ON THE CLASSIFICATION OF INDUSTRIAL R&D

Abstract There is a long history of debate about the appropriateness of the National Science Foundation's classification of industrial R&D into the categories of basic research, applied research, and development. This paper presents empirical evidence that this classification accurately describes the scope of R&D that is self-financed and conducted in most industrial firms. However, larger firms are more likely to disagree about the appropriateness of the classification, and the disagreement relates in large part to the narrowness of the definition of development.