Is there a correlation between a company's research and development (R&D) expenditure and its innovation standing? The answer is clearly no, if one looks at Booz & Co's annual study on R&D spending, entitled 'The Global
Innovation 1000: Making Ideas Work'.
Toyota topped the R&D expenditure charts in 2011, spending $9.9 billion, or about 4.2 per cent of its sales.
MOST INNOVATIVE COMPANIES
| RANK | COMPANY |
| 1 | Apple |
| 2 | Google |
| 3 | 3M |
| 4 | Samsung |
| 5 | GE |
| 6 | Microsoft |
| 7 | Toyota |
| 8 | P&G |
| 9 | IBM |
| 10 | Amazon |
| Source: The Global innovation 1000: Making Ideas Work |
However, the most innovative company turned out to be
Apple, which spent just $2.2 billion or 2.2 per cent of its sales. It is placed 52 places below
Toyota in R&D expenditure.
Google, with a spend of $5.2 billion, or 13.6 per cent of the sales, was the second most innovative.
In all, Global Innovation 1000 companies spent $603 billion on R&D last year, 9.6 per cent more than in 2010. Their revenues totalled $17.6 trillion.
In real value terms, however, the spending was a tad lower, as the increase in revenues in 2011 was far sharper than in 2010, suggesting lower innovation intensity among these companies.
In terms of industry segments, computing and electronics accounted for 28 per cent of the total R&D spend. Samsung, Sony, HP and Texas Instruments continued to pour money into developing better products.
HIGHEST R&D SPENDERS
| RANK | COMPANY | EXPENDITURE
|
| 1 | Toyota | $9.9 billion |
| 2 | Novartis | $9.6 billion |
| 3 | Roche | $9.4 billion |
| 4 | Pfizer | $9.1 billion |
| 5 | Microsoft | $9 billion |
| 6 | Samsung | $9 billion |
| 7 | Merck | $8.5 billion |
| 8 | Intel | $8.4 billion |
| 9 | GM | $8.1 billion |
| 10 | Nokia | $7.8 billion |
| Source: The Global innovation 1000: Making Ideas Work |
The healthcare sector was next and its share of the spend was 21 per cent. Novartis, Roche, Pfizer, Merck, Sanofi, GlaxoSmithKline and AstraZeneca figure in the top 20 list.
A region-wise break-up of spending also throws up interesting insights. China and India top the increase in spending. Together, the two countries spent $16.3 billion, registering 27 per cent growth.
However, a closer look reveals that India's share in that figure is a paltry 10 per cent. Only nine Indian companies made it to the Global Innovation 1000 list compared to 47 from China.
Further, the survey established the fact that there is no long-term correlation between the amount of money a company spends on R&D and its overall financial performance.
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