Skip to menu Skip to content
CS

Methodology - R&D in the business enterprise sector

Research and development (R&D)

Research and experimental development (hereinafter referred to as R&D) comprise creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge (OECD 2015, Frascati Manual). For an activity to be a R&D activity, it must satisfy five core criteria; it must be: novel, creative, uncertain, systematic, transferable and/or reproducible.

The term R&D covers three types of activity: basic research, applied research, and experimental development. Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view. Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific, practical aim or objective. Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.

Characteristics of research and development are surveyed by the Annual report (questionnaire) on research and development, which includes questions on human and financial resources earmarked for R&D activities realized in the territory of the Czech Republic in respective sectors of R&D performance. The statistical survey fully complies with methodological principles of the European Union (EU) and of the Organisation for Economic Co-operation and Development (OECD) mentioned in the Frascati Manual and in the Regulation (EU) 2019/2152 of the European Parliament and of the Council.

Reporting units in the R&D survey are all legal and natural persons performing R&D in the territory of the Czech Republic as their principal (CZ-NACE 72 – Scientific research and development) or secondary economic activity, irrespective of the number of personnel, sector, or CZ-NACE activity.

Sector of research and development performance is a basic category used in R&D statistics, which groups all institutional units performing R&D based on their main functions, behaviour, and objectives. R&D indicators are usually measured and published, also at an international level, in four sectors of R&D performance (hereinafter referred to as sectors): the business enterprise sector, the government sector, the higher education sector, and the private non-profit sector. These sectors were defined based on the Classification of Institutional Sectors and Subsectors used in the national accounts (the European System of National and Regional Accounts (ESA 2010)) and definitions given in the Frascati Manual.

Business enterprise sector (S.11: Non-financial corporations; S.12: Financial corporations; S.141: Employers, and S.142: Own-account workers), which comprises all companies, organisations, and institutions, principal activity of which is market production of goods or services for sale to the general public at an economically significant price. The business enterprise sector mainly focuses on applied research and experimental development. Results of these activities are especially related to innovations, i.e. development of new products or improvement of the existing ones or of provided services. Entities and R&D workplaces in the business enterprise sector are broken down by type of workplace based on the ownership, namely to public enterprises (corporations), private national enterprises (corporations), and foreign-controlled enterprises (corporations);

Research and development activities are especially measured in the government sector and the higher education sector in the following six main fields of R&D (broad fields) defined according to an international classification called the Fields of Research and Development Classification (FORD classification): Natural science, Engineering and technology, Medical and health science, Agricultural and veterinary science, Social science, Humanities and arts.

R&D expenditure

Research and development expenditure includes all current expenditure (wages and salaries and other current expenditure) and capital (investment) expenditure spent during the reference year on R&D performed in reporting units (intramural R&D) in the territory of a given country regardless the source or the way of funding.

Surveyed (intramural) R&D expenditure does not include extramural expenditure on R&D performed outside a reporting unit, sector, or country. The intramural R&D expenditure thus excludes expenditure spent on purchase of external R&D from entities performing R&D, sources transferred to other experts within a common R&D project, and subsidies or contributions (financial transfers) provided to third persons for R&D performed at their place.

Total expenditure on R&D made in the territory of a given country is statistically measured by the indicator of the gross domestic expenditure on R&D (GERD). The indicator includes funds received from abroad (i.e. the “rest of the world”) for R&D performed in the territory of the given country; however, it excludes domestic funds provided for R&D performed abroad.

The amount of R&D expenditure made in sectors of performance is measured by the main sources of funding of R&D activities:

  • funds from the business enterprise sector mainly comprising own (internal) sources of surveyed enterprises earmarked for R&D performed within these enterprises and sources of parent companies funding R&D in their foreign affiliations in the Czech Republic. As for the government sector and the higher education sector, funding from business enterprise sources mainly includes income from sale of R&D services (orders for R&D) and income from royalties and licence fees for intangible results of R&D;
  • funds from the government sector – national that come from the state budget or budgets of Regions earmarked for R&D performed in the territory of the Czech Republic;
  • funds from the government sector – from abroad, which especially include income from the European Structural Funds. They also include other sources from the EU budget and sources from international organisations outside the EU (CERN, ILL, NATO, UNO, WHO, Norway grants and EEA grants, etc.).

Besides the aforementioned main sources, also other national sources contribute to R&D funding, which mainly comprise own sources of universities and private non-profit institutions originating neither from the state budget, the business enterprise sector, nor from abroad. These sources are insignificant in the CR within the total R&D expenditure.

 

R&D personnel

Persons employed in research and development (hereinafter only referred to as R&D personnel) comprise researchers, technicians, administrators, and other supporting staff working at R&D workplaces in individual reporting units, who ensure direct services for those workplaces. The R&D personnel category includes all persons aged 15+ years paid in employment. The formal job attachment mainly refers to an employment contract, an agreement on work performance, and an agreement on work activity.

R&D personnel are broken down according to the work they perform (occupation) as follows:

  • researches, who are engaged in the conception or creation of new knowledge, products, processes, methods, and systems or who manage such projects. They are mainly professionals and R&D managers;
  • technicians and equivalent staff (hereinafter only referred to as technicians) who participate in R&D by performing scientific and technical tasks involving the application of concepts, operational methods and the use of research equipment, normally under the supervision of researchers;
  • other supporting staff who are skilled and unskilled craftsmen, and administrative, secretarial, and clerical staff participating in R&D projects or directly associated with such projects; also included are managers, administrators, and clerical staff, activities of whom are a direct service to R&D.

The number of R&D personnel is surveyed by two main measurement units; they are the headcount and the full-time equivalent of R&D personnel (engaged in work on R&D activities equalling to one year of full-time work):

  • headcount of R&D personnel refers to the registered number of persons fully or partially engaged in research and development activities, employed in the reporting units in main or secondary employment as at the end of the reference year. Primarily in the higher education sector and partially also in the government sector, a huge amount of R&D personnel, especially researchers, have an employment contract in more entities. Therefore, in these sectors, the indicator is overestimated and does not provide the real number of persons working in R&D;
  • full-time equivalent (FTE) refers to the average registered number of R&D personnel converted to annual full-time workload devoted to R&D activities. One FTE equals one-year (full-time) work of a member of personnel who is 100% engaged in R&D activities. The FTE indicator also includes the number of persons working for the reporting unit under agreements on work performance and agreements on work activity converted according to the methodology valid for the FTE.