A Short History of U.S. Industrial Research & Development

Organized corporate research efforts began in the chemical dyes industry in Europe in the mid-1800s and soon were launched at a fairly rapid rate in America. In 1876, at the age of 29, Thomas Alva Edison opened a private laboratory in Menlo Park, New Jersey. Edison’s efforts led to his record-setting 1,093 U.S. patents, including those for the phonograph and the incandescent light bulb. Edison’s creativity and drive eventually enabled the birth of what would become GE, the General Electric Company. By 1900, about 40 corporate research facilities were operating in the U.S. Rapid acceleration was fostered by a growing middle class that created demand for new products and was later fueled by the intense demands for leading-edge armaments, transport and other products created by World War II.

During the war, a man named Vannevar Bush was posted as the director of the Office of Scientific Research and Development within the U.S. Government. Bush’s mandate was to spur intense innovation that would give America a technological edge in warfare. The results, over an astonishingly short period of time, ranged from advanced radar to the atomic bomb. Vannevar Bush argued persuasively for a long-term federal commitment to supporting industrial research. By 1962, the federal government was subsidizing nearly 60% of America’s corporate research budget, for everything from medical breakthroughs to electronics to defense systems.

Thereafter, corporations rapidly increased their own investments in research and development efforts, resulting in a nationwide research base of unprecedented scope and cost. By 1992, however, corporate restructuring and cost cutting led to a brief period of retrenching and research budget slashing.

In the mid-1990s, companies creating or embracing new technologies were among the most exciting and successful firms in America. As corporations were striving to compete, the floodgates of research dollars were once again cranked open.

A final important thought about the development of industrial R&D: Depending on the nature of their industries, firms enter into research with widely varying expectations. For example, while aircraft maker Boeing invests billions of dollars in R&D yearly, that effort may yield a completely new aircraft model only once every eight or 10 years. In contrast, semiconductor maker Intel, which invests billions of dollars yearly, introduces breakthrough chip designs on a continual basis and invests only a tiny amount of its total budget in truly long-term research. Pharmaceutical makers are accustomed to a research-to-market cycle of as long as 10 years in order to discover, develop and commercially launch a new drug.

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