Nearly half of the research and development paid for and performed by companies in the 50 United States and the District of Columbia in 2011 was performed in five states: California, Washington, Texas, Massachusetts, and Michigan. Companies performed $239 billion of R&D paid for by their own company expenses in the United States in 2011, of which $233 billion was distributed across the 50 states and the District of Columbia. These findings are from the National Science Foundation's 2011 Business R&D and Innovation Survey (BRDIS).[2]
Concentration of R&D Performance within States
Business R&D is concentrated in a small number of states, with the 10 states with the highest levels of R&D performance accounting for $163 billion (70%) of the $233 billion total (table 1). Not included in these figures but discussed at the end of this InfoBrief is R&D performed by companies but paid for by others, such as the federal government and other customers or business partners.
| State | Business R&D performed ($millions) | R&D/GDP (%) | Largest R&D industry in location | Largest industry's share of location R&D (%) |
|---|---|---|---|---|
| U.S. totala | 238,768 | 1.6 | Pharmaceuticals and medicines (NAICS 3254) | 17 |
| California | 64,104 | 3.4 | Semiconductor and other electronic components (NAICS 3344) | 17 |
| Washington | 13,659 | 3.8 | Software publishers (NAICS 5112) | 56 |
| Texas | 12,920 | 1.0 | Semiconductor and other electronic components (NAICS 3344) | 21 |
| Massachusetts | 12,712 | 3.3 | Pharmaceuticals and medicines (NAICS 3254) | 30 |
| Michigan | 12,156 | 3.2 | Automobiles, bodies, trailers, and parts (NAICS3361–3363) | 73 |
| New Jersey | 11,977 | 2.4 | Pharmaceuticals and medicines (NAICS 3254) | 50 |
| Illinois | 10,764 | 1.6 | Pharmaceuticals and medicines (NAICS 3254) | 31 |
| New York | 9,141 | 0.8 | Software publishers (NAICS 5112) | 21 |
| Pennsylvania | 9,018 | 1.6 | Pharmaceuticals and medicines (NAICS 3254) | 43 |
| Connecticut | 6,272 | 2.8 | Pharmaceuticals and medicines (NAICS 3254) | 65 |
GDP = gross domestic product for state; NAICS = 2002 North American Industry Classification System.
a Of the U.S. total, $6,111 million could not be distributed to one of the 50 states or the District of Columbia.
NOTES: State and industry rankings are based on point estimates and do not take into account the variance of the survey sample. Industry classification is based on the dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned.
SOURCE: National Science Foundation, National Center for Science and Engineering Statistics, and U.S. Census Bureau, Business R&D and Innovation Survey, 2011. GDP data are from the U.S. Bureau of Economic Analysis.
Of the industries estimated to have at least $1 billion of self-funded U.S. R&D performance, only four had more than half their R&D concentrated in a single state in 2011 (table 2). California accounts for over half of the semiconductor machinery manufacturing (72%) and computer and peripheral products industries (54%) and also for almost half of the semiconductor and other electronic components industry (48%). Michigan accounted for the majority of R&D performed by automobile manufacturers in the United States (76%). The R&D of the mining, extraction, and support industries, including that of oil and gas companies, was concentrated in Texas, which accounted for 65% of self-funded U.S. R&D performance.
| Industry R&D performed in largest state | |||||
|---|---|---|---|---|---|
| Industry | NAICS code | Total ($millions) | Largest state for industry | Amount ($millions) | Percent |
| Automobiles, bodies, trailers, and parts | 3361–3363 | 11,737 | Michigan | 8,869 | 76 |
| Communications equipment | 3342 | 10,796 | California | 4,788 | 44 |
| Computer systems design and related services | 5415 | 11,706 | California | 3,187 | 27 |
| Mining, extraction, and support activities | 21 | 2,425 | Texas | 1,574 | 65 |
| Navigational, measuring, electromedical, and control instruments | 3345 | 10,643 | California | 2,694 | 25 |
| Computer and peripheral products | 3341, 3343, 3346 | 9,370 | California | 5,075 | 54 |
| Pharmaceuticals and medicines | 3254 | 41,111 | California | 10,042 | 24 |
| Semiconductor and other electronic components | 3344 | 22,855 | California | 10,860 | 48 |
| Semiconductor machinery | 333295 | 2,220 | California | 1,592 | 72 |
| Software publishers | 5112 | 27,280 | California | 7,777 | 29 |
NAICS = 2002 North American Industry Classification System.
NOTES: Industry classification is based on the dominant business code for domestic R&D performance, where available. For companies that did not report business codes, the classification used for sampling was assigned.
SOURCE: National Science Foundation, National Center for Science and Engineering Statistics, and U.S. Census Bureau, Business R&D and Innovation Survey, 2011.
Concentration of R&D within Metropolitan Areas
R&D Spending
Businesses responding to BRDIS tend to concentrate their self-funded R&D performance in one geographic location. This finding is based on data reported by the subset of all BRDIS respondents with known R&D activity and estimated at the time of sampling to have at least $3 million of R&D performed in the United States (hereafter referred to as large-R&D companies).[4] In 2011, a total of 2,931 of these large-R&D companies out of a total 5,037 such companies responded to questions in BRDIS asking for the address of their largest R&D location in the United States and the amount of R&D performed at that location. These responding companies accounted for 69% of all R&D performed in the United States in 2011 that was paid for by the performing companies. Of the large-R&D companies that reported these data, 52% reported performing 100% of their U.S. R&D at their largest location, and 87% reported performing at least 50% of their U.S. R&D at that location (figure 1).[5]Figure 1 Source Data: Excel file
New questions added to one of the BRDIS forms in 2011 also asked companies for information about their second-largest R&D location. Of the 2,594 large-R&D companies that were asked these questions, 907 reported data about their second-largest location, and 698 reported all their R&D at their largest location; 58% of these companies reported performing all of their U.S. R&D at their two largest locations, and 93% reported performing at least 50% of their U.S. R&D at these two locations (figure 1).
Data reported by large-R&D companies for their largest R&D location further illustrate the regional concentration of business R&D in the United States. The 10 most frequently reported combined statistical areas (CSAs) or metropolitan statistical areas (MSAs) accounted for over half of the 2,931 large-R&D companies reporting their largest R&D location (table 3).[6]
| Area | Companies reporting largest R&D location (n) | R&D performance at largest location ($millions) | Utility patents originating from location (n) |
|---|---|---|---|
| All areas | 2,931 | 106,440 | 108,592 |
| Atlanta-Athens-Clarke County-Sandy Springs, GA CSA | 60 | 989 | 1,758 |
| Austin-Round Rock, TX MSA | 24 | 2,159 | 2,460 |
| Boston-Worcester-Providence MA-RI-NH CSA | 230 | 4,524 | 5,989 |
| Chicago-Naperville, IL-IN-WI CSA | 103 | 4,090 | 3,073 |
| Cleveland-Akron-Canton, OH CSA | 30 | 535 | 1,289 |
| Dallas-Fort Worth, TX CSA | 47 | 621 | 2,249 |
| Denver-Aurora, CO CSA | 46 | 565 | 1,531 |
| Detroit-Warren-Ann Arbor, MI CSA | 98 | 7,360 | 2,972 |
| Houston-The Woodlands, TX CSA | 49 | 1,432 | 2,182 |
| Los Angeles-Long Beach, CA CSA | 214 | 8,797 | 6,065 |
| Milwaukee-Racine-Waukesha, WI CSA | 34 | 538 | 708 |
| Minneapolis-St. Paul, MN-WI CSA | 88 | 1,824 | 3,183 |
| New York-Newark, NY-NJ-CT-PA CSA | 209 | 8,154 | 8,996 |
| Philadelphia-Reading-Camden, PA-NJ-DE-MD CSA | 70 | 3,605 | 2,169 |
| Phoenix-Mesa-Scottsdale, AZ MSA | 31 | 1,061 | 1,364 |
| Pittsburgh-New Castle-Weirton, PA-OH-WV CSA | 35 | 413 | 732 |
| Portland-Vancouver-Salem, OR-WA MSA | 43 | 815 | 2,038 |
| Raleigh-Durham-Chapel Hill, NC CSA | 33 | 879 | 1,732 |
| Salt Lake City-Provo-Orem, UT CSA | 34 | 403 | 974 |
| San Diego-Carlsbad, CA MSA | 91 | 3,804 | 3,293 |
| San Jose-San Francisco-Oakland, CA CSA | 380 | 23,346 | 17,596 |
| Seattle-Tacoma-Olympia, WA CSA | 76 | 10,496 | 4,208 |
| St. Louis-St. Charles-Farmington, MO-IL CSA | 30 | 423 | 620 |
| Washington-Baltimore-Arlington, DC-MD-VA-WV CSA | 81 | 1,679 | 2,503 |
| All other geographic areas reported as largest location | 795 | 17,928 | 28,908 |
CSA = combined statistical area; MSA = metropolitan statistical area.
NOTES: R&D data are for companies known to have performed at least $3 million of R&D in prior years that reported their largest R&D location. Only geographic areas where at least 24 companies report their largest location are listed. Utility patent counts by region are based on the residence locations of the first-named inventors that may differ from the location of their inventive activity; for example, the location of their place of business. Counts include patents assigned to businesses as well as to individuals and other organizations.
SOURCES: National Science Foundation, National Center for Science and Engineering Statistics, and U.S. Census Bureau, Business R&D and Innovation Survey, 2011. Utility patent data are from the U.S. Patent and Trademark Office.
The three areas where the largest amount of R&D was performed by large-R&D companies at their primary R&D location were the San Jose-San Francisco-Oakland, Seattle-Tacoma, and Los Angeles-Long Beach CSAs. The largest R&D industries represented in these areas vary, with San Jose-San Francisco-Oakland dominated by computer and electronic products manufacturers and Seattle-Tacoma-Olympia dominated by information technology and aerospace companies. Although the Los Angeles-Long Beach CSA is home to many large-R&D companies, no single industry accounts for a disproportionately large share of its R&D performance.
R&D Locations
The San Jose-San Francisco-Oakland CSA, home to Silicon Valley, not only was the site with the highest level of R&D performance among large-R&D companies, but it also was the most commonly reported primary R&D location. The Boston-Worcester-Providence, Los Angeles-Long Beach, and New York-Newark CSAs were the next most commonly reported areas. Like Los Angeles, the Boston CSA is not dominated by a single company or industry in terms of R&D. The New York-Newark CSA is dominated by pharmaceutical and chemicals companies. A characteristic common to all of these CSAs, however, is that they are each home to multiple world-renowned research universities. These universities, along with large preexisting companies, may foster the creation of new R&D-performing companies in their locales through technology transfer programs and the training and education of future company employees.Perhaps not coincidentally, those areas reported most frequently as the sites of companies' largest R&D location were also among the largest in terms of U.S. utility patents (also known as patents for invention) granted in 2011 based on the residence of inventors (table 3). The areas listed in table 3 were home to the first-named inventors of 73% of all utility patents granted in 2011 with U.S.-located inventors.[7]
Business R&D Paid for by Others
BRDIS estimates of business R&D that is not paid for by the performing company itself but by others—such as customers, partners, or grant-giving organizations—show that this R&D is also geographically concentrated, though these estimates are less precise than those for self-funded business R&D. Companies performed $31 billion of R&D in the United States in 2011 that was funded by the federal government, of which $24 billion can be attributed by BRDIS to a specific state. The five largest states in terms of federally funded business R&D (California, New York, Virginia, Florida, and Maryland) accounted for 60% of the federal-funded business R&D that could be attributed by BRDIS to a specific state. Companies performed $24 billion of R&D in the United States in 2011 that was paid for by other nonfederal organizations, of which $22 billion can be attributed by BRDIS to a specific state. The five largest states by this measure (California, Massachusetts, New Jersey, Texas, and Michigan) accounted for 47% of the business R&D paid for by other nonfederal organizations that could be attributed by BRDIS to a specific state.Data Sources and Limitations
The sample for BRDIS was selected to represent all for-profit companies with five or more domestic employees, publicly or privately held, with an emphasis on those that perform or fund R&D. The survey also captured information on companies whether or not they perform or fund R&D. For 2011, a total of 43,108 companies were sampled for BRDIS, representing 1,964,757 companies in the population. Statistics from the survey are subject to both sampling and nonsampling errors.In 2011, 3% of self-funded U.S. business R&D performed by the companies, 14% of U.S. business R&D paid for by the federal government and performed by companies, and 9% of U.S. R&D paid for by nonfederal organizations other than the performing companies could not be assigned to a specific state location. Therefore, state R&D data provided here are lower-bound estimates. Data for the state of Missouri, which are withheld to avoid disclosing operations of individual companies, are also included in this undistributed R&D. State and industry rankings are based on point estimates and do not take into account the variance of the survey sample. Data presented here for metropolitan areas are from a subset of companies in the survey sample (companies known to have performed $3 million or more of R&D in the United States in any of the four years preceding 2011) and therefore are lower-bound estimates of the total business R&D in these areas.
BRDIS estimates of federally funded business R&D had an imputation rate of 60% in 2011. Some estimates of federally funded business R&D for specific states have imputation rates exceeding 60%.
For this InfoBrief, estimates for R&D at companies' largest locations represent only the amounts for companies responding to the item. No estimation has been made to correct for item nonresponse or for R&D performed at these locations as nonprimary locations. Further, the totals reported here for largest R&D locations do not include R&D performed by these companies that is paid for by others.
Detailed tables for the 2011 BRDIS are forthcoming and will be available athttp://www.nsf.gov/statistics/industry/. Individual tables may be available in advance of publication of the full report. For questions related to BRDIS, please contact Raymond Wolfe.
Notes
[1] Raymond Wolfe, Research and Development Statistics Program, National Center for Science and Engineering Statistics, National Science Foundation, 4201 Wilson Boulevard, Suite 965, Arlington, VA 22230 (rwolfe@nsf.gov; 703-292-7789). Brandon Shackelford is the owner of Twin Ravens Consulting, Austin, TX.[2] R&D reported on Form BRDI-1 that is not allocated to a specific state and R&D reported on Form BRDI-1A by multiestablishment companies are reported as undistributed in BRDIS data tables. This InfoBrief does not include this undistributed amount when calculating state shares of total U.S. R&D.
[3] Industry concentration was determined based on data from the U.S. Census Bureau 2007 Economic Census.
[4] Based on the likelihood of these companies having R&D, these large-R&D companies were selected with certainty for the 2011 BRDIS sample with sample weights equal to 1. These companies account for the vast majority of R&D performed by businesses in the United States.
[5] This concentration is less pronounced among the very largest R&D performers, but most of these companies still report performing the majority of their U.S. R&D at their primary location.
[6] CSAs are delineated by the Office of Management and Budget as aggregates of adjacent metropolitan or micropolitan statistical areas that are linked by commuting ties (http://www.census.gov/population/www/metroareas/metrodef.html). Some large MSAs—such as San Diego, CA; Portland, OR; and Austin, TX—are not part of a defined CSA. For the purpose of this InfoBrief, these MSAs are treated as equivalent to a CSA.
[7] Location data available on patent filings (residence of inventors) may not represent the location where inventive activity took place, as in cases where the inventors commute long distances to their places of work or where large CSAs are densely concentrated (as in the Northeastern United States). BRDIS collects aggregate patent data from companies but does so with no location detail.
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