Industrial research and development characteristics, 2016 (intentions)
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Released: 2017-04-19
Based on the intentions of research and development (R&D)-performing firms, in-house R&D spending is expected to edge down from $18.5 billion in 2014 to $17.9 billion in 2015 and to $17.7 billion 2016.
Data from the newly redesigned Annual Survey of Research and Development in Canadian Industry showed that 80% of all in-house industrial R&D spending was Canadian sourced self-funded by the business performing the R&D, while 17% of these expenditures were financed by Canadian- and foreign-related firms.
Firms with R&D programs responsible for over one-half of in-house R&D spending
Businesses with R&D programs were responsible for most in-house spending on industrial R&D. Individual businesses that spent $10 million or more on in-house R&D accounted for almost 60% of in-house industrial R&D expenditures in 2014. Businesses that spent between $1 million and $10 million on R&D were responsible for 23% of in-house expenditures, while those that spent less than $1 million on R&D accounted for the remaining share of in-house spending.
Chart 1
Distribution of industrial in-house research and development (R&D) expenditures, by R&D expenditure size group, 2014
Businesses located in Central Canada accounted for almost three-quarters of in-house R&D spending in 2014. Firms located in Ontario represented 44% of in-house R&D spending, while those located in Quebec accounted for 29%. Higher R&D expenditures in Ontario and Quebec were supported by the presence of R&D-performing manufacturers and technology-based service firms in these provinces.
Businesses in Alberta, supported by R&D spending in the oil and gas extraction sector, accounted for 12% of in-house R&D spending, while businesses in British Columbia were responsible for 10%.
Chart 2
Industrial in-house research and development spending by geographic region, 2014
Foreign-controlled firms accounted for more than one-third of in-house R&D spending.
Specialized research firms and software developers report highest levels of in-house R&D spending
Service-producing businesses were responsible for over half of all in-house R&D spending in 2014, led by specialized research firms, computer system designers and software publishers. Specialized research firms include start-up companies that focus on developing new goods or services before their entry onto the market, as well as contract research-based firms.
Manufacturing firms were responsible for one-third of in-house R&D spending. Aerospace product and parts manufacturers ($1.6 billion) spent the most, followed by machinery ($682 million) and pharmaceutical ($488 million) manufacturers in 2014.
Businesses engaged in R&D for oil and gas extraction purposes accounted for nearly 8% of all in-house industrial R&D spending.
Engineering and technology projects account for over three-quarters of industrial in-house R&D spending
In 2014, over three-quarters ($14.4 billion) of all industrial R&D expenditures were in engineering and technology. Spending on software-related sciences and technologies totalled $5.0 billion of in-house R&D spending. In-house R&D spending in natural and formal sciences amounted to over 10% of in-house R&D expenditures. Firms engaged in medical and health sciences accounted for nearly 10% of these expenditures, reflecting R&D activity related to medical biotechnology, basic medicine and clinical medicine.
In-house R&D spending for service-producing firms was relatively widespread across R&D fields. Service-producing firms dedicated over 75% of their in-house R&D spending to engineering and technology, with software-related engineering and technology accounting for over half this amount. In the manufacturing industry, engineering and technology (85.5%) accounted for most in-house R&D spending.
Data are now available for R&D spending in social sciences and humanities
Businesses spent $18 million on in-house R&D related to social sciences and humanities in 2014, reflecting research in geography, planning, organization and interdisciplinary fields, the humanities, and economics and business. Based on new data now available for this field of R&D, service-producing firms were responsible for over three-quarters of in-house R&D spending on social sciences.
Most firms that perform R&D report innovative outcomes
Data from the newly redesigned Annual Survey of Research and Development in Canadian Industry allowed for more detailed analysis on the nature of R&D and its impact on business outcomes.
In 2014, experimental development accounted for over two-thirds of R&D spending. Experimental development is defined as work that draws on existing knowledge and aims at producing new products or processes or substantially improving existing products or processes. Firms also allocated more than 20% of their in-house R&D spending to applied research and 5% to basic research.
Among firms investing in R&D from 2012 to 2014, about 55% reported that their R&D activities led to new or improved goods, while 43% reported that these activities led to new or improved services.
Chart 3
Results of research and development expenditures, 2014
R&D professionals concentrated in service industries
In 2014, firms employed 149,943 full-time equivalent R&D personnel, consisting mainly of professionals such as researchers (92,027) and technologists (51,626).
On an industry basis, service-producing firms employed just over 60% of R&D personnel and manufacturers about one-third. Researchers and research managers accounted for almost 70% of the R&D workforce in service industries and 49% of the R&D workforce in manufacturing. In the manufacturing sector, technologists performed just under half of R&D.
The redesigned survey also included data on the use of on-site R&D consultants. Just over 6,000 on-site R&D consultants were employed by R&D-performing businesses in 2014, mainly in R&D services and technology-based manufacturers.
In celebration of the country's 150th birthday, Statistics Canada is presenting snapshots from our rich statistical history.
Declining concentration of business sector research and development spending in top 100 research and development performers
The top 100 companies with established research programs have always been important research and development (R&D) performers in Canada. One method of highlighting the importance of these R&D performers, often large multinational corporations with extensive business activities both in Canada and abroad, is to focus on their share of industrial R&D spending.
While the composition of Canada's top 100 R&D performers changes from year to year, their share of industrial R&D spending has been declining (trending downwards) since peaking at 80% in the late 1970s to under 50% in recent years. By comparison, the share of industrial R&D spending concentrated in the top 100 R&D performers in the United States has been trending around 55% from 2010 to 2014.
Canada's share of top 100 industrial R&D performers has generally declined since the 1980s although it trended upwards during the information communication technology boom at the end of the 1990s. This concentration measure fell in the early 2000s to less than 50% during the 2008-2009 recession as R&D activity in manufacturing declined. Following a slight post-recession recovery, it has once again edged below 50% more recently.
Changes in the trend line of this R&D concentration indicator may reflect improvements in measurement, as the coverage of smaller R&D performers may have been less comprehensive in the 1970s, 1980s and early 1990s. The new survey methodology introduced for 2014 as well as a reporting tendency towards conservative estimates of R&D spending intentions may account for some of the decline from 2014 to 2016.
Data users are advised that this data series contains numerous survey methodology changes.
Chart 4
Share of industrial in-house research and development spending by top 100 companies in decline, 1973 to 2016
Note to readers
These data are subject to revision.
In-house research and development expenditures
In-house research and development (R&D) expenditures refers to expenditures within Canada for R&D performed within the company by employees (permanent, temporary or casual) and self-employed individuals who are working on-site on the company's R&D projects. The term can be used interchangeably with intramural expenditures.
Research and development
Research and experimental development R&D comprise creative and systematic work undertaken in order to increase the stock of knowledge—including knowledge of humankind, culture and society—and to devise new applications of available knowledge.
R&D research activities
There are three types of R&D activities. Basic research is defined as experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view. Applied research is original investigation undertaken to acquire new knowledge. It is, however, directed primarily towards a specific, practical aim or objective. Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.
Survey redesign
Several aspects of the Annual Survey of Research and Development in Canadian Industry have been redesigned, including concepts, methodology, the collection method and the data processing system. Users should therefore exercise caution when comparing 2014 data with historical datasets. For more information on survey content and methodology changes consult Definitions, data sources and methods and go to The Integrated Business Statistics Program in the Behind the data feature of our website to learn more about data production.
Starting in reference year 2014, the Annual Survey of Research and Development in Canadian Industry is a weighted sample survey, supplemented by administrative tax data. The reference period changed from the fiscal year ending in the calendar year (reference year 2013) to the fiscal year ending within the fiscal period from April 1, 2014, to March 31, 2015 (reference year 2014). Revised data for reference year 2013 are being released today using the previous survey methodology.
Revised 2013 data now available on CANSIM
Users are advised that revised 2013 data are now available in the following CANSIM tables: 358-0024; 358-0140; 358-0141; 358-0161; and 358-0205 to 358-0213.
With this revision, these CANSIM tables have been archived.
Contact information
For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca).
To enquire about the concepts, methods or data quality of this release, contact Louise Earl (613-883-0562; louise.earl@statcan.gc.ca), Investment, Science and Technology Division.
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