Sourcing R&D

Since the beginning of the 2000´s the share of sourced R&D by Danish firms has increased considerably. This increasingly intensive use of acquired—often international—R&D might be the result of classic outsourcing of high-paid tasks that could be performed at lower cost abroad. The Danish Agency for Science, Technology and Innovation have therefore investigated, whether Danish firms earn an additional return to sourced R&D, e.g. by lowering their costs and still obtaining the same knowledge. The analysis is based on a sample of Danish firms that continuously perform R&D activities, and they represent about 70 % of total Danish business investments in R&D.

The typical R&D firm in Denmark earns a return on investment in in-house and sourced R&D of about 20 %. However, it does not earn an additional return on sourced R&D.

The analysis further shows that not only—and commonly known—is the bulk national in-house R&D activity by Danish firms concentrated on a small group of firms, national sourced R&D is even more concentrated. The 50 largest firms by in-house R&D represent 65 % of total Danish business investments in in-house R&D. However, this group of firms represents 85 % of national R&D sourced from other firms within the same concern group by Danish firms, and 72 % of national R&D sourced from firms not in the same concern group.