Importance of Research and Development

Mar 2 • General • 11472 Views • 3 Comments on Importance of Research and Development

Research and Development(R&D) is the key element of many organizations.When it is well planned and used it enables a business to generate increased wealth from time to time.Most of the people associates the research and development function of a company with the invention of new products.while the inventions are important, the development of existing products is of equal significance as the consumer preferences are continually changing.Thus we can say that the term R&D refers to a specific group of activities within a business.R&D differs from company to company according to the activities of that company.

Objective of R&D
R&D is a process intended to create new or improved technology that can provide a competitive advantage at the business,industry or national level.While the rewards can be very high, the process of technological innovation is complex and risky. The majority of R&D projects fail to provide the expected financial result,and the successful projects may also pay for the projects that are unsuccessful or terminated early by the management.There are certain objectives that an R&D follows:

      i)obtain new ideas or knowledge
        ii)apply it to the practical uses
      iii)increase company’s sales and profit

Types of R&D
The National Science Foundation(NSF) defines three types of R&D:

      i)Basic Research
        ii)Applied Research

Basic Research has its objectives a fuller knowledge or understanding of the subject under study,rather than a practical application.Basic research is defined as research that advances scientific knowledge but does not have a specific commercial objectives.
Applied Research is directed towards gaining knowledge or understanding necessary for determining the means by which a recognized and specific need may be met.It includes investigations directed to the discovery of new knowledge having specific commercial objectives with respect to product,processes or services.
Research creates knowledge and development designs,and builds prototypes to prove their feasibility.Engineering then converts these prototypes into products or services that can be offered to the marketplace or into processes that can be used to produce commercial products and services.


The importance of research and development has become more evident everyday among the factors that directly related to the good economic performance of the emerging countries of 21st centuries. In any well-run company, research and development have commercial functions to enhance the company’s business objectives by creating better and innovative products, to improve operational processes and to provide expert advice to the rest of the company and to customers.

In any industry whether an old or emerging,must continually revise their design and range of products.This is necessary because of continuous technology change and development as well as other competitors and the changing preferences of customers everyday which is not possible without an R&D program.

Importance of Research and Development in other Fields

Research has always been important aspect for any organisation – big or small.It is not restricted only to medical or science fields.Many organisations in industries like pharmaceuticals have a full fledged research and development division with quality control to ensure quality of product and invention of new technologies and products.The different fields where importance of R&D lies are education,industry,organisations,agriculture,etc.

Importance of Research and Development for economic growth
R&D Data

The future economic progress for any country will be driven by the invention and application of new technologies.The importance of research and development lies there,as it is one category of spending that develops and drives these new technologies.R&D plays an important role in enhancing the capability of companies because they stimulate innovative methods of production,reduce costs and improve product quality.

There are some large companies that allocates a significant part of their budget for R&D activities,improving performance and increasing profitability.In present day, R&D is a core part of the modern business world. The major decision in firms are made on basis of the importance of research and development.Product research and development goes hand in hand with market research and development.The product researchers use marketing information which helps them to develop products or services and chooses suitable designs.The subject of R&D has gradually become more visible in economic literature and many studies cover its intermixing values.It is a source of information and it updates the organization and insist the organization to tell change in the environment.

Private sector and the innovation process
Business,operating in a competitive global market system have numerous advantages in the creation and implementation of useful new ideas.With the rise of a technology based approach to the production of new goods and services,the organization of high-tech business in the US and globally has changed.The results of the recent Business R&D and Innovation Survey (BRDIS) sponsored by NSF suggests that private sector companies that perform or fund R&D have a far higher incidence of innovation than companies without R&D activity.”R&D intensity”-that is the ratio of domestic R&D performed and paid for by the company to domestic net sales.However,private sectors firms are focusing their R&D on applied projects where their main aim is likely to gain their pay off only to themselves.The private sector are benefited from research and development as it was seen to improve the quality of existing products to create new products and goods and to contribute to an increase in their market share of the local market.

Government Promotes Research and Development

The Government policy already does promote research and development in many ways.Around 32% of gross national expenditure on R&D in 1996 was funded by Government.The Government also promotes innovative activity in firms through direct spending on education and training,patent protection,regulation and competition policy. Government follows some policies which affects firms incentives to invest in R&D,that is numerous and diverse.Policies that directly target research and development include direct funding of government R&D labs,universities or business,investing in human capital formation,patent protection laws and R&D tax credits.The other policies, not directly targeted at R&D,which may have a significant impact on the level of research and development investment include competition policy and regulation.

R&D Tax Credits

Government may stimulate business research and development through tax incentives like
iv)tax credits
each of which can be designed with differing criteria for eligibility,allowable expenses and baselines.


Research and Development is of great importance in business as the level of competition, production processes and methods are rapidly increasing.It is of special importance in the field of marketing where companies keep an eagle eye on competitors and customers in order to keep pace with modern trends and analyze the needs,demands and desires of their customers.If a company has made some significant contribution in R&D, the results are bound to be good but higher R&D spending does not signify more creativity, higher profit or a greater market share.

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3 Responses to Importance of Research and Development

  1. Rishu Goel says:

    Research and development is a backbone of science…And it is very essential in every type of industry..

  2. Anjali Dreamgirl says:

    Research and development is needed for today’s scenario. It is really important.

  3. preeti nisha says:

    Research and development is indeed an important aspect in today’s world be it business or any other prospect. Company’s and business organisation stressing on research and development leads in the production and development of organisation and increases its profit and customer requirements are better served. Research and development encourages an organisation to foster and monitor its existing products and make them better so that it can meet the changing requirements of the customer and thus increases the economic values. Thus research and development is of great importance and plays a significant role in the growth and prosper be it organisation or the applied research.

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