What is R&D&I? First of all, it is a key function that makes it possible to increase the quality of life of a country. Promoting it is a priority for many governments worldwide, including Spain’s, as it is a comparative strategy for nations that want to be at the forefront of knowledge.
Companies that are committed to investing in R&D&I activities in Spain are extremely valuable. In this article we will explain why and we will also reveal whether your company is part of them without even knowing it.
The meaning of R+D+I
At first glance it may seem like some kind of complicated code, but this combination of letters joined by a + symbol is simply the acronym for Research, Development and Innovation. To understand what they stand for, we will analyze the first two acronyms separately:
R+D (research and development)
According to the Frascati Manual prepared by the OECD (Organisation for Economic Co-operation and Development), they comprise the creative and systematic work carried out with the objective of increasing the volume of knowledge in order to conceive new applications from the available knowledge.
In other words, R&D refers to those activities carried out by different entities in order to develop goods and services, or to improve them.
Activities included in R+D
Basic research is everything that includes experiments and theoretical work carried out to obtain or deepen new knowledge but without the intention of giving it any direct application. For example, when a pharmaceutical company studies the behavior of a virus, the modes of contagion, its evolution and the effects it has on the human body, it is called basic research.
Although it also consists of original works that seek to generate new knowledge, these are usually directed to more specific objectives. If we return to the previous example of pharmaceuticals, after having carried out an evaluation of the virus, a form of applied research could be the studies carried out to develop a vaccine.
This is the systematic work based on existing knowledge obtained during research or practical experience, i.e., it is when we apply knowledge to improve or create a new product or process. In this step is when the pharmaceutical company manufactures the vaccine.
And when do we reach innovation?
The final acronym, Innovation, is the introduction we make of a new or significantly improved product (good or service), process, marketing method, system, among others, in the market or in the internal practices of our company. That is, when what we work so hard on is finally commercialized and applicable.
R+D+I in companies
As we mentioned at the beginning, R&D&I represents a competitive advantage that is maintained through studies of scenarios, hypothetical, physical or abstract, to achieve not only the improvement of products and services, but also to increase social innovation.
Today almost all of us enjoy the gifts of technoscience, which has undoubtedly facilitated many aspects of our daily lives. Advances in telecommunications, nanotechnology, the internet of things, Big Data, are all benefits obtained through the functionality of R&D&I.
Tasks that used to take days or much more effort, can now be done in minutes or at the push of a button, and thanks to these new powers, we have the time to focus on more complex and technical objectives that promise to solve and satisfy a greater number of needs and problems.
But for this to be carried out successfully, we need the collaboration of three fundamental actors, because Research, Development and Innovation, if we want to put real effort into it, cannot be delegated only to companies, it is also necessary the intervention and convergence of agreements between the State and the Universities.
The study between State, University and Enterprise, also known as the Triple Helix of the economy, is analyzed as a model proposed by Etzkowitz and Leydesdorff (1997).
This model pretends that the action of the University is a creator of knowledge, which plays a primordial role between the relationship between business and government; and how these are developed to create innovation in organizations as a source of knowledge creation.
We are talking about an intellectual process oriented to visualize the evolution of the relationship between university-society, and on the other hand characterized by the intervention of the university and organizations in the economic and social processes.
In simpler words, it is about the university, supported by the government, being able to create sufficient knowledge and train people with the necessary competencies so that they, in turn, participate or collaborate through organizations and thus generate improved products and services that the government (the market regulators) can implement or apply to finally achieve innovation in different aspects of society.
R&D&I is used to solve the structural and conjunctural problems of a country. It is for this reason that it is very important for governments to ensure that a portion of national funds are allocated to educational projects and companies that carry out activities focused on R&D&I. Investment in this area is what will allow nations to advance and generate greater wealth.
Among the countries that lead the percentages with higher investment rates dedicated to R&D&I, we find Israel (4.9% of GDP), South Korea (4.5% of GDP), Sweden (3.3%), Japan (3.2% of GDP), Germany (3.1% of GDP) and the United States (2.8% of GDP).
It is worth noting that several of this group of countries were the same ones to appear at the top of the 2021 ranking of the most innovative economies on the planet by the digital economic magazine Bloomberg.
R+D+I in Spain
It is clear that innovation is positioned as one of the fundamental pillars of the world economy. The more technical and/or scientific advances are available to a country, the more it will increase its added value, the more it will enjoy opportunities, and therefore, the more attractive it will become for foreign investors whose contribution will bring great benefits and wealth to the entire population.
According to the data collected by Bloomberg’s 2021 edition, shown in the table above, Spain ranks 31st in innovation. This study took into account factors such as investment in R&D, number of patents, productivity, high technology, among others.
While it is true that Spain has risen two positions with respect to the previous year’s ranking and 5 with respect to 2019, with 67.91 points out of a total of 100, this is still in the group of countries with “moderate” innovation.
Therefore, it is to be recognized that the innovation system in Spain is still small, it still needs to climb steps, and this is clear to the Spanish government, so it has not stood idly by.
In order to promote research, development and innovation, or R&D&I in Spain, different tools and incentives have been created, such as bonuses for research personnel and tax deductions on corporate income tax, which allow organizations to recover the costs of research and development.
These tools allow organizations to recover part of the expenditure that has been allocated to R&D&I activities, or to obtain funding to carry out new projects that are still in the pipeline. The goal is to incentivize and financially help companies to devote resources to develop R&D&I activities in the country.
Now, the important thing is to determine if your company qualifies as an innovative agent to enjoy these rights and financial incentives.
Business activities considered as R+D+i
Contrary to what you may think, it is not necessary to lead a team of researchers and scientists locked in a laboratory or creative workshop to qualify as a company involved in R&D&I.
According to The Oslo Manual 2021 , prepared by the OECD and EUROSTAT, whose content provides a harmonized definition of the concept of innovation and represents the international reference methodological manual for measuring innovation, those business activities that can be considered as innovative are:
Basic and applied research to acquire new knowledge and to produce specific inventions or modifications to existing techniques.
A good example of this type of activity can be found in the environmental crisis, which, in order to combat it, many companies are researching new methods to generate renewable, less polluting and more economical energy. If we reduce it to a much simpler expression, it is enough to reformulate the composition of a product to make it less harmful to the environment. Example: a fashion company researching methods to create fine fabrics from new or recycled materials.
Significant improvement of products (goods or services) or processes that involve assessing whether these are feasible and viable through testing and research to modify design or technical functions. These activities should aim to strengthen capabilities that allow the development of innovations or the ability to successfully adopt innovations developed by other companies or institutions.
Any amazing innovations in the testing phase that serve as examples? Starlink, a business project of Elon Musk that consists of a constellation of satellites, through which he will provide broadband internet to every corner of the world.
The acquisition of technical information, paying fees or royalties for patented inventions. It also includes the incorporation of new advanced software technologies -whether of its own creation or not- that, through algorithms and systems, serve to implement new products, processes or substantially improved services. These ways normally require, in spite of being previously designed, an effort on the part of the company that receives them to know how to adapt them to its own needs.
For example, there is an open source business management system known as Odoo, which is adjusted and developed by programmers according to the requirements of the business and the suggestions of consulting firms.
Make improvements on production processes. You can reorganize your management systems or the global way of managing your business, or work on the development of new commercial methods to sell your products or services.
Do you want to boost your company’s R+D+I in Spain?
Developing your company’s full potential will require keeping pace with the latest technological advances. Riding the wave of innovation will not only guarantee better performance and quality of your products and processes, it will also ease the financial path thanks to grants and incentive plans.
If you are looking for innovation, TAS Consulting will evaluate your case to find the most suitable tools and incentives to boost your company’s R+D+i. Do not hesitate to contact us so you can receive qualified advice and maximize the potential of your company.