European R&D: all work and no pay-back

A higher level of research and development spend by Europe neither guarantees future innovations will come from Europe nor delivers more creativity, higher profit or a greater market share, according to one US-based think tank.

A new study by the Center for Strategic and International Studies concludes that while Europeans spend a lot on R&D, much of what they develop is not commercially useful. This would explain relatively high R&D expenses per employee, but low conversion of R&D spending into sales.

US companies, on the other hand, commercialize their R&D more effectively, getting more sales out of a given level of research investment. This, they argue, is consistent with relatively larger defence procurements; for US companies, investment in a new product is more likely to result in relatively larger sales. It is also consistent with the pressure to perform the capital markets place on US public companies.

Do European companies really spend more seeking innovation, while their transatlantic cousins are more likely to find and commercialize it?

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