Global recession affected world’s top innovators in 2009: Booz & Company

By By Barry Jaruzelski and Kevin Dehoff | 17 May 2011

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Spending on innovation by Indian and Chinese companies remained relatively unaffected at the height of the global recession in 2009, says a new survey by global strategy consulting firm Booz & Company.

According to the survey report, companies in the two countries boosted their R&D spending by 41.8 per cent  though from a small base as they account for only 1 per cent of total spending on R&D by the top companies world wide.

However, the top 1,000 companies which had shown the highest R&D spending in 2008 despite the spreading recession, decreased their total R&D spending in 2009 by 3.5 per cent, to $503 billion, says the report, The Global Innovation 1000: How the top Innovators  Keep Winning.

"This decline in corporate R&D spending is the first we've seen in the more than 10 years we have tracked the global innovators, and it is clearly a result of the economic downturn's impact on corporate R&D budgets," the report says.

"Revenue for the Global Innovation 1000 plunged at an 11 per cent rate, from $15.1 trillion in 2008 to $13.4 trillion in 2009 - nearly  three times the rate of decline in R&D spending. The result was that R&D intensity (innovation spending as a percentage of revenue) actually increased, from 3.5 per cent to 3.8 per cent, indicating that companies attempted to stay the course with their overall innovation programs, and that they continue to see innovation as essential for future growth, it adds.

Compared to the 3.5 per cent reduction in R&D spending, the 1,000 top R&D spenders cut much more deeply into both sales, general, and administrative expenses (a 5.4 per cent reduction) and capital expenditures (a 17.5 per cent drop).

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