Long run patterns of corporate R&D expenditure: A descriptive analysis of the period 1965 to 1984

This paper examines two decades of R&D performance (1965-1984) for seven research-intensive industries in the U.S. The analysis uses two measures of R&D effort, R&D as a percent of sales and R&D per employee, and considers both the intensity and the stability of R&D spending. R&D data are taken from the Compustat tapes. R&D expenditures are deflated using new R&D deflators provided by Mansfield. The analysis shows that most industries exhibited a U-shaped pattern of R&D intensity (six of seven when measured by R&D as a percent of sales), with R&D expenditures declining from the mid-1960s to the mid-1970s and then rebounding from the mid-1970s to the early 1980s. As to stability of R&D spending, the analysis shows that continuous process industries (chemicals, drugs and pharmaceuticals, soaps and detergents) have greater stability in R&D effort, while fabrication and assembly industries (computer peripherals, electronic equipment, missiles and aircraft) show greater variability. The study sets forth a series of research questions about the relationship between these patterns and an industry’s structure, performance and competitive position.