Industrial Research 



123 



Paper and allioil products $0. 39 



Iron and stool and tlieir products not including machinery. . 20 



Food and kindred products .19 



Forest products . 07 



Textiles and their products . OG 



Leather and its manufactures .06 



Transportation eciuipment other than motor vehicles . Oo 



All manufacturing industries .04 



The niaiuifactiiring industries in the United States 

 in the aggregate spend for scientific research only 

 $0.64 out of every $100 rahie added to goods, two- 

 thirds of 1 percent of the total value added by manu- 

 facture. That tliis could profitably be increased is 

 indicated by the fact that certain industries find it pays 

 to spend more than 2 percent. The majority of indus- 

 tries, if not all of them, are far from the point where the 

 law of diminishing returns \\ill make further expendi- 

 tures less profitable. Probably the greatest oppor- 

 tunities from the standpoint of capital lie in those 

 industries which have not yet fully awakened to the 

 possibilities of research in expanding markets and 

 increasing earning power. It is likely that the most 

 rapid increases in research efforts will occur in some of 

 those lines where it is now neglected. Competition 

 will help to bring this about, for no industry or com- 

 pany can long maintain its trade position, if it fails to 

 keep up with the procession. Research will no doubt 

 continue to be one of America's fastest growing 

 industries — a fountain of perpetual youth for the old 

 and new alike. 



Summary and Conclusions 



1. The importance of scientific research as a growth 

 factor in industry is receiving increasing attention 

 from a financial and investment standpoint. Although 

 difficult to measure, there is undoubtedly a correlation 

 between research expenditures and the growth of com- 



panies and industries. This view is supported by 

 numerous case histories. 



"2. Based on a survey of 31 companies representing a 

 broad cross section of American industry and account- 

 ing for one-fifth of total research workers in the United 

 States in 1937, the average expenditure was found to 

 be close to $4,000. 



3. Total research expenditures in industrial labora- 

 tories in the United States in 1937 have been estimated 

 at approximately $200 million, equivalent to 0.29 per- 

 cent of national income produced. The average re- 

 search expenditure per $100 value added by manu- 

 facture was $0.64. 



4. Research expenditm-es by industries showed wide 

 variation. There are vast opportimities for increasing 

 earning power through expanding research activities, 

 particularly in those industries in which it is now 

 relatively neglected. 



Bibliography 



.Amerman, G. Controlling the costs of industrial research. 

 Chemical Industries, 37, 535 (1935). 



The costs of industrial research; a summary of the preparation 

 of cost estimates, the research budget, and comparison of actual 

 cost with the budget. Chemical Industries, 34, 217 (1934). 



Hamok, W. a., and G. U. Beal. Control of research expense. 

 Industrial and Engineering Chemistry, SJf, 427 (1932). 



Mees, C. E. K., and others. (Symposium on) Management of 

 research. Industrial and Engineering Chemistry, 2^, 65, 191 

 (1932). 



National Association of Cost Accountants. Present-day prac- 

 tice in accounting for research and development costs. N. A. 

 C. A. Bulletin, W, sec. 3, 889 (1939). 



Kedman, L. V. Research as a fixed charge. Industrial and 

 Engineering Chemistry, 34, 112 (1932). 



Seybold, Roscoe. Controlling the cost of research, design, 

 and development. New York, American Management Asso- 

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