Research intensity and the identification of high technology industries

Abstract

<p>Research intensity (the ratio ofR&D expenditures to total sales income) has a number of virtues as a metric for identifying high technology industries (those whose business activities are heavily dependent upon innovation in science and technology). Research intensity is unambiguous and quantifiable with data that are readily available from a variety of sources for a large number of firms and industries. It generates a list of high technology industries with high face validity that is quite stable over time. Industries with high research intensities are not necessarily those with the highest absolute expenditures on R&D and they have a much higher growth rate than the highest R&D spenders, and than the economy as a whole. Research intensity can be applied at the industry and firm level, and can be used by managers making strategic and other decisions. Research intensity, if judiciously used in light of its limitations, can be a useful tool for managers and policy makers and further research on it should prove useful.</p>