In business, knowledge is power. The more a company can learn about consumers, technology, products, and more, the better. It’s why many firms invest in business intelligence solutions and market research. 

It’s also why research and development is critical to many organizations. Inventing and developing new products or solutions is how many firms get an edge on their rivals. If you’ve always been a little uncertain about R & D, never fear. We’re going to explain what it is, what it entails, and who does it. 

Two Types of Research and Development 

R & D is a catch-all phrase used to describe the process of a business obtaining new knowledge. That may be to build new products, streamline operations, or improve a firm in other ways. Overall, R & D is about encouraging and fostering innovation.

Tech is a sector most traditionally associated with R & D. Firms in the niche are forever looking for new software, solutions, or products. From VoIP services to microprocessors, new innovations are forever in development. Not all R & D is the same, though. In fact, there are two principal types. 

1. Basic. 

Basic research and development is R & D for its own sake. Organizations embark on this research with the sole aim of growing their knowledge base. They’re looking to learn more about a given subject, concept, or phenomenon.

For instance, an ecommerce firm may choose to research the latest innovations in AI. They’d have no practical application in mind, but what they learn could aid their business down the road.   

2. Applied. 

Applied R & D represents the other side of the coin. It’s research undertaken with a specific need, process, or objective in mind. Where basic R & D is about gainer broader understanding, the applied branch is more focused. 

When a business embarks on applied R & D, it has a particular commercial goal in mind. That might be to develop a new product and take it to market. It may be to find a new system by which to run day-to-day operations.  

Who Does Research and Development?

When you hear the phrase R & D, your mind wanders to a picture of a huge lab filled with scientists. Research does, of course, happen on that grand kind of scale. Innovation isn’t the sole preserve of multinationals, though. Research and development gets done by large and small businesses alike.  

1. Large businesses. 

Bigger corporations have more significant budgets. That means they’re often best placed to spend the most on R & D. According to PWC, for instance, Amazon spent an astonishing $22.6 billion in the area in 2018 alone. 

In many cases, large businesses may have their own R & D departments. It’s also commonplace for those firms to utilize the resources of universities for research. 

2. Small businesses. 

Smaller companies usually don’t have the budget to run in-house R & D departments. Innovation is still vital, though, so they often go down the outsourcing route. That means contracting specialist firms to handle research and development on their behalf. 

Precisely how this gets arranged will be down to the organizations involved. Sometimes a firm may have ideas about products or solutions, but lack the engineers or equipment to make them a reality. In other cases, an outsourced company may get given a far broader remit. 

Either way, outsourcing gives smaller firms a route to more significant innovation. It could also help them build a more professional profile. It’s possible to provide a contractor with a vanity number or company email. That presents the appearance that your company does run its own R & D.  

When Does R&D Take Place? 

For most organizations, research and development is an ongoing process. It’s something that ticks along in the background of day-to-day operations. R & D – and especially the basic variety – is a long game. The idea is you’ll get your rewards down the road, but there are no guarantees. 

Spending on research and development, then, is by nature a risky endeavor. You could get nothing more than a flimsy prototype of a product no one would ever buy. You may, though, find that game-changing new solution that propels your firm to another level. That’s why R & D gets seen as critical by most major companies.  


Research and development is about broadening a firm’s knowledge base. By learning more and trying new things, an organization can grow and improve. Whether via a new product, method of implementing tech, or even packaging, R & D can catapult any company to success. 

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