Measuring Service-Sector Research and Development

Examining the innovation process in the servicesector and positing a model of the process are the goals of thisreport.Specifically, this analysis looks to identify areas of improvementfor the RD-1 survey instrument created by the National Science Foundation(NSF). Currently, institutional definitions of research and development (R&D)are not entirely applicable for the service sector because the historicaldefinitions and examples have evolved primarily to characterize manufacturingsector R&D activities.Case studies were conducted for fourservice-sector industries: telecommunications, software, financial services,and research development and testing. The purpose of the case studies was to determine the nature of theinnovation process therein and from that information glean an understanding ofwhether there are areas of significant over- or underreporting of R&Dactivities and to assess issues of misclassification. The model created is composed of the following components: strategicplanning, entrepreneurial activity, technology development, science base,infrastructure technologies, and risk reduction.With respect to theimprovements to the NSF's RD-1 instrument, recommendations are put forth formodifications to existing questions and for new questions that could beadded. (SRD)