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What is Business R&D?

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  • Written By: G. Melanson
  • Edited By: Bronwyn Harris
  • Last Modified Date: 12 September 2016
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Business research and development (R&D) refers to the analysis and improvement of products, services and processes that a company must continuously undergo in order to stay competitive. Pharmaceutical and technology companies in particular conduct a high level of business R&D due to the constantly-evolving nature of their industries. Companies that don’t invest in business R&D risk losing their competitive positions in the marketplace, as well as potential new revenue streams from alternate applications for their products and services.

Technology companies often assign the research portion of their business R&D to a technology advisor or researcher within the company, whose responsibility is to monitor competitive technologies and their position in the marketplace. The development side of business R&D is often outsourced, as companies require outside expertise in the new applications for which their technology is being adapted. For example, a company that manufactures body scanners used in the apparel industry might outsource an expert in the deployment of scanning technology in other sectors, such as security or health and fitness. Pharmaceutical companies typically turn to universities for their research needs and outsource private companies during the development phase, which must be carried out according to their country’s drug safety regulations.

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In addition to outsourcing for their business R&D, some leading technology companies such as Dell Computers have taken an approach known as crowdsourcing. Outsourcing on a mass scale, crowdsourcing entails surveying customers to determine which upgrades or features they’d like to have added to the company’s products or services. Once the suggestions have been amassed, the customers vote on which features or upgrades they want the most, and the winner proceeds to the development phase.

Because business R&D is so costly, some countries offer tax relief incentives and grants to foster leading technologies and world class systems within their own nation. Some of these countries include the US, France, Canada, Australia, and the UK. Once a company has been accepted into a government-sponsored tax relief program, they are usually matched with a caseworker who maps out milestones that the company plans to achieve using the incentive. Companies that receive tax incentives or grants are also often required to file regular reports on the progress of their research and development, along with invoices, pay stubs, and other records of R&D expenditure.

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