U.S. Department of Commerce

Technology Administration, 

Office of Technology Policy, 

September 1999

National Science Foundation

Directorate for Social, Behavioral, and Economic Sciences

Division of Science Resources Studies

Topical Report

by Industry Category

Top 500 Firms in R&D 

U.S. Corporate R&D

Volume I: 
U.S. Corporate R&D

Division of Science Resources Studies

Directorate for Social, Behavioral, and Economic Sciences

National Science Foundation

September 1999

Office of Technology Policy

Technology Administration

U.S. Department of Commerce

Carl Shepherd, Department of Commerce, Office of Technology Policy, and

Steven Payson, National Science Foundation, Division of Science Resources Studies,

Authors

Topical Report

Volume I:

Top 500 Firms in R&D

by Industry Category
ii

United States Department of Commerce

William M. Daley

Secretary of Commerce

Technology Administration

Gary R. Bachula

Acting Under Secretary for Technology

Office of Technology Policy

Kelly Carnes

Assistant Secretary Designate for Technology Policy

Technology Competitiveness

Jon Paugh

Director

Technology Administration

The Technology Administration (TA) is the only Federal agency working to maximize technology’s contribution

to America’s economic growth. Pursuant to 15 United States Code Section 3704(c)(12)(15), the Technology

Administration has among its statutory authorities the responsibility to:

· Propose and encourage cooperative research involving appropriate Federal entities, state or local

governments, regional organizations, colleges or universities, nonprofit organizations, or private industry

to promote the common use of resources, to improve training programs and curricula, to stimulate

interest in high technology careers, and to encourage the effective dissemination of technology skills

within the wider community;

· Publish the results of studies and policy experiments.

The Office of Technology Policy

The mission of the Office of Technology Policy (OTP) is unique in the Federal Government: to work in partnership

with the private sector to develop and advocate national policies that maximize technology’s contribution to U.S.

economic growth, the creation of high-wage jobs, and improvements in our quality of life.

For inquires regarding this or other OTP activities or reports please contact:

The Office of Technology Policy

U.S. Department of Commerce

14th and Constitution, NW

Room 4418

Washington, DC 20230

Telephone: 202-482-2100

Fax: 202-219-8667

Or visit the Technology Administration and OTP sites on the World Wide Web at http://www.ta.doc.gov

September 1999
iii

National Science Foundation

Rita R. Colwell

Director

Directorate for Social, Behavioral, and Economic Sciences

Bennett I. Bertenthal

Director

Division of Science Resources Studies

Mary J. Frase

Acting Division Director

Research and Development Statistics Program

John E. Jankowski

Program Director

DIVISION OF SCIENCE RESOURCES STUDIES

The Division of Science Resources Studies (SRS) fulfills the legislative mandate of the National Science

Foundation Act to ...

provide a central clearinghouse for the collection, interpretation, and analysis of data on scientific and

engineering resources and to provide a source of information for policy formulation by other agencies of the

Federal Government...

To carry out this mandate, SRS designs, supports, and directs periodic surveys as well as a variety of other data

collections and research projects. These surveys yield the materials for SRS staff to compile, analyze, and disseminate

quantitative information about domestic and international resources devoted to science, engineering, and technology.

If you have any comments or suggestions about this or any other SRS product or report, we would like to hear from

you. Please direct your comments to:

National Science Foundation

Division of Science Resources Studies

4201 Wilson Blvd., Suite 965

Arlington, VA 22230

Telephone: (703) 306-1780

Fax: (703) 306-0510

email: srsweb@nsf.gov

Suggested Citation

National Science Foundation and the United States Department of Commerce, U.S. Corporate R&D: Volume I. Top

500 Firms in R&D by Industry Category, NSF 00-301, Authors, Carl Shepherd, Department of Commerce/Office

of Technology Policy, and Steven Payson, National Science Foundation/Division of Science Resources Studies

(Arlington, VA 1999).

September 1999

SRS data are available through the World Wide Web (http://www.nsf.gov/sbe/srs/stats.htm).

For more information about obtaining reports, contact pubs@nsf.gov or call (301) 947-2722.

For NSF’s Telephonic Device for the Deaf, dial (703) 306-0090.
iv
v

Kelly H. Carnes, Esq.

Acting Assistant Secretary Designate of

Commerce for Technology Policy,

U.S. Department of Commerce

Mary J. Frase

Acting Division Director

Division of Science Resources Studies

National Science Foundation

FOREWORD

The ability of U.S. industry to compete in global

markets depends significantly on a continued, strong

investment in scientific knowledge and technology. A

confluence of maturing major innovations and accelerating

rates of technological progress across many technical

fields have contributed considerably to the current surge

in U.S. economic growth. Both the creation of technology

and the more effective adoption of key technological

innovations, such as information and telecommunication

systems, are dramatically transforming industrial

landscapes. Nevertheless, while all firms may obtain

considerable quality and productivity gains through the

purchase and deployment of technologies, ultimately, over

the long-term, U.S competitiveness rests on the willingness

of firms to risk creating and developing new technologies

in the first place.

This report, jointly developed by the U.S. Commerce

Department’s Office of Technology Policy and the

National Science Foundation’s Division of Science

Resources Studies (SRS), provides perspective on the

corporate research and development (R&D) spending

that underwrites this essential creative process. While

R&D spending has long been used as a proxy for

measuring the activities of scientists and engineers, the

report introduces the U.S. Corporate R&D data series

to provide new information and context on the R&D

activity of the Nation’s top 500 R&D spending

corporations. Based on the Standard and Poor’s

Compustat database, U.S. Corporate R&D is intended

to both substantiate existing SRS R&D data series and

to provide complementary information for analysts and

decision makers. It should be noted, however, that U.S.

Corporate R&D does not distinguish between different

kinds of R&D. According to other 1997 NSF data, more

than 93 percent of U.S. industry R&D spending consists

of development and applied research. Significantly, while

industry spending on development enjoyed robust growth

during the 1990s, spending on basic research declined

substantially in the mid-1990s, recovering to only 1991

levels in real terms by 1997. Measures of basic research

can be found in the SRS special report, National Patterns

of R&D Resources: 1998.

In addition to a straightforward account of 1996 and

1997 R&D activity of companies and the industries they

comprise, the U.S. Corporate R&D report sets the

baseline and lays groundwork for more in-depth research

in the future. For example, subsequent reports that might

follow could be expanded to include aggregate industry

data for more-extensive categories of industrial R&D

performers. These expanded research efforts could

provide analysts and planners with information that allows

for a clearer understanding of the process of technological

change in the United States. It is our hope that, through

such improved understanding, both public policies and

strategic decisions by private companies could become

more effective and successful.

v
vi
vii

This report was written by Carl Shepherd and Steven

Payson. Carl Shepherd is a Technology Policy Analyst

for the Office of Technology Policy (OTP), Technology

Administration (TA), U.S. Department of Commerce

(DOC). Steven Payson is a Senior Science Resources

Analyst for the Research and Development Statistics

(RDS) Program, Division of Science Resources Studies

(SRS), National Science Foundation (NSF).

Other individuals from various Federal agencies

provided information for inclusion in this report and

reviewed the material for accuracy. Significant guidance

and review were provided by Jon Paugh, Director for

Technology Competitiveness, OTP, and John Jankowski,

Program Director, RDS. The project had been originally

conceived and initiated by John Jankowski.

Appreciation is expressed to officials of the

Economics and Statistics Administration (ESA), DOC

for their helpful advice and suggestions. These include

Lee Price, Chief Economist, ESA; Barbara Fraumeni,

Chief Economist, Bureau of Economic Analysis;

Frederick Knickerbocker, Associate Director for

Economic Programs, U.S. Bureau of the Census; and

Laurence Campbell, Senior Regulatory Policy Analyst,

ESA.

SRS staff members providing review of the report

included Mary Frase, Acting Division Director; Ron

Fecso, Chief Mathematical Statistician; Larry Rausch,

Chair of the SRS Peer Review Group; and Melissa Pollak

and Raymond Wolfe, who are Senior Analysts. The text

was edited by Anne Houghton, Publications Manager

with assistance from Julia Harriston and Tanya Gore.

A special thanks is expressed to Laurie Leonard and

Jerrilyn Heller of EDO Technology Services and

Analysis, who thoroughly reviewed the content of the

report, and provided composition services. A special

thanks is also given to Howard Bernheim, of Standard

and Poor’s, for his guidance and support in the authors’

use of the Compustat database. Appreciation is further

expressed to Standard and Poor’s, and its parent company,

The McGraw-Hill Companies, for allowing the authors

to use and disseminate Compustat data for the top 500

U.S. companies in R&D.

Finally, gratitude is shown to Jane Adams, Deputy

Chief Accountant of the Securities and Exchange

Commission for her review and suggestions regarding

the section on “R&D Valuation Adjustments.”

ACKNOWLEDGMENTS

vii
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ix

CONTENTS

Section Page

EXECUTIVE SUMMARY ........................................................................... 1

R&D EXPENDITURES BY INDUSTRY CATEGORY ............................................... 3

R&D SPENDING AND GROWTH RATE ........................................................ 3

R&D INTENSITY ...................................................................................... 4

COMPARISON OF R&D SPENDING TO SALES, EMPLOYMENT, AND

CAPITAL INVESTMENT .......................................................................... 7

COMPARISON OF GROWTH RATES IN R&D SPENDING AND NET SALES ......... 9

DISTRIBUTION BY NUMBER AND SIZE OF FIRM ............................................ 13

PURPOSE AND CHARACTERISTICS OF THE DATA SERIES ..................................... 15

CHARACTERISTICS OF THE SRS INDUSTRY R&D DATA SERIES .................... 15

CHARACTERISTICS OF THE U.S. CORPORATE R&D DATA SERIES .................. 15

THE SOURCE DATABASE—COMPUSTAT .................................................. 16

COMPUSTAT TREATMENT OF R&D EXPENSES ......................................... 16

TOP 500 R&D SPENDERS ........................................................................ 19

INDUSTRIAL SECTORS ............................................................................... 19

R&D VALUATION ADJUSTMENTS .............................................................. 20

Figure 1. R&D spending by major industrial sectors: top 500 corporations in R&D

spending of 1996 and 1997 ......................................................................................................... 3

Figure 2. R&D annual percent change by major industrial sectors: top 500 R&D corporations

of 1996 and 1997 ........................................................................................................................ 4

Figure 3. R&D spending and R&D growth of detailed industry sectors within the information

and electronics sector and medical substances and devices sector ................................................. 5

Figure 4. R&D intensity by major industrial sectors: top 500 R&D corporations of

1996 and 1997 ............................................................................................................................ 6

Figure 5. Net sales by major industrial sectors: top 500 R&D corporations of 1996 and 1997 ............. 8

Figure 6. Number of employees by major industrial sectors: top 500 R&D corporations

of 1996 and 1997 ........................................................................................................................ 8
x

Section Page

Figure 7. Capital spending by major industrial sectors: top 500 R&D corporations of 1996

and 1997 .................................................................................................................................... 9

Figure 8. Major industrial sector shares of R&D, sales, capital spending, and employment:

top 500 corporations in R&D spending for 1997 ...................................................................... 10

Figure 9. Percent change between 1996 and 1997 in R&D spending, sales, capital spending, and

employees by major industrial sector: Top 500 R&D corporations of 1996 and 1997 .................... 11

Figure 10. Comparison of change in R&D and net sales between 1996 and 1997 and billions of R&D

dollars per industry by major industrial sector: Top 500 R&D corporations of 1996 and 1997 ....... 11

Figure 11. Comparison of change between 1996 and 1997 in detailed industries R&D and net sales and

billions of R&D dollars per detailed industry: Top 500 R&D coporations of 1996 and 1997 ......... 12

Figure 12. Number of top 500 R&D corporations in major industrial sectors: 1996 and 1997 ............. 13

Figure 13. R&D intensity compared to average firm net sales by major industrial sector ....................... 13

Figure 14. Spending comparison of U.S. Corporate R&D top 500 corporations and the

SRS Data Series, 1997 ............................................................................................................... 18

Table 1.Comparison of 1996 and 1997 R&D, employment, and sales of top 500 corporations in

R&D, by detailed sector .................................................................................................................... 23

Table 2. Comparison of 1996 and 1997 capital expenditure, R&D/sales ratio, and R&D/employment ratio

of top 500 corporations in R&D, by detailed sector ...................................................................... 25

Table 3. Comparison between top 500 corporate R&D levels and industry-survey R&D levels: 1997 .. 27
1

A newly developed data series, U.S. Corporate

R&D, suggests that U.S. industry significantly increased

its spending on research and development (R&D) in 1997.

In that year, the top 500 R&D-spending corporations in

the United States spent a total of $111 billion of their own

funds on R&D, a 9.0-percent increase over the $102 billion

spent by the top 500 R&D spenders in 1996. The

$111 billion spent on R&D by the top 500 R&D corporations is equivalent to 86.8 percent of the total industryfinanced and industry-performed R&D in the United

States, as reported by the National Science Foundation

(NSF) based on data collected by the Bureau of Census.

These expenditures also equal 54.2 percent of total U.S.

R&D by all performers from all sources.1

The U.S. Corporate R&D data series was built using

data from Standard & Poor’s Compustat2

 listing for

publicly held firms. It was jointly developed by the U.S.

Commerce Department’s Office of Technology Policy

(OTP) and the NSF’s Division of Science Resources

Studies (SRS). It supplements SRS’ data series on U.S.

industry R&D spending with timely information on eight

major, and 45 detailed, industrial sectors. The new data

series features for the years 1996 and 1997 the combined

domestic and overseas R&D spending, net sales, capital

investment, and employment data by the top 500 publiclyheld R&D-spending corporations that are headquartered

in the United States.

As a supplement to existing data on U.S. R&D

expenditures, the U.S. Corporate R&D database meets

a variety of analytic needs. First, tallies of latest year

R&D spending data are available for firms very soon

after the close of their fiscal year. By July of each year,

Compustat compiles the latest R&D figures for a majority

of the 9,800 active U.S. companies in its database. This

information can be used to help substantiate SRS R&D

spending estimates issued earlier in the year for the most

recently completed year. Second, because Compustat

provides data on other performance indicators for

hundreds of individual firms (e.g., sales, employment,

exports, foreign sales, and profits), such additional

information could provide immediate context for analyses

of industry R&D activity.

Among the eight major industrial sectors used in this

report, the information and electronics sector had the

highest share of the $111 billion spent by the top 500 R&D

firms in 1997—$45.8 billion (41 percent). Second was

medical substances and devices with $20 billion

(18 percent); followed by motor vehicles and other transportation equipment with $18 billion (17 percent); basic

industries and materials with $8 billion (8 percent);

machinery and electrical equipment with $7 billion

(6 percent); chemicals with $7 billion as well (6 percent);

aircraft, guided missiles, and space vehicles with $5 billion (4 percent) and other industries (general services,

engineering, accounting, research/testing services; and

finances, insurance and real estate), with $0.4 billion

(0.4 percent).

Volume 1 of this report, prepared jointly by OTP and

SRS, is divided into two sections. The first, “R&D

Expenditures by Industry Category,” details aggregate data

of the U.S. Corporate R&D data series for 1996 and

1997. The second section discusses the “purpose and

characteristics of the data series” and compares it to the

long-established SRS data series on U.S. industry R&D.

Volume 2 of this report, by NSF, is entitled, “Company

Information on Top 500 Firms in R&D.” It details the

R&D expenditures and other financial characteristics of

each of the top 500 firms in R&D in 1996 and 1997. This

information is available because the Securities and

Exchange Commission (SEC) requires public corporations

to provide such information in detailed financial reports.

EXECUTIVE SUMMARY

1

 These proportions are based on national R&D data provided in

Table B-1A of National Science Foundation, National Patterns of

R&D Resources: 1998, by Steven Payson, NSF 99-335 (Arlington,

VA 1999).

2 Standard & Poor’s Compustat, Englewood, Colorado.
3

R&D SPENDING AND GROWTH RATE

Figures 1 and 2, respectively, display the total R&D

spending and R&D spending growth rate of the top 500

corporations of 1996 and 1997. These R&D spending

levels are grouped among eight major industrial sectors

based on their standard industrial classifications and

their conceptual similarities with regard to patterns of

technological change. These categories are: information

and electronics; medical substances and devices; motor

vehicles and surface transportation; basic industries

and materials; machinery and electrical equipment;

chemicals; aircraft, guided missiles, and space vehicles;

and all other industries. The all-other category contains

only 10 of the top 500 1997 firms in R&D, and less than

0.5 percent of total R&D among those top 500 firms.

This category includes general services; engineering,

accounting and research/testing services; and finance,

insurance, and real estate.3

Table 1 (page 21) provides the same aggregate

information as figures 1 and 2, along with more detailed

information on smaller industrial sectors. It also provides

data on employment and sales in 1996 and 1997 in those

detailed sectors. These data, however, pertain only to the

top 500 corporations in R&D expenditures in each year.

Among the seven major sectors that conducted more

than $4 billion in R&D in 1997, the largest R&D sector,

information and electronics, increased its annual R&D

spending the most, 15.2 percent, to $45.824 billion.

The second largest R&D sector, medical substances

and devices, raised its R&D spending 11.7 percent to

$19.849 billion, moving it ahead of the only declining R&D

sector (between 1996 and 1997), motor vehicles and

surface transportation, which reduced its spending 4.6

percent to $18.380 billion. The smaller aircraft, guided

R&D EXPENDITURES BY INDUSTRY CATEGORY

3 See tables 1-3 for more information on these sectors.

SOURCE: Standard & Poor's Compustat, Englewood, CO

Figure 1. R&D spending by major industrial sectors: top 500 corporations in R&D spending of 1996 and 1997

0 5 10 15 20 25 30 35 40 45 50

General services; engineering, accounting, and research/

testing services; and finance, insurance, real estate

Aircraft, guided missiles, and space vehicles

Chemicals

Machinery and electrical equipment

Basic industries and materials

Motor vehicles and other surface transportation equipment

Medical substances and devices

Information and electronics

Billions of dollars

1997

1996
4

missiles, and space vehicles R&D sector experienced

the second fastest surge in R&D spending, growing

11.9 percent to $4.673 billion.

The R&D spending and R&D growth rates of the

two largest major sectors, information and electronics and

medical substances and devices, are broken down by

detailed industry sector in figure 3. Within information

and electronics, firms in the electronic computers and

computer terminals industry spent the most on R&D in

1997, totaling $11.094 billion, growing 10.1 percent over

the previous year. Electronic components, which includes

semiconductors, is the second largest R&D spender in

the sector at $6.648 billion, growing 17.3 percent, and

followed closely by the third largest R&D spender,

prepackaged software, which grew 25.7 percent. The

impressive 39.2 percent R&D growth rate of the sixth

largest R&D spending industry in the sector, computer

networking communications equipment, reflects the

phenomenal growth of computer network systems,

including the Internet.

At 46.8 percent, the R&D spending growth of the

fourth largest information and electronics industry—

modems and other wired telephone equipment—is, in part,

misleading because of a one-time shift in the reporting

year of Lucent Technologies, Inc. Lucent Technologies

accounts for 77.3 percent of that detailed sector’s R&D

spending. In 1996, Lucent Technologies changed its fiscal

year-end from December 31 to September 30, consequently shortening its 1996 reporting year to only 9 months.

This led to in a reduction in the reported amounts of R&D

spending in 1996 and other indicators to about threequarters of what they would have been otherwise, thereby

resulting in an artificially-inflated, reported growth rate

between 1996 and 1997.

Within the medical substances and devices sector,

pharmaceuticals preparations firms spent by far the largest

amount on R&D, totaling $15.733 billion in 1997, which

was up 11.5 percent over 1996. Medical instruments firms

spent a total of $2.018 billion, 6.8 percent more than in

1996.

R&D INTENSITY

Figure 4 shows the combined R&D intensity of firms

in each major industry sector. R&D intensity is the ratio

of R&D to sales expressed as a percentage. In 1997,

medical substances and devices firms had by far the

highest combined R&D intensity at 11.8 percent, a

SOURCE: Standard & Poor's Compustat, Englewood, CO

Figure 2. R&D annual percent change by major industrial sectors: top 500 R&D corporations of 1996 and 1997

NOTE: Totals include all 8 "major industrial sectors", including the sector "general services; engineering, accounting, and research/testing services; 

 and finance, insurance, real estate. This last sector was not shown separately because of its small relative level of R&D.

-5 0 5 10 15 20

Total, all major sectors

Aircraft, guided missiles, and space vehicles

Chemicals

Machinery and electrical equipment

Basic industries and materials

Motor vehicles and other surface transportation equipment

Medical substances and devices

Information and electronics

R&D percent change, 1996 to 1997
5

Figure 3. R&D spending and R&D growth of detailed industry sectors within the information 

and electronics sector and medical substances and devices sector

1997 R&D spending

0 2 4 6 8 10 12 14 16 18

Drugs: in vitro, in vivo diagnostic substances

Drugs: biological products, except diagnostic substances

Medical instruments

Drugs: pharmaceutical preparations 

Computer peripheral equip. (printers, scanners...)

Computer integrated systems design

Multiple & miscellaneous computer, data processing serv.

Search & navigation equipment

Communicatons serv. (phone, satellite, radio/TV, cable...) 

Laboratory controlling & measuring instruments 

Computer storage devices 

Opthalmic goods, photogrph. equip. & clocks

Computer networking communications equip.

Radio, TV, cell phone, and satellite communication equip.

Modems & other wired telephone equipment 

Prepackaged software

Electronic components (semiconductors, coils...)

Electronic computers and computer terminals 

Billions of dollars

R&D percent change from 1996–97

-15 5 25 45

Percent change

NOTE: The figure does not include the two smallest information and electronics industry sectors: (1) household audio & video equipment, and audio 

 recordings, which spent $230 million on R&D with a 73-percent R&D decline from the previous year; and (2) calculating/accounting machines 

 & office machines, which spent $210 million on R&D with a 2-percent growth in R&D.

SOURCE: Standard & Poor's Compustat, Englewood, CO

Information and Electronics

Medical Substances and Devices
6

0.3-percentage point increase over 1996 and well above

the 4.2-percent average for all 500 top 1997 R&D

spenders combined. The information and electronicssector

ranked second in intensity at 7.0 percent, an increase of

0.6-percentage points over 1996. Both these sectors

increased their intensity due to increases in R&D spending

rather than reductions in annual net sales.

As indicated in table 2 (page 23), the pattern of R&D

spending per employee for the seven sectors is similar to

that for R&D intensity with medical substances and

devices, again the highest at $29,095 per employee.

Information and electronics is second at $16,381.4

Combined, the top 500 1997 R&D firms spent $10,457 per

employee. Table 2 also provides R&D/sales ratios for major

and detailed sectors, as well as data on capital expenditure

from 1996–97. Like table 1, table 2 is restricted to only

the top 500 corporations in R&D expenditure.

While these R&D-to-sales ratios reflect the relative

tendencies of companies to devote their own resources

to R&D activities, they do not reflect the additional

resources provided by the Federal Government (not

included in this data series) that increase the actual amount

of R&D performed. Such Federal support for R&D

varies greatly by industry. Therefore, any study of the

broader question of how much total R&D is performed

by industry would require supplemental data on Federal

support in addition to the data provided in this report.

4

 See table 2 for industry figures on R&D spending

per employee.

SOURCE: Standard & Poor's Compustat, Englewood, CO

Figure 4. R&D intensity by major industrial sectors: top 500 R&D corporations of 1996 and 1997

0 2 4 6 8 10 12

Total, all major sectors

General services; engineering, accounting, and research/

testing services; and finance, insurance, real estate

Basic industries and materials

Machinery and electrical equipment

Chemicals

Aircraft, guided missiles, and space vehicles

Motor vehicles and other surface transportation equipment

Information and electronics

Medical substances and devices

R&D/sales ratio (percent)

1997

1996
7

For example, according to the SRS findings, the

Federal Government provided $23.7 billion for industry

R&D in 1996.5

 Aerospace companies (or the industrial

sector “aircraft and missiles”) alone received 44 percent

of all Federal R&D funds provided to all industries.

Consequently, 65 percent of the aerospace industry’s

R&D dollars came from Federal sources, while the

remaining 35 percent came from companies’ own funds.

In comparison, the drugs and medicines sector in 1996

financed 100 percent of its R&D from company funds;6

machinery 99 percent; professional and scientific

instruments 68 percent, transportation equipment other

than aircraft and missiles 90 percent, business services

97 percent, and engineering and management services

62 percent.

R&D-to-sales ratios are known to reflect differences

among industries in their relative reliance on R&D.

However, comparisons between industries on this basis

should be made cautiously, because, depending on the

situation, the R&D-to-sales ratios may be as circumstantial

as they are strategic. For example, in the case of the

pharmaceutical industry, R&D is performed not only for

the sake of discovering new products, but for the sake of

product testing to meet regulatory requirements once a

new product has been designed. A change in such

regulatory requirements might, therefore, change the

amount of R&D conducted without changing the number

or value of new products being developed. Furthermore,

for all industries, the cost of materials to the firm is included

in the firm’s sales, even though that materials cost reflects

the “sales” of another firm earlier in the production chain.

As a result, firms further along the production chain will

have higher sales, and thus lower reported R&D-to-sales

ratios, even though R&D as a proportion of the firm’s

contribution to GDP (as measured by value added) might

not be any lower.

Finally, it is important to note that U.S. Corporate

R&D does not distinguish between kinds of R&D by

character of work (i.e., basic research, applied research,

and development). According to other 1997 SRS data,

more than two-thirds of U.S. industry R&D spending

consists of development. Of the remainder about 22 percent is applied research and less than 7 percent basic

research. Significantly, spending on development contributed to almost all the robust growth in industry R&D

during the 1990s. Contrarily, basic and applied research

experienced substantial declines in the mid-1990s. While

both kinds of R&D regained ground in the last half of the

decade, by 1997 industry basic research spending had

only recovered to 1991 levels in real terms. During the

same period, modest growth in Federal spending on basic

research (and to a lesser extent academic spending) ensured positive growth in the Nation’s overall investment

in basic research.7

COMPARISON OF R&D SPENDING TO

SALES, EMPLOYMENT, AND CAPITAL

INVESTMENT

Figures 5, 6, and 7 reflect net sales, employment, and

capital spending, respectively, for the major R&D sectors.

Figure 8 reflects each sector’s percentage share of these

three indicators, as well as R&D spending. In 1997, basic

industries and materials led information and electronics

in sales. But information and electronics employed more

workers than other sectors, and edged out motor vehicles

and surface transportation and basic industries and

materials in capital spending. In considering these data, it

is important to bear in mind that R&D, sales, employment,

and capital spending totals of these industrial sectors

reflect only the activity of the year’s top 500 R&D-spending corporations. Consequently, these data understate the

aggregate R&D, sales, employment, and capital spending

of the sectors examined. That is, sectors that have

disproportionately fewer companies in the top 500 will

tend to be understated more than other sectors. The most

understated sectors in this respect are the basic industries

and materials sector and the miscellaneous sector that

includes general services, finance, insurance, etc.

Nevertheless, for purposes of comparing the R&D-active

portions of large corporations in all sectors, the data for

these indicators are relevant.

5 National Science Foundation, National Patterns of R&D

Resources: 1998, by Steven Payson, NSF 99-335 (Arlington, VA,

1999).

6

 The 100-percent company funding for the drugs and medicines

sector does not include support for R&D that NIH ultimately provides

to this sector through its own research and through funding of research

by universities and other organizations.

7 National Science Foundation, National Patterns of R&D

Resources: 1998, by Steven Payson, NSF 99-335 (Arlington, VA,

1999).
8

SOURCE: Standard & Poor's Compustat, Englewood, CO

Figure 5. Net sales by major industrial sectors: top 500 R&D corporations of 1996 and 1997

0 100 200 300 400 500 600 700 800

General services; engineering, accounting, and research/

testing services; and finance, insurance, real estate

Aircraft, guided missiles, and space vehicles

Chemicals

Machinery and electrical equipment

Basic industries and materials

Motor vehicles and other surface transportation equipment

Medical substances and devices

Information and electronics

Billions of dollars

1997

1996

SOURCE: Standard & Poor's Compustat, Englewood, CO

Figure 6. Number of employees by major industrial sectors: top 500 R&D corporations of 1996 and 1997

0 500 1,000 1,500 2,000 2,500 3,000

General services; engineering, accounting, and research/

testing services; and finance, insurance, real estate

Aircraft, guided missiles, and space vehicles

Chemicals

Machinery and electrical equipment

Basic industries and materials

Motor vehicles and other surface transportation equipment

Medical substances and devices

Information and electronics

Thousands of employees

1997

1996
9

For the major R&D sectors, figure 9 compares the

1997 annual percent change in R&D spending to changes

in net sales, capital spending, and employees. Total R&D

of the seven major sectors grew by 9.0 percent between

1996 and 1997. This growth significantly out paces net

sales (3.7 percent), capital investment (5.3 percent), and

employment (a decline of 0.2 percent).

The comparison among the seven major R&D sectors,

as shown in figure 9, with respect to the four indicators

varies substantially. R&D growth out paces sales growth

in five sectors. But it lags well behind sales in motor

vehicles and surface transportation, and is slightly behind

sales in the aircraft, guided missiles, and space vehicles.

Capital spending growth exceeded R&D growth in three

sectors: motor vehicles and surface transportation;

machinery and electrical equipment; and aircraft, guided

missiles, and space vehicles.

In general, high R&D growth sectors experienced

stronger employment growth than sectors having slow

R&D growth, although again, it is not possible to draw

any connection between these variables from this limited

data. Machinery and electrical equipment enjoyed the

fastest employment growth at 9.4 percent, followed by

information and electronics at 4.4 percent and aircraft,

guided missiles, and space vehicles at 3.5 percent. The

slower growing R&D sectors, motor vehicles and surface

transportation, and chemicals, experienced the lowest

employment growth of the seven sectors, 0.2 percent and

1.6 percent, respectively.

COMPARISON OF GROWTH RATES IN

R&D SPENDING & NET SALES

As shown in figure 10, which highlights the seven

largest R&D sectors, R&D growth roughly correlates

with sales growth in 1997. That is, growth in R&D

spending tends to be higher for industries that have higher

sales growth. Each sphere in figure 10 represents an

industry. A close relationship would not be unexpected

since the amount of company funds available for R&D

investment often depends on the company’s sales

performance in the current and immediately preceding

years. On the other hand, given that investment in R&D

is frequently undertaken with the intention of eventually

achieving higher sales, R&D investment may be as much

a cause of sales growth as it is a result.

SOURCE: Standard & Poor's Compustat, Englewood, CO

Figure 7. Capital spending by major industrial sectors: top 500 R&D corporations of 1996 and 1997

0 10 20 30 40 50 60

General services; engineering, accounting, and research/

testing services; and finance, insurance, real estate

Aircraft, guided missiles, and space vehicles

Chemicals

Machinery and electrical equipment

Basic industries and materials

Motor vehicles and other surface transportation equipment

Medical substances and devices

Information and electronics

Billions of dollars

1997

1996
SOURCE: Standard & Poor's Compustat, Englewood, CO

Figure 8. Major industrial sector shares of R&D, sales, capital spending, and employment:

top 500 corporations in R&D spending for 1997

1997 Capital Spending

$210 billion

Services

1.8%

Machinery & 

electrical 

equipment

8.2%

Basic industries 

& materials

24.7%

Motor vehicles

& other surface 

transportation

equipment

24.7%

Medical

substances & 

devices

Aircraft & 5.1%

guided missiles

2.1%

Chemicals

7.8%

Information &

electronics

25.6%

1997 Employees

$10.7 million

Information & 

electronics

26.3%

Services

9.0%

Chemicals

6.4% Medical

substances & 

devices

6.4%

Aircraft &

guided missiles

7.2%

Motor vehicles 

& other surface 

transportation

equipment

14.5%

Basic

industries & 

materials

19.3%

Machinery & 

electrical 

equipment

10.9%

1997 R&D Spending

$111.4 billion

Motor vehicles

& other surface 

transportation

equipment

16.5%

Information &

electronics

41.1%

Services

0.4%

Chemicals

6.1%

Medical 

substances & 

devices

17.8%

Aircraft & 

guided missiles

4.2%

Basic 

industries & 

materials

7.5%

Machinery & 

electrical 

equipment

6.3%

1997 Net Sales

$2,663 billion

Basic

industries & 

materials

27.3%

Motor vehicles 

& other surface 

transportation

equipment

17.1%

Chemicals

7.9%

Aircraft &

guided missiles

4.9%

Medical

substances & 

devices

6.3%

Services

2.5%

Information & 

electronics

24.7%

Machinery & 

electrical 

equipment

9.3%

10
11

Figure 9. Percent change between 1996 and 1997 in R&D spending, sales, capital spending, and employees by major industrial 

sector:

top 500 R&D corporations of 1996 and 1997

-5

0

5

10

15

20

25

Information and 

electronics

Medical

substances 

and devices

Motor vehicles

and 

other surface

transportation

equipment

Basic industries 

and materials

Machinery and 

electrical

equipment

Chemicals Aircraft, guided

missiles, 

and space

vehicles

Total, all 

major sectors*

Percent change

R&D

Net Sales

Capital Spending

Employees

*Totals include all 8 "major industrial sectors", including the sector "general services; engineering, accounting, and research/testing services; and 

 finance, insurance, real estate. This last sector was not shown separately because of its small relative level of R&D.

SOURCE: Standard & Poor's Compustat, Englewood, CO

SOURCE: Standard & Poor's Compustat, Englewood, CO

Figure 10. Comparison of change in R&D and net sales between 1996 and 1997 and billions of R&D dollars per industry by 

major industrial sector:

top 500 R&D corporations of 1996 and 1997 

Information and

electronics

$45.8B Aircraft, guided missiles

and space vehicles

$4.7B

Medical substances 

and devices

$19.8B

Machinery and

electrical equipment

$7.0B

Motor vehicles and other 

surface transport equipment

$18.4B

Basic industries and 

materials

$8.4B

Chemical

$6.8B

-10

-5

0

5

10

15

20

-10 -5 0 5 10 15 20

Sales percent change

R&D percent change

R&D spending for 

each industry is 

shown in billions 

of dollars and is 

proportional to the 

area of the circles 

displayed.
12

This relationship shows up more clearly in figure 11,

which aggregates R&D spending and sales growth data

for the top 500 companies of 1996 and 1997 into the 45

detailed sectors. In the figure, the various industries cluster

along a diagonal line that runs from the lower left corner

to the upper right corner. This clustering, which shows

the positive relationship between R&D growth and sales

growth, is also borne out by individual firm data for the

top 500 firms.

DISTRIBUTION BY NUMBER AND SIZE

OF FIRM

As shown in figures 12 and 13, respectively, the major

industry sectors vary in number, as well as average sales

of top 500 R&D-spending firms. At one extreme, aircraft,

guided missiles, and space vehicles, and motor vehicles

and surface transportation, respectively, had 8 and 22 of

the top 500 firms in 1997. The average net sales of firms

in these two sectors were, respectively, $16.286 billion

and $20.720 billion in 1997. At the other extreme, medical

substances and devices and information and electronics,

respectively, claimed 83 and 217 of the top 500 firms, but

the net sales averages for firms in these sectors were

relatively small, respectively, $2.020 billion and $3.027 billion in 1997. While these numbers reflect only the 500

largest of the more than 3,400 public firms whose R&D

is reported in Compustat, they are significantly different

enough to suggest that certain major R&D industry

sectors have quite different industrial structures. As a

consequence, the competitive conditions that influence

firm R&D decisions and spending levels may also vary

from one industry to another.

*Except sectors in "engineering, accounting, and research/testing services," "finance insurance, real estate," and "general services."

SOURCE: Standard & Poor's Compustat, Englewood, CO

Figure 11. Comparison of change between 1996 and 1997 in detailed industries* R&D and net sales and billions of R&D dollars 

per detailed industry:

top 500 R&D corporations of 1996 and 1997

-20

-15

-10

-5

0

5

10

15

20

25

30

35

40

45

-20 -15 -10 -5 0 5 10 15 20 25 30 35 40 45

Sales percent change

R&D percent change R&D spending for each industry 

is proportional to the area of the 

circles displayed. The largest 

detailed industry, "motor vehicles 

and motor vehicle equipment," 

spends the most for R&D, 

$18.093 billion.

Five industries with R&D percent 

changes and/or sales percent 

changes are outside the scales of 

this chart. They are not shown 

here in order to preserve the 

detail of the information 

displayed. These industries have 

the following R&D/sales percent 

changes: –73%/–58%, 

–34%/–56%, 18%/64%, 

47%/41%, and 62%/11%. The 

R&D spending totals of firms in 

these industries are respectively: 

$230, $60, $431, $4,011, and 

$159 million.
13

SOURCE: Standard & Poor's Compustat, Englewood, CO

Figure 12. Number of top 500 R&D corporations in major industrial sectors: 1996 and 1997

0 50 100 150 200 250

Aircraft, guided missiles, and space vehicles

General services; engineering, accounting, and research/

testing services; and finance, insurance, real estate

Motor vehicles and other surface transportation equipment

Chemicals

Machinery and electrical equipment

Basic industries and materials

Medical substances and devices

Information and electronics

Number of top 500 R&D corporations

1997

1996

Figure 13. R&D intensity compared to average firm net sales by major industrial sector

Billions of R&D spending per industry, top 500 R&D corporations of 1997

Medical substances

and devices

$19.8B

Information and

electronics

$45.8B

Basic industries

and materials

$8.4B

Chemicals

$6.8B

Machinery and

electrical equipment

$7.0B

Aircraft, guided missiles,

and space vehicles

$4.7B

Motor vehicles and other

surface transportation 

equipment

$18.4B

0

2

4

6

8

10

12

14

0 5,000 10,000 15,000 20,000 25,000

Average firm net sales, millions of dollars

1997 R&D/

sales ratio

SOURCE: Standard & Poor’s Compustat, Englewood, CO

R&D spending for 

each industry is 

shown in billions 

of dollars and is 

proportional to the 

area of the circles 

displayed.
14
15

The U.S. Corporate R&D data series supplements

the NSF’s SRS data series on U.S. industry R&D spending

with timely information on both industrial sectors and

individual firms. U.S. Corporate R&D is created under

a joint agreement by U.S. Department of Commerce’s

OTP and the NSF’s SRS. Based on Standard & Poor’s

Compustat database, the new data series features, for

the years 1996 and 1997, the combined domestic and

overseas R&D spending by the top 500 publicly held

corporations headquartered in the United States. The data

series provides not only individual firm and industry level

R&D data, but also contextual data on net sales, capital

spending, and employment.

CHARACTERISTICS OF THE SRS

INDUSTRY R&D DATA SERIES

The long-established SRS data series on U.S. industry

R&D and the U.S. Corporate R&D data series are

distinctly different, but serve complementary needs. The

SRS data series on industrial R&D provides national

estimates of the expenditures on R&D performed within

the United States by industrial firms, whether U.S. or

foreign-owned. Designed to capture all industrial R&D

performed domestically, the data series includes, but does

not distinguish between, privately held and publicly held

firms. In providing the most comprehensive data on U.S.

domestic R&D spending, the data series necessarily

precludes information on individual firm activity, since it

uses confidential firm data provided to the Bureau of

Census. The data series selectively excludes the R&D

spending of U.S. companies overseas, which is published

in a separate SRS data series on U.S. foreign subsidiaries.

Among the SRS data series statistics are estimates

of total R&D, the portion financed by the Federal

Government, and the portion financed by the companies

themselves or by other non-federal sources, such as state

and local governments or other industrial firms under

contracts or subcontracts. Total R&D is also separated

into its character-of-work components: basic research,

applied research, and development. Other statistics

include R&D financed by a domestic firm but performed

outside the United States, R&D contracted to organizations outside of the firm, and the funds spent to perform

energy-related R&D. The series also provides statistics

on domestic net sales, number of employees, number of

R&D-performing scientists and engineers, and cost per

R&D scientist and engineer.

These data are acquired through SRS’s Survey of

Industrial Research and Development. SRS has sponsored

and managed surveys of industrial R&D since 1953. The

content of these surveys has been expanded and refined

over the years in response to an increasing need by policy

makers for more detailed information on the nation’s R&D

effort. Beginning with the 1992 survey, the sample size

was increased from approximately 14,000 to

approximately 25,000 firms. This increase was made for

several reasons: (1) to account better for births of

R&D-performing firms in the survey universe; (2) to more

fully and accurately survey R&D performed by nonmanufacturing firms, especially in the service sector; and

(3) to gather more current information about potential R&D

performers.

CHARACTERISTICS OF THE U.S.

CORPORATE R&D DATA SERIES

Because it is derived from Standard and Poor’s

Compustat, U.S. Corporate R&D meets a variety of

analytic needs different from those provided by the

Census-based SRS industry R&D data series. For example, tallies of latest year R&D spending data are available

for firms very soon after the close of their fiscal year. By

July of each year, Compustat compiles the latest R&D

figures for a majority of the 9,800 active U.S. companies

in its database. While U.S. Corporate R&D represents

a smaller number of R&D firms than the SRS data series,

it is sufficiently large and overlapping to help substantiate

SRS R&D spending estimates issued earlier in the year

for the most recently completed year. Furthermore,

because Compustat provides data on other performance

indicators for hundreds of individual firms (e.g., sales,

employment, exports, foreign sales, and profits), the data

series contains information that provides immediate

context for analyses of industry R&D activity. Possible

relationships between R&D spending and a wide variety

of factors can be explored, the outcomes of which may

be useful to researchers and policy makers. In addition,

because it includes publicly held firms, U.S. Corporate

R&D can provide R&D spending and other data for

PURPOSE AND CHARACTERISTICS OF THE DATA SERIES
16

individual firms that often can be linked with other data

series, thereby allowing for more detailed analysis of U.S.

industrial R&D.

8 While Compustat provides data on a limited number of foreign

firms, another comparable Standard and Poor’s database, Global

Vantage, is the primary source of information for these firms.

SOME STRUCTURAL DIFFERENCES

BETWEEN THE U.S. CORPORATE R&D

AND THE SRS DATA SERIES

• The SRS data series includes privately held

firms, whereas, U.S. Corporate R&D does

not.

• Firms switching from private to public

ownership may enter the U.S. Corporate

R&D 500 top firms. Switches in ownership

status do not influence the SRS data series

• In contrast to the SRS data series, U.S.

Corporate R&D generally attributes R&D

expense to the firm that is the research

funding source, not the performer of the

research (i.e., not contractors).

• The SRS data series includes R&D

conducted in the United States by firms

headquartered outside the United States,

whereas U.S. Corporate R&D excludes

such R&D.

• The R&D expenses of foreign firms that are

acquired by U.S.-headquartered firms may

be added to the U.S. Corporate R&D top

500 firm total. Conversely, U.S.-

headquartered firms that are acquired by

foreign-headquartered firms are no longer

included in the top 500. The SRS data series

is unaffected by change in national affiliation

of a given firm or subsidiary conducting R&D

in the United States.

• The SRS data series excludes U.S. firm R&D

conducted abroad, while U.S. Corporate

R&D includes it.

• The SRS data series includes the R&D

expenditures of banks, utilities, and property

and casualty companies, while U.S.

Corporate R&D does not.

THE SOURCE DATABASE—COMPUSTAT:

U.S. Corporate R&D is derived from Standard and

Poor’s Compustat database, which provides 20 years of

annual and monthly data and 48 quarters of quarterly data

for more than 18,500 U.S. and Canadian companies.8 Of

these firms, more than 9,800 are active U.S. companies

(of which more than 3,400 conduct R&D) and approximately 8,200 are no longer active U.S. companies (due

to buyouts, bankruptcy, etc.). Compustat provides R&D

data for corporations, and also provides other financial,

statistical, and market data for corporations, banks, savings

and loans, business segments, geographic areas, industry

composites, aggregates, and indexes. It provides coverage

of annual and quarterly Income Statement, Balance Sheet,

Statement of Cash Flows, and supplemental data items

on publicly-held companies.

Compustat company data are derived from publicly

held companies, specifically those trading on the New

York Stock Exchange, American Stock Exchange,

National Association of Securities Dealers Automated

Quotations (NASDAQ), Over-the Counter, three Canadian

stock exchanges, and wholly owned subsidiaries of

companies that are required to file with the SEC.

The convention used by Compustat to adjust for the

fact that the fiscal years of individual U.S. firms vary, is

to treat fiscal years ending January 1 through May 31 as

ending in the prior calendar year. Thus, the data for a

fiscal year beginning on June 1, 1997 and ending on

May 31, 1998 are reported as the year 1997, whereas

data for a fiscal year beginning on July 1, 1997 and ending

on June 30, 1998, are reported as the year 1998.

COMPUSTAT TREATMENT OF R&D

EXPENSES

Because Compustat draws its R&D data from the

10-K reports that corporations file with the SEC, it relies

fundamentally on the SEC’s definition of R&D. It defines

R&D expenditure as all costs incurred during the year,

by the company in question, that relate to the research

and development of new products, processes, or services.

Such expenditures generally include related software

expenses and amortization of software costs. They

generally exclude the following items: (1) customer or

government-sponsored R&D (including reimbursable
17

STATISTICAL COMPARISONS BETWEEN THE U.S. CORPORATE R&D

AND THE SRS DATA SERIES

Table 3 (page 25) and figure 14 compare 1997 R&D

spending data from the U.S. Corporate R&D and

SRS industry survey. Differences in the R&D

spending of various industrial sectors are attributable

to the smaller universe of firms in U.S. Corporate

R&D, as well as, the structural differences between

the two data series discussed in the text box on the

previous page.

The U.S. Corporate R&D total of $111 billion for

the top 500-R&D spenders in 1997 is 83.4 percent of

the SRS industry survey estimate of $134 billion—

about what might be expected given differences in

the two series. According to the SRS industry survey,

R&D increased by 10.4 percent over the survey’s

$121 billion total, in comparison to a 9.0-percent

increase according to the U.S. Corporate R&D data

series. U.S. Corporate R&D aggregates for the following four major industries also compare reasonably

to corresponding SRS survey aggregates: aircraft,

guided missiles, and space vehicles (82.3 percent of

SRS data); chemicals(96.9 percent); information and

electronics (89.9 percent); and machinery and

electrical equipment (70.1 percent).

Nevertheless, within information and electronics, the

U.S. Corporate R&D and the SRS industry survey

assign quite different R&D spending amounts for

various detailed industries. For example, according

to U.S. Corporate R&D, the five computer-related

hardware detailed sectors together spent a total

of $16.9 billion, compared to the SRS survey’s

$12.8 billion. Conversely, U.S. Corporate R&D

attributes $6.6 billion to electronic components, while

SRS assigns $10.8 billion. Such differences between

the two series within information and electronics may

be due largely to differences in how Compustat and

the U.S. Census Bureau assign Standard Industrial

Codes to firms.

U.S. Corporate R&D attributes significantly higher

amounts of R&D spending than SRS to two major

sectors, motor vehicles and surface transportation

and the large “substances” portion of medical

substances and devices—respectively, 130.7 and

153.9 percent of the SRS amount. One possible

explanation for these differences may be that U.S.

firms in these industries spend greater amount for

R&D abroad than do their foreign counterparts in

the United States. Another explanation may obtain

from the fact that SRS assigns R&D spending to the

R&D performer (e.g. contractors), whereas, U.S.

Corporate R&D attributes the R&D spending to the

funding source. Accordingly, significant amounts of

motor vehicle research may be under contract to some

of the many firms in other sectors that provide motor

vehicle subcomponents. In the case of medical

substances, the SRS survey may view a sizable

amount of that industry’s R&D as occurring under

contract in testing/research services. This “transfer”

of R&D funds may also partly explain why U.S.

Corporate R&D attributes a much smaller portion

of R&D to testing/research services than does SRS

(in addition to the fact that many testing and research

service firms may be too small for inclusion in top

500 U.S. Corporate R&D firms).

The significantly smaller amount of R&D spending

that U.S. Corporate R&D attributes to the basic

industries and materials sector may be partly because

SRS includes many more smaller and private firms.

This same factor may contribute also to the very

significant lower U.S. Corporate R&D amounts

attributed to the finance, insurance, real estate, and

general services sectors. Additionally, the amount of

R&D attributed by U.S. Corporate R&D to these

last two sectors is reduced by the fact that Compustat

does not report the R&D expenditures of banks,

utilities, and property and casualty companies.
18

9 Given the latitude that exists in firms reporting such information,

this may not always be the case, e.g., some firms probably do report

federally supported R&D as their own, especially when such support

is provided after the R&D was actually performed, as in the case of

Federal support for independent R&D.

indirect costs);9 (2) extractive industry activities, such as

prospecting, acquisition of mineral rights, drilling, mining,

etc.; (3) those engineering expenses directed toward

routine, ongoing efforts to define, enrich, or improve the

qualities of existing products; (4) inventory royalties; and

(5) marketing research and testing. R&D expense is not

itemized with respect to banks, utilities, or property and

casualty companies.

Compustat’s SEC-based definition of R&D is the

same as the SRS definition with two exceptions. First,

unlike SRS, Compustat’s SEC-based data does not

exclude social science research. Second, following SEC

rules, Compustat data does not include very small R&D

amounts that are not material to a firm’s decision-making.

These differences in definition are unlikely to contribute

to any significant differences.

Greater differences, however, may result from the

fact that some firms consider certain routine

engineering activities as qualified research for inclusion

on SRS industry R&D questionnaires, but do not report

such activity as R&D to the SEC, which disallows it.10

The fact that Compustat only includes a given firm’s

own expenditure on R&D is significant. This means

Compustat usually attributes R&D funds to the researchfunding source, not the final performer of research when

it is contracted out to another firm. As a result, reported

levels of R&D by industry group are different from what

they would be if they were based on the actual locations

of final R&D activities. For example, if a manufacturing

firm purchases the services of a research and testing firm,

those expenses are generally reported under “manufacturing R&D” rather than “services-sector R&D,” although

the latter would better reflect where R&D is actually

performed.

For each firm Compustat provides only a single annual

R&D expense total. Thus, unlike some other data in Compustat, such as net sales, data on separate R&D expenses

for a single firm are not available for R&D performed in

different geographic regions, such as in the United States

10 Bronwyn Hall and William F. Long, ”Difference in Reported

R&D Data on the NSF/Census RD-1 Form and the SEC 10-K Form:

A Micro-Data Investigation,” unpublished report to the National

Science Foundation, April 1998.

SOURCE: Standard & Poor's Compustat, Englewood, CO

Figure 14. Spending comparison of U.S. Corporate R&D top 500 corporations and the SRS Data Series, 1997

0 5 10 15 20 25 30 35 40 45 50 55

General services; engineering, accounting, and research/

testing services; and finance, insurance, real estate

Aircraft, guided missiles, and space vehicles

Chemicals

Machinery and electrical equipment

Basic industries and materials

Motor vehicles and other surface transportation equipment

Medical substances and devices

Information and electronics

Billions of dollars

U.S. Corporate R&D top 500 corporations

(Total $111.369 B)

SRS industry—survey R&D

(Total $133.611 B)
19

or performed abroad by U.S.-owned subsidiaries. Only

a single, combined R&D total is provided for each firm.

TOP 500 R&D SPENDERS

Based on their latest annual R&D spending, U.S.

Corporate R&D identifies the top 500 R&D-conducting,

publicly held corporations that are headquartered in the

states or territories of the United States.11 The data series

excludes the R&D of U.S. subsidiaries owned by corporations headquartered in foreign countries. The top 500-

R&D firms in U.S. Corporate R&D account for nearly

90 percent of all the R&D spending reported by

Compustat from more than 3,000 firms. Because the list

of top 500-R&D corporations changes from year to year,

U.S. Corporate R&D uses two distinct 1996 and 1997

lists of top 500 firms for generating and comparing

aggregate 1996 and 1997 activity.

Annual changes in the corporate composition and

overall R&D content of the top 500 firms in U.S.

Corporate R&D may be attributed to a variety of factors,

such as: (1) firms increasing or decreasing their ordinary

and usual R&D expenses as necessary; (2) firms merging

or spinning off (such as Lucent from AT&T); (3) U.S.-

headquartered firms acquiring other U.S.-headquartered

firms, private firms, or foreign firms; (4) private U.S. firms

becoming publicly held; and (5) foreign headquartered

firms acquiring U.S.-headquartered firms, in which case

the latter’s R&D is no longer tracked.

INDUSTRIAL SECTORS

U.S. Corporate R&D categorizes individual firms

and relates R&D data according to eight “major” industrial

sectors and 45 “detailed” industrial sectors. The detailed

sectors are similar, but not identical to sectors featured

by the SRS data series.12 The eight major sectors combine

detailed sectors into some new, large industrial groups,

one of which, information and electronics, includes both

manufacturers and services (communications and software). By categorizing many multifaceted firms into broad

industrial categories, these large sectors minimize the

misleading effects of labeling firms by a narrower Standard

Industrial Code (SIC) and the movement of R&D from

one narrow category to another when companies acquire

(or spin-off) companies into a different sector. Seven of

these eight major sectors conduct significant amounts of

R&D and/or include significant numbers of R&D firms

among the top 500-R&D spending corporations. The

remaining sector—general services; engineering,

accounting, and research testing services; finance,

insurance and real estate—contains only 10 of the top

500 1997 R&D firms in the Compustat, accounting for

less than 0.5 percent R&D performed by the top 500.

While generally reflective of the activity or performance in a given sector, sectoral aggregates (including

R&D, sales, and employment) should be used with caution. Because U.S. Corporate R&D data are tabulated

at the enterprise level, all the R&D or other activity pertaining to a single firm are attributed to the major (most

relevant) SIC of that firm. This means all the R&D of a

given firm is classified under one SIC regardless of how

many other SICs may apply to various firm activities and

subdivisions. Industrial sector aggregates thus contain

activities of many firms and subdivisions that logically

should, but cannot be, attributed to other sectors.

Another reason for caution in using sectoral aggregates is that, from year to year, aggregates may rise or

fall not only due to trends in the industries themselves,

but also due to the acquisition of firms or subsidiaries by

other firms. When such acquisitions occur within a single

industrial sector, they do not affect year-to-year

aggregates. However, aggregates may be significantly

affected when major mergers or acquisitions cross

industrial sectors. For example, the manufacturing sector

was enlarged at the expense of the service sector when

IBM acquired Lotus in 1995. Similarly, the spin-off of

Lucent from AT&T in 1995 reassigned very significant

amounts of R&D from the communications services

sector to the communications equipment sector.

R&D VALUATION ADJUSTMENTS

The U.S. Corporate R&D data series aims at using a

firm’s internal, current dollar expenditures to measure

actual performance of R&D work (i.e., scientists and engineers doing work on research and development projects).

However, when one firm acquires another, Compustat

generally combines the acquiring firm’s internal R&D

11 The list of 500 companies is drawn from Compustat data

reported on July 31, 1998. While Compustat reports latest year data

for nearly all large firms by July 31, Compustat reports a significant

number of smaller firms over the remainder of the calendar year. Some

of these late firms may have R&D spending levels equal to or greater

than some firms contained in the July 31 list of top 500 R&D spenders.

12 While the detailed industrial sectors of U.S. Corporate R&D

and the SRS data series are similar, differences exist in the method of

classifying firms by category. Most importantly, in some cases the

same firm may be grouped under different industrial categories by the

two data series, thereby limiting the comparability of the two series in

terms of industry aggregates.
20

expenditure with write-offs of purchased in-process R&D

(IPR&D) and reports these as a single R&D expense.

This practice presents difficulties for the U.S. Corporate

R&D data series. This is because it mixes together

acquired R&D, which is often measured according to

some estimate of its future value, with R&D that is

measured strictly by the current expenditure of dollars.13

13 This distinction arises from existing accounting rules and related

policy questions regarding the appropriate valuation of purchased inprocess R&D (IPR&D), and the consistency of accounting treatment

between IPR&D and an acquiring firm’s own internal R&D expenditure.

According to 1974 rules of the Financial Accounting Standards Board

(FASB), R&D conducted internally should be expensed rather than

capitalized (FASB Statement No. 2: Accounting for Research and

Development Costs). In a later interpretation, the Board additionally

determined that certain forms of R&D that might transfer in a corporate

acquisition could also be expensed, including ”even a specific research

project in process.” The extent of the write-off should be determined

”from the amount paid by the acquiring enterprise and not from the

original cost to the acquired enterprise.” The amounts allocated to

IPR&D are expensed at the date of consummation of the acquisition,

unless the projects have an alternative future use.

In the last several years, amounts attributed to purchased IPR&D

have increased, raising questions as to whether the valuations are

measuring the fair value of the IPR&D. By increasing IPR&D, acquiring

firms reduce their reported levels of assets attributable to goodwill

and other intangibles, and thereby improve their returns on equity.

While the write-offs reduce net earnings in the year of purchase, they

also bolster future earnings, an important gauge to investors of a

firm’s health. Such write-offs, which are intended to represent the fair

value of the acquired in-process technology, may be significantly larger

than the amount originally spent on R&D by the acquired firm.

Under generally accepted accounting principles (GAAP), goodwill

is the remaining value of a company’s purchase price after accounting

for acquired tangible and identified intangible assets such as IPR&D.

Generally, firms wish to avoid recording large amounts of goodwill

since it is amortized over its useful life, using periods as long as 40

years, during which earnings per share are reduced annually. Also,

most securities analysts subtract goodwill from equity when examining

a firm debt-to-equity position.

In a number of high-profile acquisitions, the purchasing firms

have written off significant portions of acquisition cost as IPR&D. For

example, in 1995 when IBM purchased Lotus Development Corporation

it valued the acquired R&D as $1.800 billion, increasing IBM’s total

Compustat reported R&D from $3.382 billion in 1994 to $5.227 billion.

Prior to its acquisition, Lotus reported an R&D expenditure of only

$256 million. Similarly, in 1994 and 1995, acquisitions by Computer

Associates resulted in the write off of significant portions of acquisition

costs as IPR&D, with the result that its Compustat reported total

R&D increased from $226 million in 1993 to $504 million in 1994,

and to $1.607 billion in 1995. The practice is not limited to the

purchase of software companies; any company with products under

development may have IPR&D to be written off.

As more companies in recent years have written off acquired

IPR&D, the Securities & Exchange Commission (SEC) has increased

its scrutiny of company IPR&D valuations, and in several cases has

forced companies to reduce their write-offs. In addition, the FASB

has indicated that it will examine the appropriate accounting treatment

for both in-house and acquired R&D.

In order to eliminate potential overstatement of actual

R&D expenses, the U.S. Corporate R&D series adjusts

Compustat-reported R&D expenses when IPR&D writeoffs do not represent actual dollars spent on R&D in the

current year. Firms that may have such write-offs are

identified by a combination of filters that look for unusual

increases in R&D from year to year, or significant differences in annual percent changes between R&D and net

sales, or R&D and employment. The SEC submissions

of identified firms are then examined to determine whether

an unusual R&D increase is due to either an exceptionally

large increase in actual R&D performance or to the writeoff of purchased IPR&D.

These screening and adjusting methodologies are not

perfect. Some firms are examined based on past activity

or other information. However, not all smaller firms are

examined and the modest percentage increases of larger

firms may contain relatively small IPR&D write-offs.

Also, firms that may in the same year write off large

amounts of IPR&D and significantly decrease their

spending on actual R&D may not be identified, thereby

leaving their R&D expenses subsequently unadjusted.
As a Percent Percent 

Major & detailed industrial sector percent change change 

 of the total from from 

1996 1997 500 in 1997 1996–97 1996 1997 1996–97 1996 

All of the top 500 firms (across all industries)..............................102,212,335 111,368,541 100.00 8.96 10,673,673 10,650,175 -0.22 2,567,94

Aircraft, guided missiles, & space vehicles............................... 4,177,500 4,672,800 4.20 11.86 736,783 762,298 3.46 115,32

Basic industries & materials................................................... 7,963,432 8,355,329 7.50 4.92 2,057,850 2,056,390 -0.07 735,63

 Agr. services; forestry; fishing; mining; construction....................... 183,600 203,300 0.18 10.73 6,620 7,031 6.21 2,10

 Fabricated metal products, except machinery & transp. eq...................... 476,244 508,038 0.46 6.68 176,762 172,812 -2.23 31,23

 Food & kindred products; tobacco products.............................. 1,195,600 1,187,900 1.07 -0.64 457,534 441,424 -3.52 120,00

 Lumber, wood products, & furniture..................................... 433,083 543,085 0.49 25.40 162,303 185,603 14.36 31,87

 Misc. products (leather, toys, jewelry, musical inst.).................... 304,429 372,432 0.33 22.34 41,800 42,262 1.11 7,52

 Printing, publishing, & allied industries............................... 98,413 159,472 0.14 62.04 19,388 21,447 10.62 3,58

 Stone, clay, glass, & concrete products...................................... 360,791 412,266 0.37 14.27 80,900 90,200 11.50 13,35

 Textile & apparel products...................................................... 73,449 77,091 0.07 4.96 10,454 10,681 2.17 1,79

 Oil & gas extraction; petrol. reflining & related ind. ........................................... 2,367,808 2,474,105 2.22 4.49 494,235 509,180 3.02 402,87

 Paper & allied products........................................................ 1,462,562 1,515,944 1.36 3.65 287,587 292,113 1.57 63,49

 Ferrous metal products..................................................... 91,200 60,300 0.05 -33.88 41,500 22,000 -46.99 8,49

 Nonferrous metal products................................................... 324,503 286,676 0.26 -11.66 126,231 117,002 -7.31 26,19

 Rubber & misc. plastic prod. (tires, plastic footwear...)................. 591,750 554,720 0.50 -6.26 152,536 144,635 -5.18 23,09

Chemicals................................................................................... 6,531,070 6,821,613 6.13 4.45 667,231 677,803 1.58 209,48

 Industrial chem.; plastic & other synthetic materials.............................. 4,029,550 4,295,342 3.86 6.60 315,419 312,391 -0.96 120,45

 Other chem. (soaps, ink, paints, fertilizers, explosives...)..................... 2,501,520 2,526,271 2.27 0.99 351,812 365,412 3.87 89,02

Engineering, accounting, & research/testing services......................... 125,341 138,309 0.12 10.35 25,800 52,300 102.71 2,92

Finance, insurance, real estate................................................... 47,863 81,048 0.07 69.33 1,411 3,505 148.41 30

General services.................................................................... 180,118 207,689 0.19 15.31 1,232,349 905,843 -26.49 68,54

 Other (noncomputer) bus. serv (advertising, equip. rental...).................. 25,394 52,582 0.05 107.06 543 1,620 198.34 

 Transportation; freight & warehousing; & pipeline services............... 55,500 68,000 0.06 22.52 885,871 892,873 0.79 56,40

 Wholesale & retail trade...................................................... 99,224 87,107 0.08 -12.21 345,935 11,350 -96.72 12,14

See SOURCE at end of table

21

(In th

Table 1. Comparison of 1996 and 1997 R&D, employment, and sales of top 500 corporations in R&D, by detailed sect

(In thousands of dollars) Number of employees

R&D Total Employment
As a Percent Percent 

Major & detailed industrial sector percent change change 

 of the total from from 

1996 1997 500 in 1997 1996–97 1996 1997 1996–97 1996 

Information & electronics................................................................. 39,774,093 45,823,950 41.15 15.21 2,678,550 2,797,403 4.44 618,81

 Calculating/accounting mach. & office machines, nec.......................206,063 210,468 0.19 2.14 42,315 43,869 3.67 6,25

 Communicatons serv. (phone, satellite, radio/TV, cable...).......................... 1,182,833 1,053,727 0.95 -10.91 302,156 244,448 -19.10 87,07

 Computer integrated systems design........................................ 364,923 431,256 0.39 18.18 21,546 33,090 53.58 3,48

 Computer networking communications equip. ........................... 1,882,810 2,620,503 2.35 39.18 36,212 42,863 18.37 15,75

 Computer peripheral equip. (printers, scanners...).......................... 246,176 325,349 0.29 32.16 14,162 14,294 0.93 4,00

 Computer storage devices.................................................. 2,466,070 2,607,477 2.34 5.73 186,431 211,348 13.37 38,74

 Electronic components (semiconductors, coils...)..........................5,668,425 6,648,235 5.97 17.29 321,588 340,356 5.84 66,20

 Electronic computers & computer terminals................................10,077,693 11,093,953 9.96 10.08 508,192 558,862 9.97 176,56

 Household audio & video equipment, & audio recordings................. 835,871 229,751 0.21 -72.51 110,269 34,784 -68.46 18,42

 Laboratory controlling & measuring instruments.............................. 1,993,705 2,423,390 2.18 21.55 221,193 257,279 16.31 34,18

 Modems & other wired telephone equipment................................2,732,411 4,010,990 3.60 46.79 156,116 167,125 7.05 23,96

 Multiple & miscellaneous computer & data 

 processing services........................................................... 515,211 540,442 0.49 4.90 42,470 42,567 0.23 6,34

 Opthalmic goods, photogrph. equp. & clocks................................2,546,710 2,616,313 2.35 2.73 216,101 223,806 3.57 40,44

 Prepackaged software........................................................... 5,266,971 6,619,062 5.94 25.67 136,782 160,331 17.22 34,51

 Radio, TV, cell phone, & satellite communication eq.............................. 3,122,671 3,625,457 3.26 16.10 204,617 215,681 5.41 38,36

 Search & navigation equipment............................................... 665,550 767,577 0.69 15.33 158,400 206,700 30.49 24,47

Machinery & electrical equipment..............................................6,387,141 7,038,500 6.32 10.20 1,063,117 1,162,838 9.38 229,90

 Electrical equipment (industrial & household)................................ 3,000,095 3,070,656 2.76 2.35 519,786 532,873 2.52 121,70

 Machinery (indus., farm, services, mining & construction)...................................... 3,387,046 3,967,844 3.56 17.15 543,331 629,965 15.94 108,20

Medical substances & devices.................................................17,767,772 19,849,094 17.82 11.71 664,202 682,214 2.71 154,31

 Drugs: biological products, except diagnostic substances................ 1,231,684 1,504,594 1.35 22.16 12,411 15,235 22.75 3,50

 Drugs: in vitro, in vivo diagnostic substances............................... 542,086 592,959 0.53 9.38 19,033 15,606 -18.01 3,52

 Drugs: pharmaceutical preparations......................................... 14,105,088 15,733,395 14.13 11.54 499,680 514,369 2.94 125,97

 Medical instruments........................................................... 1,888,914 2,018,146 1.81 6.84 133,078 137,004 2.95 21,31

Motor vehicles & other surface transportation equipment....................................... 19,258,005 18,380,209 16.50 -4.56 1,546,380 1,549,581 0.21 432,69

 Ships, trains, motorcycles, bicycles, campers, military tanks................ 232,470 286,808 0.26 23.37 72,870 85,060 16.73 11,38

 Motor vehicles & motor vehicle equipment.................................19,025,535 18,093,401 16.25 -4.90 1,473,510 1,464,521 -0.61 421,31

KEY: nec -- Not elsewhere classified. 

SOURCE: Standard and Poor's Compustat, Englewood, CO.

22

(In thousands of dollars) (Number of employees) (In th

Table 1. Comparison of 1996 and 1997 R&D, employment, and sales of top 500 corporations in R&D, by detailed sect

R&D Employment 
Change from 

Major & detailed industrial sector 1996 1997 1996–97 1996 1997 

(Percent)

Top 500 corporations (across all industries)................................................................ 199,057,903 209,635,382 5.31 3.98 4.18 

Aircraft, guided missiles & space vehicles.............................................. 3,686,100 4,449,900 20.72 3.62 3.59 

Basic industries & materials................................................................ 50,392,908 51,713,149 2.62 1.08 1.15 

 Agr. services; forestry; fishing; mining; construction................................... 146,700 186,400 27.06 8.71 9.09 

 Fabricated metal products, except machinery & transp. eq.................................. 2,044,074 2,076,520 1.59 1.52 1.63 

 Food & kindred products; tobacco products......................................... 4,939,533 4,664,939 -5.56 1.00 1.00 

 Lumber, wood products, & furniture.................................................. 2,079,671 1,439,200 -30.80 1.36 1.56 

 Misc. products (leather, toys, jewelry, musical inst.)................................. 382,531 421,955 10.31 4.05 3.88 

 Printing, publishing, & allied industries............................................... 272,158 395,504 45.32 2.75 4.03 

 Stone, clay, glass, & concrete products.............................................. 1,434,758 1,598,779 11.43 2.70 2.66 

 Textile & apparel products................................................................ 108,767 113,793 4.62 4.10 4.15 

 Oil & gas extraction; petrol. refining & related ind.....................................30,542,101 33,025,107 8.13 0.59 0.63 

 Paper & allied products....................................................................... 4,908,441 5,102,898 3.96 2.30 2.30 

 Ferrous metal products..................................................................... 347,600 96,300 -72.30 1.07 1.61 

 Nonferrous metal products................................................................. 1,768,670 1,370,489 -22.51 1.24 1.16 

 Rubber & misc. plastic prod. (tires, plastic footwear...).............................. 1,417,904 1,221,265 -13.87 2.56 2.61 

Chemicals..........................................................................................15,979,555 16,409,997 2.69 3.12 3.25 

 Industrial chem.; plastic & other synthetic materials..................................10,907,622 11,681,488 7.09 3.35 3.65 

 Other chem. (soaps, ink, paints, fertilizers, explosives...)............................5,071,933 4,728,509 -6.77 2.81 2.75 

Engineering, accounting, & research/testing services...................................133,190 163,012 22.39 4.29 2.46 

Finance, insurance, real estate............................................................... 37,133 258,815 596.99 15.87 5.95 

General services................................................................................. 3,061,709 3,339,130 9.06 0.26 0.34 

 Other (noncomputer) bus. serv (advertising, equip. rental...)........................... 44,956 62,998 40.13 1521.51 68.78 

 Transportation; freight & warehousing; & pipeline services...........................2,339,600 3,233,000 38.19 0.10 0.12 

 Wholesale & retail trade.................................................................... 677,153 43,132 (93.63) 0.82 4.18 

See SOURCE at end of table

Table 2. Comparison of 1996 and 1997 capital expenditure, R&D/sales ratio, and R&D/employment ratio of top 500 corporations in R

Capital expenditure

R&D/sales ratio

(Percent) 

23

(In thousands of dollars)
Change from 

Major & detailed industrial sector 1996 1997 1996–97 1996 1997 

(Percent)

Information & electronics.....................................................................53,018,113 53,624,756 1.14 6.43 6.98 

 Calculating/accounting mach. & office machines, nec.................................. 362,873 374,291 3.15 3.29 3.16 

 Communicatons serv. (phone, satellite, radio/TV, cable...)...........................13,555,977 12,676,013 -6.49 1.36 1.41 

 Computer integrated systems design................................................... 130,094 380,542 192.51 10.48 7.56 

 Computer networking communications equip. .............................................1,126,597 913,803 -18.89 11.95 12.57 

 Computer peripheral equip. (printers, scanners...).................................... 221,473 167,816 -24.23 6.15 6.81 

 Computer storage devices................................................................. 2,004,239 2,076,732 3.62 6.36 6.41 

 Electronic components (semiconductors, coils...).......................................11,985,814 11,249,167 -6.15 8.56 9.18 

 Electronic computers & computer terminals........................................... 9,964,264 11,491,962 15.33 5.71 5.77 

 Household audio & video equipment, & audio recordings............................1,053,054 1,035,678 -1.65 4.54 2.94 

 Laboratory controlling & measuring instruments........................................... 1,547,567 1,665,022 7.59 5.83 6.45 

 Modems & other wired telephone equipment............................................1,603,558 2,199,054 37.14 11.40 11.89 

 Multiple & miscellaneous computer & data processing services.................. 404,093 414,479 2.57 8.12 7.85 

 Opthalmic goods, photogrph. equp. & clocks.............................................2,278,349 2,391,037 4.95 6.30 6.61 

 Prepackaged software........................................................................ 2,099,650 2,074,568 -1.19 15.26 15.00 

 Radio, TV, cell phone, & satellite communication eq....................................... 3,945,943 3,659,526 -7.26 8.14 8.79 

 Search & navigation equipment...................................................... 734,568 855,066 16.40 2.72 2.78 

Machinery & electrical equipment.............................................................. 15,337,480 17,281,298 12.67 2.78 2.84 

 Electrical equipment (industrial & household).............................................10,548,717 10,702,407 1.46 2.47 2.42 

 Machinery (indus., farm, services, mining & construction).............................4,788,763 6,578,891 37.38 3.13 3.29 

Medical substances & devices............................................................... 9,966,717 10,648,623 6.84 11.51 11.84 

 Drugs: biological products, except diagnostic substances............................. 462,530 564,931 22.14 35.17 36.64 

 Drugs: in vitro, in vivo diagnostic substances............................................ 308,176 207,474 -32.68 15.39 19.18 

 Drugs: pharmaceutical preparations.......................................................7,890,949 8,372,782 6.11 11.20 11.45 

 Medical instruments......................................................................... 1,305,062 1,503,436 15.20 8.86 8.75 

Motor vehicles & other surface transportation equipment............................................................ 47,444,998 51,746,702 9.07 4.45 4.03 

 Ships, trains, motorcycles, bicycles, campers, military tanks.................................................. 542,560 556,665 2.60 2.04 2.23 

 Motor vehicles & motor vehicle equipment..............................................46,902,438 51,190,037 9.14 4.52 4.08 

KEY: nec -- Not elsewhere classified. 

SOURCE: Standard and Poor's Compustat, Englewood, CO.

Table 2. Comparison of 1996 and 1997 capital expenditure, R&D/sales ratio, and R&D/employment ratio of top 500 corporations in R

Capital expenditure

R&D/sales ratio

24

(In thousands of dollars) (Percent)
Page 1 of 2

Corporate R&D

Corporate Industry (top 500) as

R&D 1997 survey a percent of

Standard industrial (top 500) 1997 R&D industryclassification Major & detailed industrial sector1 (In millions of dollars) (In millions of dollars) survey R&D

Total.............................................................................................. 111,369 133,611 83.35

372,376 Aircraft, guided missiles, & space vehicles.................................... 4,673 5,677 82.31

Basic industries & materials............................................................

07–12,14–17 Agr. services; forestry; fishing; mining; construction.......................... 203 1,541 13.19

13,29 Oil & gas extraction; petroleum reflining & related ind............................................... 2,474 1,612 153.48

20,21 Food & kindred products; tobacco products................................. 1,188 1,787 66.47

22,23 Textile & apparel products.......................................................... 77 476 16.20

24,25 Lumber, wood products, & furniture............................................ 543 348 156.06

26 Paper & allied products............................................................ 1,516 1,456 104.12

27 Printing, publishing, & allied industries........................................ 159

31,39 Misc products (leather, toys, jewlry, musicl inst..).............................. 372

30 Rubber & misc. plastic prod. (tires, plastic footwear...)....................... 555 1,372 40.43

32 Stone, clay, glass, & concrete products................................................ 412 606 68.03

33–332,3398–99 Ferrous metal products........................................................... 60 414 14.57

333–336 Nonferrous metal products................................................................. 287 353 81.21

34 Fabricated metal products, except machinery & transp. equip.............. 508 1,669 30.44

Chemicals................................................................................. 6,822 7,042 96.87

2800,281–82,286 Industrial chemicals; plastic & other synthetic materials...................... 4,295 4,970 86.43

284-85,287–89 Other chem. (soaps, ink, paints, fertilizers, explosives...).................... 2,526 2,072 121.92

873 Engineering, accounting, & research/testing services............................... 138 5,909 2.34

60–65,67 Finance, insurance, real estate............................................................ 81 1,500 5.40

General services............................................................................ 208 10,256 2.03

40–42,44–47 Transportation; freight & warehousing; & pipeline services....................................68 670 10.15

49 Electric, gas, sanitary services.................................................. 0 258 0.00

50–59 Wholesale & retail trade......................................................... 87 7,961 1.09

731–736,738 Other (noncomputer) bus. serv (advertising, equip. rental...)................. 53 242 21.73

701,72,75–79,81, Lodging, repair, legal, social, consultg, & oth serv; movie prod................. 0 446 0.00

83–84,89

801–809 Hospitals & health care-related laboratories & services............................. 0 679 0.00

Information & electronics............................................................... 45,824 50,981 89.88

3571,3575 Electronic computers & computer terminals................................... 11,094

3572 Computer storage devices......................................................... 2,607

3576 (Compustat code) Computer networking communications equip...................................................2,621

3577 Computer peripheral equip. (printers, scanners...).............................. 325

3578–79 Calculating/accounting mach. & office machines, nec............................... 210

365 Household audio & video equipment, & audio recordings........................... 230 152 151.15

3661 Modems & other wired telephone equip........................................................... 4,011

3663,3669 Radio, TV, cell phone, & satellite comm. equip................................................. 3,625

367 Electronic components (semiconductors, coils...)..................................................................................... 6,648 10,786 61.64

See explanatory information and SOURCE at end of table

Table 3. Comparison between top 500 corporate R&D levels and industry-survey R&D levels: 1997

7,377 103.52

2,642 20.13

12,787 131.84

25
Page 2 of 2

Corporate R&D

Corporate Industry (top 500) as

R&D 1997 survey a percent of

Standard industrial (top 500) 1997 R&D industryclassification Major & detailed industrial sector (In millions of dollars) (In millions of dollars) survey R&D

Information & electronics—continued

381 Search & navigation equip..........................................................................768

382 Lab. controllling & measuring instru. .............................................. 2,423

386–387 Opthalmic goods, photogrph. equp. & clocks1............................................ 2,616 2,958 88.44

 Communicatons services (telephone, satellite tracking,

481–484,489 radio/TV, cable...).............................................................. 1,054 1,884 55.93

7370,7371,7374–5 Multiple & miscel. computer & data processing services........................................... 540

7372 Prepackaged software............................................................. 6,619

7373 Computer integrated systems design............................................ 431

Machinery & electrial equipment............................................... 7,039 10,038 70.12

351–56,358–59 Machinery (industl, farm, service ind., mining & constructn).............. 3,968 5,606 70.78

361–64,369 Electrical equipment (industrial & household)................................. 3,071 4,432 69.28

Medical substances & devices.................................................. 19,849 13,868 143.13

2833 Drugs: medicinal chemicals, botanical products.............................. 0

2834 Drugs: pharmaceutical preparations............................................. 15,733

2835 Drugs: in vitro, in vivo diagnostic substances................................. 593

2836 Drugs: biological products, except diagnostic substances..................... 1,505

3841–5 Medical instruments1..............................................................................2,018 2,282 88.44

Motor vehicles & other surface transportation equipment............................................ 18,380 14,065 130.68

371 Motor vehicles & motor vehicle equipment..................................... 18,093 13,758 131.51

373–75,379 Ships, trains, motorcyc, bicycles, campers, miltry tanks............................................ 287 307 93.42

{Classified Differently by Industry Survey}

384–87 Opthalmic goods, photogrph. equp. & clocks2..........................................

 Medical instruments2.......................................................................

 

N/A

11,586 153.90

5,240 N/A

3,719 85.80

11,318 67.07

Table 3. Comparison between top 500 corporate R&D levels and industry-survey R&D levels: 1997

1 In the industry survey, some of these detailed sectors are consolidated into a single data item, as indicated by the horizontal lines in the table, 

 displaying a single entry for more than one group of detailed sectors. 

2 Amounts for industry survey are prorated estimates based on the Corporate R&D data, which were done in order to estimate major sector

 totals.

KEY: N/A -- Not applicable.

 nec -- Not elsewhere classified.

SOURCE: Standard and Poor's Compustat, Englewood, CO; and National Science Foundation/Division of Science Resources Studies, 

 Research and Development in Industry 1997 , Detailed Statistical Tables, by Raymond M. Wolfe (Arlington, VA, forthcoming).

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excluded from participation in, be denied the benefits of, or be subject to

discrimination under any program or activity receiving financial assistance from

the National Science Foundation.

Facilitation Awards for Scientists and Engineers with Disabilities (FASED)

provide funding for special assistance or equipment to enable persons with

disabilities (investigators and other staff, including student research assistants)

to work on NSF projects. See the program announcement or contact the

program coordinator at (703) 306-1636.

The National Science Foundation has TDD (Telephonic Device for the Deaf)

capability, which enables individuals with hearing impairment to communicate

with the Foundation about NSF programs, employment, or general information.

To access NSF TDD dial (703) 306-0090; for FIRS, 1-800-877-8339.