Information about the number of businesses engaged in research and development (R&D) and the levels of investment and profitability.


One third of the businesses had engaged in R&D in the last financial year (see Figure 6). Manufacturers were more likely to engage in R&D than business services (37% versus 22%) and high-tech businesses more than conventional businesses. This was also the case for larger businesses (63% medium-sized, 38% small and 21% micro) and fast growers (45% fast, 32% moderate, 29% non-growers).

Figure 6: R&D spending



Reported expenditure on R&D as a percentage of turnover was relatively low: just 13% invested 2% or more of turnover, 8% invested 5% or more and 4% invested 10% or more. The figures were higher for medium-sized businesses (22% spent 2% or more of their turnover on R&D), industry level innovators (26%), high-tech manufacturers (25%) and fast growers (22%). Indeed, there was a small group at the intersection of these categories which spent a very high proportion of their turnover on R&D.


This may have suppressed their profits. Those without R&D expenditure were much more likely than those with R&D expenditure to make profits of 30% or more, and those making a loss were proportionately much more likely to be spending 6% or more of their turnover on R&D. That said, roughly 40% of those with 2% or more R&D expenditure also made profits of 15% or more.