This InfoBrief summarizes the rationale for and key
findings from a project linking company-specific R&D and international investment datasets of several federal agencies. The project demonstrated not only the feasibility of such a linkage, but also its utility. The combined data set provides a rich source of new information on the domestic and international dimensions of U.S. R&D activity, such as data on the R&D activities of U.S. and foreign multinational companies by character of work (basic research, applied research, development). The study also has produced tangible benefits for the participating agencies, through improvements in survey sampling and quality of reported data. Such data sharing among federal statistical agencies has been facilitated by the Confidential Information Protection and Statistical Efficiency Act of 2002 (CIPSEA). This study was the first data-sharing project in the U.S. government undertaken under CIPSEA (see "Conclusion").
The project was proposed and funded by Science Resources Statistics (SRS), a division of the National Science Foundation (NSF). The full report, Research and Development Data Link Project: Final Report, is available at http://www.census.gov/mcd/RDD/rddatalink.pdf.
Rationale and Methodology
NSF and the U.S. Census Bureau jointly collect a considerable amount of detailed information on the R&D activities of industrial companies in the United States through the Survey of Industrial Research and Development (SIRD). Information from the SIRD includes whether companies' R&D activities are for applied or basic research or for development, the technology areas supported, and the U.S. state location of R&D performance. The Bureau of Economic Analysis (BEA) collects information from parent companies of U.S. multinational corporations (MNCs) about their overseas activities through the Survey of U.S. Direct Investment Abroad (USDIA) and from affiliates of foreign MNCs through the Survey of Foreign Direct Investment in the United States (FDIUS). BEA data include statistics on foreign ownership and location and on performance metrics, such as sales, operating expenses, and investments, but very little on R&D activities beyond total R&D expenditures.
Combining technological and investment data from these separate but complementary sources should facilitate a better assessment of globalization trends in R&D and technological innovation. This project linked data from the 1997 benchmark FDIUS and the 1999 benchmark USDIA with corresponding years' data from the SIRD. For each link, at least 80% of the published totals were accounted for by matched companies.
This InfoBrief includes data on four company groupings, data for one group collected by the SIRD and data for the other three groups collected by BEA in separate direct investment surveys.
Collected by the SIRD
- R&D-performing companies in the United States, regardless of their ownership structure
Collected by BEA
- U.S. affiliates of foreign MNCs that are majority-owned by their foreign parents (owning more than 50% of their voting securities or equivalent)
- parent companies of U.S. MNCs: fully consolidated U.S. enterprises that own or control at least 10% of the voting securities, or equivalent, of their foreign affiliates
- foreign affiliates of U.S. MNCs that are majority-owned (>50%) by their U.S. parents (majority-owned foreign affiliate)
The first two company groups surveyed by BEA have business activities in the United States. Their respective R&D expenditures are, in effect, subsets of total U.S. industrial R&D (estimated separately by the SIRD). Of this total, MNCs account for a substantial—and growing—share, based on published and nationally representative data. Affiliates of foreign MNCs in the United States performed $29.8 billion, or about 15%, of the $204 billion total in U.S. industrial R&D in 2003, compared with 11% in 1997. Parent companies of U.S. MNCs performed $139.9 billion in R&D in 2003, or just under 70% of total U.S. industrial R&D; foreign affiliates of U.S. MNCs invested $22.8 billion in R&D overseas in the same year.
Key Findings
The values reported below illustrate the kinds of information that can be obtained from linked data. Data in this section and in the tables are from the linked data set. Linked data are not nationally representative: data represent only matched companies, therefore data may not be extrapolated to the population of interest (see "Data Notes"). Additional information appears in the full report, available at http://www.census.gov/mcd/RDD/rddatalink.pdf. Appendix tables from that report are cited below.
U.S. Affiliates of Foreign MNCs
- In 1997, the majority of the R&D expenditures by U.S. affiliates was devoted to development activities and was funded by company and other nonfederal sources, based on data reported to the SIRD (table 1).
- R&D performed by U.S. affiliates accounted for 8% of the U.S. industrial R&D expenditures reported to the SIRD. However, the U.S. affiliate share of spending for basic research was twice as large (16%). (Appendix table 1, full report.)
- U.S. affiliates employed 8% of the U.S. industrial R&D employees of companies in the SIRD. (Appendix table 5, full report.)
U.S. Parent Companies
- In 1999, U.S. parent companies reported $115.7 billion in R&D in the United States, based on data reported to the SIRD (table 2). Parent companies accounted for three-quarters of the U.S. industrial R&D expenditures and for two-thirds of the R&D employees. (Appendix tables 1 and 5, full report.)
- In the manufacturing sector, parent companies accounted for 86% of federally-funded U.S. R&D expenditures according to 1999 SIRD data. The corresponding share for the trade sector was 52%. (Appendix table 4, full report.)
Majority-owned Foreign Affiliates
- Two-thirds of overseas R&D by majority-owned affiliates of U.S. parent companies was performed in five countries in 1999: United Kingdom, Germany, Canada, France, and Japan (table 3), based on data reported to BEA.
- Affiliates located in the United Kingdom and Germany accounted for the largest share of R&D employment of such foreign affiliates in 1999.
Table 1 Source Data: Excel file
Table 2 Source Data: Excel file
Table 3 Source Data: Excel file
Conclusion
The study unequivocally demonstrated the feasibility of linking microdata from the NSF/Census industrial R&D survey with BEA data on U.S. affiliates of foreign MNCs and on U.S. MNCs. The link provided new information on the R&D activities of multinational corporations; allowed improvements in sample design for each of the surveys; and provided useful information on the quality of reported data. For example, by combining information from the surveys federal agencies can for the first time obtain basic research, applied research, and development expenditures for MNCs located in the United States or owned by U.S. companies, without adding to respondent burden or duplicating survey efforts, meeting goals anticipated under CIPSEA data-sharing activities.
Based on these promising initial results, the Census Bureau, NSF/SRS, and BEA concur that future links of SIRD and BEA data likely would produce significant benefits and agree in principle to conduct the linking exercise involving more current data.
Data Notes
All data presented in key findings and tables represent data from the subset of firms that matched during the data-linking project. Linked data are unweighted and do not represent the full population of interest.
Data on R&D employment from SIRD and BEA are not directly comparable. SIRD R&D employment data are based on full-time equivalents (FTEs). To report FTE counts, companies are asked to include scientists and engineers that perform R&D functions on a full-time basis plus an adjusted number of employees whose activities are not solely devoted to R&D (based on the proportion of their time devoted to R&D activities). BEA R&D employment data are headcounts of full-time and part-time employees that devote the majority of their time to R&D activities.
For further information, contact
John E. Jankowski
703-292-7781
jjankows@nsf.gov
or
Francisco Moris
703-292-4678
fmorisor@nsf.gov
Research and Development Statistics Program
Division of Science Resources Statistics
National Science Foundation
4201 Wilson Boulevard, Suite 965
Arlington, VA 22230
Footnotes
[1] MNCs engage in foreign direct investment, the ownership of productive assets outside the home country. An MNC comprises a parent company and its foreign affiliates. An affiliate is a business that is located in one country but is owned or controlled by a parent company located in another country. Thus, a U.S. MNC comprises a U.S. parent company and its foreign affiliates; a foreign MNC is a corporation whose parent company is located outside the United States.
[2] The main purposes of the data-sharing aspects of CIPSEA are to authorize the sharing of business data in order "to reduce the paperwork burdens imposed on businesses that provide requested information to the Federal Government, to improve the comparability and accuracy of Federal economic statistics by allowing [agencies]…to update sample frames, develop consistent classifications of establishments and companies into industries, improve coverage, and reconcile significant differences in data…" and "to increase understanding of the United States economy, especially for key industry and regional statistics, to develop more accurate measures of the impact of technology on productivity growth, and to enhance the reliability of the Nation's most important economic indicators, such as the National Income and Product Accounts." For the full text of The CIPSEA Act of 2002, see http://www.eia.doe.gov/oss/CIPSEA.pdf (accessed 29 November 2006).
