) were originally determined by the 1974
SSEL file. Between 1967 and 1974 and again between 1977 and 1979, the
SIC code for a company on the R&D survey generally remained fixed and
reflected that company's principal activity as of 1967 or 1976. Under
certain circumstances, however, such as the merger of two or more
companies, the acquisition of one company by another, or the formation
of conglomerates, the 1967 or 1976 SIC code for a company could have
changed. Census could not be aware of a possible new SIC code for a
company until the 1976 or 1981 new sample was drawn based upon the 1974
or 1981 SSEL file. (See the foregoing description of the new sample.)
When the new sample was selected in each of the years 1976 and 1981, the
industry codes of companies in both the old and new panels were examined
for possible changes. The historical R&D tables (for example, 1968--74
and 1977--79) have been adjusted to reflect the change in company
activities. Because it is not known normally when a company changed its
industrial activities, the data were adjusted in the following fashion:
For companies changing industry codes between 1967 and 1974, the
industry total for each of the years affected (1968 through 1974) were
estimated to have changed at a constant rate of 14.3 percent per year.
Accordingly, the data for the industry in which such a company had been
classified in 1967 were deflated by 14.3 percent per year for each of
the years 1968--74 (for example, 14.3 percent subtracted in 1968, 28.6
percent in 1977, 42.9 percent in 1970, etc.). Similarly, data for the
industry in which such a company was classified in 1974 were inflated by
14.3 percent per year for each of the years 1968--74. The industry code
assigned to a company for 1981 was also used to classify that company's
activities for 1982--84.

To reflect changes in industry classification between 1976 and 1981, a
nonlinear algorithm was used which is intended to link the two sample
years while preserving the original year‑to‑year industry trend as much
as possible. Estimates for 1976 remained unchanged since they were based
on accurate classifications of companies at that time. Revised estimates
for 1980 were formed based upon prior period data that were collected in
the new 1981 sample. Thus, the revised estimates reflect the most recent
classification. Based on the 1976 estimates and the revised 1981
estimates, data for each industry grouping for the years 1977, 1978, and
1979 were revised.

The following measures were adjusted in the manner just described:
Number of scientists and engineers; funds for research and
development---total, Federal, and company; net sales; cost per R&D
scientist or engineer; and basic research expenditures. Historical data
for the other categories appear in selected tables of this publication.
(See tables B‑2, B‑5, B‑9, B‑18, B‑19, B‑27, and B‑38.) No adjustments
were made in other data elements.

[^1]: National Science Foundation, *Science and Engineering 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.: Supt. of Documents, U. S. Government Printing
    Office, 1956 and 1960).

[^2]: For purposes of comparison, company‑sponsored research and
    development by foreign subsidiaries of U.S. domestic companies
    performed outside the United States is reported in table B‑7 but
    excluded from all other tables.

[^3]: Executive Office of the President, Office of Management and
    Budget, *Standard Industrial Classification Manual, 1972*
    (Washington, D.C.: Supt. of Documents, U.S. Government Printing
    Office). Industry group code numbers are shown in parentheses.

[^4]: The classification "Industrial Chemicals" has been revised to
    include SIC Group 286, Industrial Organic Chemicals. All current and
    historical tables have been revised accordingly.

[^5]: Starting with the 1978 survey, oil and gas extraction (13) was no
    longer grouped with petroleum refining (29), and communication (48)
    was no longer grouped with electrical equipment (36). Instead, firms
    in these SIC groups may be included in the nonmanufacturing sector
    so that the delineation between manufacturing and nonmanufacturing
    industries is more consistent. This change has had almost no effect
    on the levels of the data. It is likely that there will be a change
    in how communication companies are classified beginning with the
    1987 survey.

[^6]: 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.

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

[^8]: For a discussion of industry codes for 1966 and earlier years, see
    National Science Foundation, *Research and Development in Industry,
    1975. Funds, 1975; Scientists & Engineers, January 1976* (NSF
    77‑324), and *Research and Development in Industry, 1970. Funds,
    1970: Scientists & Engineers, January 1971* (NSF 72‑309)
    (Washington, D.C.: Supt. of Documents, U.S. Government Printing
    Office, 1978 and 1972).