SECTION I I 

 8. INDUSTRIAL RESEARCH EXPENDITURES 



By Karl T. Compton 



President, Massachusetts Institute of Technolog>-, Cambridge, Mass.; Chairman, Advisory Committee to the National 

 Association of Manufacturers, Committee on Patents and Research 



ABSTRACT 



A suniinary of fiiidiiinjs on the relation of research 

 expenditures to annual gross sales income in 181 

 companies. 



Break-down by sizes of companies 



Conipanies reportiiiK research expenditures (number) 181 



Usable returns as related to capitalization (number) 151 



Member conipanies of the National Association of 

 Manufactiiror.<5, in a letter dated April 2, 1940, were 

 asked : 



What percentage of your normal aiiiiual gross sales income do 

 you spend for researcli? 



The letter accompanied a questionnaire prepared by 

 the National Research Council for its Survey of 

 Research in Industry with which the National Associa- 

 tion of Manufacturers cooperated. 



Responses received numbered 892, of which 203 

 included reports of research expenditures. The sample 

 reporting expenditures represents about 8 percent of 

 the knowTi industrial researcli laboratories. 



The median expenditure of the companies for indus- 

 trial research was found to be 2 percent of gross sales 

 income. The percentage was highest in small com- 

 panies. The chemical and allied products industries, on 

 the other hand, ranUtd the highest in percentage of 

 gross income for research. 



Following is a summary of the leplies: 



Companies reporting research expenditures (number) 203 



Usable returns on relation of research expenditures to sales 



(number) 181 



Median expenaiture (percent) 2 



Number of 

 Distribution: companU, 



Less than 1 percent. . 43 



1 to 2 percent. 49 



2 to 3 percent 36 



3 to 4 percent 22 



4 to 5 percent 3 



5 to 6 percent 13 



6 to 7 percent 4 



7 to 8 percent 



8 to 9 percent. 1 



9 to 10 percent i 



10 to 11 percent.. 7 



11 to 12 percent 1 



12 to 13 percent 1 



124 



'In this cal«Eory were included all companies reported by Dun 4 Dradstreet as 

 bavins capitalization "over 1 million dollars" but tor whom specific BEures were not 

 available. 



