McKinsey Research Studies the Reallocation of Tech R&D Expenditures By Large Companies

McKinsey&CompanyMcKinsey & Co. has polled senior executives at businesses that generate more than $1 billion in revenues to examine the levels of their organizations’ research and development reallocation.

Data from the research shows that annual R&D budget shifts range between 12.7 percent and 13.7 percent, on average, regardless of a firm’s innovation performance, McKinsey said.

Seventy-five percent of top-quartile organizations reallocated up to 30 percent of their annual R&D resources in the past three years, compared with 37 percent of companies rated in the bottom quartile.

McKinsey also found that low-perfoming innovators move 5 percent or less of R&D dollars annually to subsidiaries or divisions.

The consultancy recommends that firms assess their R&D reallocation levels and ensure that investments are aligned with their strategic plans .

 

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