Amount of funds allocated for RD&I in industrial businesses operating in the Czech Republic

Investments in research, development and innovation (“RD&I”) represent a significant source of the further development of companies and increasing their value. Financing is one of the crucial issues that companies pursuing RD&I must inevitably focus on. Organisations can choose various strategies that differ in terms of financing methods, allocation of funds, etc. and that are reflected in the budget structure. If we focus on industrial organisations active in the Czech Republic that pursue RD&I, what was the total amount of funds allocated for RD&I projects in 2013?

The Institute for Evaluations and Social Analyses (INESAN) conducted a survey in November 2014 with a focus on the practice in organisations pursuing RD&I in the Czech Republic. The principal objective of the project was to evaluate the current state of RD&I in industrial companies and identify the planned use of RD&I in the future. The CATI technique was used to conduct interviews with the representatives of the individual organisations selected by means of stratified random sampling from a database of industrial companies in the Czech Republic. The survey focused on organisations with a dedicated employee or employee team focusing on RD&I; in total, there were 168 companies.

The answers of the representatives of the industrial organisations active in RD&I indicate that the average amount of funds allocated to RD&I per organisation was CZK 24.9 million in 2013. The median is CZK 8 million, which means that the RD&I budget in one half of the organisations is lower than CZK 8 million. As expected, the amount of funds allocated to RD&I depends on the size of the organisation. In the segment of small organisations with a maximum of 49 employees, the average amount attributable to one entity is CZK 4.7 million, in the segment of medium-sized organisations with 50 to 249 employees, this is CZK 16.5 million, and in the segment of large organisations with 250 or more employees, the average amount of the RD&I budget is CZK 35.8 million.

If we compare the figures with the data obtained by the CSO, the CSO found that the total RD&I allocation in 2013 was CZK 77.9 billion, of which CZK 41.5 billion was funded by the private sector, which accounts for 53% of the total amount of funds allocated to RD&I. There is a general observation that small enterprises expend lower amounts on RD&I than large ones. Small enterprises allocated on average CZK 4.6 million, medium-sized enterprises allocated on average CZK 15 million and large companies CZK 54 million. As far as the processing industry is concerned, it allocated a total of CZK 22.1 billion for RD&I in 2013, with the average amount of funds per enterprise active in RD&I being CZK 18 million.

Graph: Average amount of funds allocated for RD&I by the number of employees (in CZK million)

The average amount of funds allocated for RD&I per organisation was CZK 24.9 million in 2013. The analysis focused on the allocation of funds allows the conclusion that RD&I activities are beginning to play a role in industrial businesses’ considerations of competitiveness built on new knowledge and its application in practical solutions. However, there appear to be quite sizeable differences between various organisations in terms of the amount of funds allocated to RD&I. It is possible to infer that especially small organisations face issues in pursuing RD&I activities, which is exhibited in the relatively smaller ratio or organisations with their own RD&I facilities as well as in the number of registered outputs, of which there are fewer than with large organisations.