Concepts and definitions

Extramural research and development

Extramural R&D means R&D projects or services which have been acquired outside of the unit and which from the point of view of the service provider are its intramural R&D. Extramural R&D is characterized by the fact that the developer largely determines the implementation of the project content.

Other R&D; personnel

Other R&D staff such as technical experts, other personnel carrying out R&D tasks (e.g. laboratory technicians, computer programmers) and staff providing other kinds of support for R&D projects.

Other R&D; personnel

Other R&D staff includes technical experts, other personnel carrying out R&D tasks (e.g. laboratory technicians, computer programmers) and staff providing other kinds of support for R&D projects.

R&D; in full-time equivalents (FTE)

R&D in full-time equivalents refers to the amount of time spent on R&D work during one year of full-time work (approx. 35 hours per week), allowing for 4-6 weeks of holidays.

R&D work done outside normal working hours is taken into account in calculating R&D in full-time equivalents, provided it is remunerated.

R&D; in full-time equivalents (FTE)

R&D on full-time equivalents refers to the amount of time spent on R&D work during one year of full-time work (including holidays).

Research and development activity

Research and experimental development (R&D) comprise creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge.

The five criteria for identifying R&D:

To be aimed at new findings (novel)

The aim of the R&D is to produce new knowledge and novelties. Mere application of the existing knowledge in development of new solutions, products or procedures is not R&D activity.

To be based on original, not obvious, concepts and hypotheses (creative)

Characteristic to R&D activity is creativity, setting and testing of new hypothesis and concepts. Routine activities in the development of products, processes or other procedures in not R&D activity.

To be uncertain about the final outcome (uncertain)

R&D involves uncertainty regarding outcomes and costs.

To be planned and budgeted (systematic)

R&D is conducted in a planned way, with records kept of both the process followed and the outcome. The purpose of the R&D project and the sources of funding for the R&D performed should be identified. R&D is often organized as a project, but it can also be goal-oriented activity of a person or a group.

To lead to results that could be possibly reproduced (transferable and/or reproducible)

An R&D project should result in the potential for the transfer of the new knowledge which also can be reproduced.

Distribution by type of R&D

Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view.

Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific, practical aim or objective.

Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.

Research and development expenditure

The labour costs of R&D personnel are calculated as the proportion of labour costs of people doing R&D work accounted for by R&D. Labour costs include actual wages, fringe benefits counted under current costs, holiday pay and holiday bonuses. They also include social security payments, contributions to unemployment insurance, compulsory and voluntary pension contributions, and contributions to mutual benefit funds.

Current expenditure on buildings includes the R&D share of, for example, the following items of expenditure: heating, electricity, water, rents, maintenance of premises, cleaning and insurance.

Materials and equipment: materials and equipment needed for R&D activities, which also include the R&D share of the following items of expenditure: books, journals, etc., as well as purchases of machinery, appliances or instruments whose estimated service life is not more than one year.

Services bought in: these are defined as purchases of services relevant to an enterprise's own R&D activities. Whole R&D projects that are contracted out are considered to be contracted research. Services bought in might be construction work, software activities or other planning services, which are not generally considered R&D activities from the point of view of the service provider. However, whole R&D projects that are contracted out are not included.

Other current expenditure: this includes the R&D share in postal and telephone charges, as well as administrative costs (including labour costs of administrative and maintenance personnel that are not counted as research staff labour costs).

Building acquisition costs include the total booked costs of constructing laboratories, production plants and other buildings used for R&D, or the proportion of costs accounted for by R&D activities according to utilisation if the building is also used for other purposes. Acquisition costs essentially also include such things as major improvements that extend service life or enhance capacity.

Other acquisition costs for fixed assets include the total costs of acquiring equipment and machinery that are used exclusively for R&D activities; otherwise the proportion of expenditure accounted for by R&D activities is estimated according to use.

Expenditure is reported minus value-added tax (VAT), and should include costs incurred by activities during the statistical year and items counted as assets on the balance sheet. Depreciation provisions are excluded. In the absence of detailed monitoring, the R&D share of the various expenditures can be calculated for example from the labour costs of research personnel and total labour costs of the unit.

Research and development expenditure

Labour costs of internal R&D personnel

Share of R&D work in annual wages according to R&D person-years. Labour costs include actual wages, fringe benefits in actual value, holiday pay and holiday bonuses. They also include social security payments, contributions to unemployment insurance and compulsory and voluntary pension contributions.

Materials, equipment and other current expenditure

Materials and equipment needed for R&D activities including acquisition of machinery and equipment with operating life at most one year. Other current expenditure includes the share of R&D activity in cost items such as buildings and premises, information technology, travel and administrative costs (also labour costs of administrative and maintenance personnel, which are not included in the R&D wages).

Purchased services

Purchases of services integrated into enterprise's own R&D activities. Services that are produced by external personnel, but which are closely linked to the intramural R&D of an enterprise. They may include software services, consultancy and other planning services, which are not considered as intramural R&D activities from the point of view of the service provider.

Capital costs (acquisition of machinery, equipment, buildings and the like)

Acquisitions which serve R&D only are included in total, in other cases the share of R&D is estimated by the share of use for R&D purposes. Item covers also acquisition of software for R&D activities along with licence fees.

Research and development personnel

Internal R&D personnel are persons employed by the statistical unit and who contribute to the unit’s intramural R&D activities (at least 10% of their normal annual work time) by performing R&D or administrative, office or other support work that is directly linked to R&D work or R&D projects. This category does not include people belonging to central departments who have done general administrative or office work serving the whole unit.

Research and development personnel by function

Product development engineers, researchers or equivalent are persons whose job is to produce new knowledge or develop new applications in product, process or other development work. This category also includes people responsible for the managing and planning of the contents of R&D projects. Person performing only administrative activities linked to the R&D projects belong to the group other R&D staff. According to the R&D definition every statistical unit performing R&D has at least one person who is product development engineer, researcher or equivalent.

Other R&D staff includes technical experts, other personnel carrying out R&D tasks (e.g. laboratory technicians, computer programmers) and staff providing other kinds of support for R&D projects.

Researcher

A researcher or equivalent is a person whose job is to produce new knowledge or develop new applications in product, process or other development work. This category also includes people responsible for managing and planning the content of R&D projects. People who are responsible only for R&D-related administrative tasks are classified as other R&D personnel.

Researcher

Product development engineers, researchers or equivalent are persons whose job is to produce new knowledge or develop new applications in product, process or other development work. This category also includes people responsible for the managing and planning of the contents of R&D projects. Person performing only administrative activities linked to the R&D projects belong to the group other R&D staff. According to the R&D definition every statistical unit performing R&D has at least one person who is product development engineer, researcher or equivalent.

University

In the statistics on university education universities refer to educational institutions belonging to type 42 of educational institutions. Lower (bachelor's) and higher (master's) level university degrees can be attained in universities, as well as further academic degrees, e.g. licentiate's or doctor's degrees. Universities also provide continuing education and open university teaching.

University of applied sciences

In the statistics on university of applied sciences education, a university of applied sciences education means and educational institution in category 41 of the classification of educational institutions. Students of university of applied sciences education can obtain university of applied sciences degrees and higher university of applied sciences degrees. University of applied sciences are maintained by municipalities, or by municipal or private limited companies or foundations.

Referencing instructions:

Official Statistics of Finland (OSF): Research and development [e-publication].
ISSN=2342-6721. Helsinki: Statistics Finland [referred: 18.9.2020].
Access method: http://www.stat.fi/til/tkke/kas_en.html