Some of the world’s top businesses have delivered sharp increases in their R&D spending, admitting they are under pressure to innovate despite uncertainty surrounding regulations, taxes and the movement of labour. Corporate R&D spending hit a global record of $700bn in 2016 with a rise of 6% year on year, reflecting optimism for a genuine commitment to innovation from those analysed in PwC’s Strategy& Global Innovation 1000 survey.
"It's been a year of highs and lows for R&D, with record levels of investment next to unprecedented drops in alignment between innovation and business strategies. There's no doubt that uncertainty is causing concern for medium- and long-term plans, irrespective of whether policy realities actually follow political rhetoric," said Barry Jaruzelski, principal Strategy&, a subsidiary of PwC US.
But economic nationalism and geopolitical tensions are already beginning to alter the picture with leading corporates revising business priorities. For example, half of those responding to questions in the PwC survey said the state of economic nationalism has had a moderate or significant impact on their R&D efforts.
Companies are making potentially harmful cuts to innovation as they become increasingly cautious of governments' uncertain economic policies, which are impacting large firms’ investments in R&D companies. It is highly common for multinationals to conduct R&D outside their headquarter countries, but regulations governing visas and crossborder knowledge and technology sharing are leading executives to question the viability of their integrated global research networks.
“Nearly 33% of R&D executives surveyed report that they have already felt the effects of economic nationalism on their R&D talent acquisition or retention because of visa or work restrictions – either losing employees, seeing less talent available, or in hiring more local talent,” the report said.
Almost 50% of Us and Canadian companies have proposed to make changes to their R&D programmes over the next two years in response to the changing political environment, while China has already seen a decline in its corporate R&D spending by 3.3% in 2017.