INTRODUCTION

Innovation requires a conscious effort to develop new ideas for both products and processes. During the nineteenth century, scientific progress was less structured and typically arose from ideas developed in many different areas of the firm. While sources for ideas still flow from different areas, the twentieth century has seen increasing emphasis placed on formal research and development (R&D) facilities as a source of innovation. The renowned research laboratories of AT&T, General Electric, Dupont, and IBM epitomize the organized pursuit of scientific knowledge and its application to production problems. It is true that science played an important role in the early industrial revolution in the United Kingdom; nevertheless, in the twentieth century, the modern corporate enterprise has harnessed science and technology in a new and more extensive fashion within its organizational bounds. Systematic management rules are used to pursue scientific knowledge in the interest of economic well-being.

Since research and development is seen to have a special and key role in the innovation process, this chapter investigates its importance by examining the extent to which Canadian manufacturing firms incorporate R&D into the innovation process.

DEFINITIONS: EXPENDITURES ON RESEARCH AND DEVELOPMENT

Because of the importance that is today attached to research and development, considerable effort has been devoted to measuring the inputs to this process. New data on the importance of research and development expenditures within different systems of national innovation have emerged.