IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

The global economic and financial downturn: What does it imply for firms' R&D strategies?

Listed author(s):

R&D and the entire innovation process are likely to be affected by the current crisis. Apart from changes in R&D spending, as any crisis usually provides also chances it may stimulate a new wave of networked / open innovation and in this regard lead to 'creative destruction' as Schumpeter called it. Thus, high-technology manufacturing is far better-positioned to face the crisis compared to low-tech manufacturing, which is assumed to fare especially badly. The figures of R&D expenditure are assumed to evolve accordingly. And small companies and particularly those which are financially restricted (many SMEs) are supposed to suffer most. In general, the downturn is supposed to accelerate the shift of EU manufacturing towards higher value-added, highly integrated, and internationally oriented sectors. Assumed that the latter tends to be characterised by higher R&D-intensity this in turn may have a positive impact on R&D investment figures. But, as structural changes usually happen slowly, this leverage effect may appear just in the long-run. Empirical evidence from a series of recent business surveys [mainly capturing R&D-performing / higher R&D-intensity sectors] suggests that the perception as well as the funding of corporate R&D and innovation activities are holding up fairly well so far which suggests an anti-cyclic firm behaviour in terms of R&D engagement in the light of the current economic and financial crisis. For 2008/09 the estimates of R&D expenditure changes differ significantly among the sources – mainly due to the corresponding assumption on the further evolvement of the current financial and economic crisis with the estimate of 4.1% for EU – based on the JRC-IPTS' IRMA-Survey – well in-between. However, across the sources, the corridor for the R&D investment change is assumed to be above the corresponding assumptions on GDP and sales growth. Evidence suggests that the impact of the crisis on R&D activities and the correspondingly assumed adjustments of firm strategies is sector specific. However, looking at micro level, there is no unique company strategy obvious commonly applied to face the crisis. In fact, some companies leave their R&D engagements unchanged, others cut them down, and a third group even accelerates their R&D and innovation activities (inclusive a significant leveraging of spending on R&D). In this regard experiences from past downturns suggest that companies having the farsightedness and the courage to invest more in R&D and innovation activities while others are cutting back have a significant advantage in the inevitable upswing that will come. Market rewards will follow – but not immediately.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Joint Research Centre (Seville site) in its series JRC Working Papers on Corporate R&D and Innovation with number 2009-12.

in new window

Length: 33 pages
Date of creation: May 2009
Handle: RePEc:ipt:wpaper:200912
Contact details of provider: Postal:
C/ Inca Garcilaso, s/n 41092 Seville

Phone: +34 954 48 8318
Fax: +34 954 48 8300
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ipt:wpaper:200912. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Publication Officer)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.