Survey Methodology

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The survey’s history
Recent changes to survey methodology
The 2005 survey
Data quality
Other notes

 

The survey’s history

Data on R&D in the business enterprise sector, covering commercially oriented enterprises (privately or publicly owned), industrial non-profit organizations and trade associations, have been collected since 1955. Until 1969, the survey was biennial. From 1970 to 1981, all known performers or funders of industrial R&D were surveyed for odd-numbered years and a sample, including the leading performers, were surveyed for even-numbered years. From 1982 to 1991, a full survey was conducted annually.

Because of reductions in the science and technology program, only the top 100 R&D performers (accounting for 64% of all industrial R&D) were surveyed for the 1992 and 1994 reference years. However, as a result of a cost-sharing agreement with the province of Quebec, the 1992 and 1994 industrial R&D survey results also included small firms having R&D activities in the province of Quebec.

Prior to 1997, Statistics Canada surveyed all firms that performed or funded R&D in Canada. Virtually all of these firms also provided information to Canada Revenu Agency (CRA) in order to claim tax benefits under the Scientific Research and Experimental Development (SR&ED) program. In an effort to reduce respondent burden, Statistics Canada stopped surveying the small performers and funders (those with less than $1 milion of R&D in Canada) and instead, imputes their R&D data using CRA administrative data from the SR&ED program.

When first implemented, this initiative resulted in an understatement of the total value of intramural expenditure and of the total number of R&D personnel. Under the current tax regulations, firms must file their application to the SR&ED program within 18 months of expenditure.  Once claims are submitted, they are processed and forwarded to Statistics Canada.  As a result, data may not arrive for up to two years after the incurrence of expenditures.  To remedy the situation, an estimation system was subsequently put into place to impute values for outstanding administrative data.  This estimation system confirms the company is active using Statistics Canada’s extensive Business Register, and then applies an estimate based on industry trends.

Recent developments in R&D spending are important economic signals, desired promptly by a variety of users.  Because the small estimation of outstanding CRA data does not seriously influence overall trends, the R&D data are published as soon as possible after the survey is conducted, and revised in subsequent publications.

Recent changes to survey methodology

In the 2005 collection year, changes were made to the survey methodology to improve the quality of R&D performers’ revenue data. Revenue figures for the SR&ED tax filers were adjusted to reflect corporate income tax data for the corresponding filer. To provide a time series, data were revised as far back as possible. It is believed the revisions have substantially improved the quality of the revenue variable. Within the publication, the revisions have had impacted the ratios of research and development expenditures to revenues, revenue size groups and total revenues by survey year.
 

The 2005 survey

The 2005 survey collected data on four years. The four years were: 2004 for which the data are expected to be final; 2005, for which the data are expected to be close to final, 2006 for which the data are planned expenditures, and 2007 for which the data are a forecast of spending intentions.

Data from the surveyed firms in 2005 represent approximately 81% of the total expenditures.  Estimates are not available for administrative data for 2006 and 2007.  Therefore, based on the percentage increase or decrease by industry reported by the surveyed firms, forecasts are made for planned expenditures and spending intentions based on the administrative data.

The 2005 survey was mailed out in September 2006. All companies believed to be performing or funding one million dollars or more in R&D were sent a questionnaire. The mailing list of companies was made up of firms which had reported R&D in the previous survey, of firms claiming an R&D income tax incentive for 2005, of firms reported by government respondents as R&D contractors or grantees for 2005 to 2006, of firms reported by other companies as funders or performers of R&D, and of firms indicated in some other way, such as newspaper or journal articles or provincial directories. These larger performers and funders received “long forms”, covering four years, 2004, 2005, 2006 and 2007.
 

Data quality

One of the problems in a survey of this type is to ensure that the quality of the data is satisfactory. It cannot be expected that all firms funding R&D will be surveyed, will respond and will report correctly. There are sources of information such as federal government grant and contract lists to aid in identifying firms and editing returns. In addition, complete coverage cannot be assured. This is especially true for the smaller companies in the service industries. The term, R&D, in spite of survey guidelines, can be misinterpreted.

Different interpretations of the definition of R&D also result in discrepancies between federal government reporting of funds to industry (the business enterprise sector) for R&D and industry’s reporting of such funds. For example, a federal government department may regard a contract to industry for the building of a prototype (e.g., communications satellite) as R&D. The contractors and subcontractors, however, may only use a portion of the R&D contract and even that portion may not be reported because the contract is considered as part of the firm’s “routine” contract work. Differences may also arise for contracts awarded to industry for services or equipment required for a government in-house project which are reported by the federal sponsor as industrial R&D contracts. Therefore, the totals for R&D grants and contracts from the federal government to industry shown in this publication do not agree with those reported in Federal Science Activities, 2007/2008, (Catalogue no. 88-204-X).

Other notes

The business enterprise sector is the only sector in which data are not collected on R&D in the social sciences and humanities.

In this survey, the reporting unit is generally the company or enterprise. This unit has been used because a company, which may have several establishments or even subsidiaries, will often have a centralized research unit. In the case of a company with decentralized research units, the reporting unit may be the division, if the accounting system enables divisions to supply the required data. This procedure creates a problem when classifying data by industry. A company can only be assigned to one industry although that company may have establishments in several industries. The assignment is based on the activity from which the firm derived the greatest portion of its income. Thus, comparisons between R&D data collected at the company level and other data collected at the establishment level, such as “census value added”, may be misleading. Since industrial R&D is highly concentrated, the use of the company/enterprise as the main reporting unit also means that classification cannot be very detailed, to avoid disclosing individual company data.