Research and development (R&D) can, depending on the emphasis, be an expression for application-oriented research or the initially linguistic summary of basic research and engineering development, since in large, commercially-oriented companies, the two areas are linked in favor of production or engineering innovations to increase sales is desired and aimed at.



The strong combination of research and development with application-oriented research is, on the one hand, a new way for university institutes to obtain third-party funding by agreeing cooperation agreements with companies. On the other hand, companies see more future opportunities if they get involved in longer-term research topics.

One of the dangers of too strong a combination, however, is that basic research could be neglected.


There are different definitions of the term “research and development” in the literature, but these essentially contain the same characteristics. Research & development includes all planned and systematic activities based on scientific methods, the aim of which is to acquire new knowledge. It is to be understood as “new” in relation to the respective organizational unit. Research and development is an independent area in most production companies and – depending on the size of the company – either represented by a board member or, in medium-sized and small companies, subordinated to technical management.


A distinction must be made between the following operational sub-segments:

  • Business research is the systematic search for new production processes and new technologies that can be used in the company. It is very risky because it creates costs that may not contribute to marketable products.
    • Basic research is looking for new knowledge, but its economic benefit for a company is uncertain. It is designed for the medium to long term and does not aim to be applied or implemented.
    • Applied research (also functional research), on the other hand, pursues a targeted economic use and is geared towards practical application or implementation, whereby it is intended to solve consumer-related problems.
  • Product development searches for the creation of new products or improves existing products through construction and advance development. Achievable economic benefits are highly likely here.
    • The final stage of the new development involves marketable products / services that are absolutely or relatively new to the market.
    • A further development exists when already existing products or services are technically or economically improved.
  • The experimental development consists of systematic work that uses the findings from research and practice with regard to the manufacture of new materials, products or processes. The aim is usually the development of new production processes, production methods or service systems or the significant improvement of existing methods.

The financial sector has to provide the capital required for investments in R&D property, plant and equipment, operating resources and personnel. These cause the cost types depreciation, material, maintenance and repair costs and personnel costs, which are summarized as research and development costs.

The research quota is calculated from this as a business indicator.

Structure of R + D

With regard to their application, research and development can be broken down into four functions, which can only be vaguely delimited from one another and which mostly overlap in the context of a single R&D project.

Basic research

The aim of basic research is to gain new knowledge and experience without generally aiming for direct practical benefit. Rather, the knowledge base is to be expanded. This means that theories and legal hypotheses are to be drafted and checked in order to create the basis for application-oriented knowledge. Since the results of basic research often cannot be protected or used economically, it is only extremely rarely the subject of private-sector efforts. As a rule, basic research takes place in universities, but also in other institutions such as the Max Planck Society and, in some cases, the Fraunhofer Society.

Technology development

Technology development deals with the acquisition and further development of knowledge and skills, the aim of which is to solve practical problems with the help of technology. In doing so, she makes use of the results of basic research, application-oriented knowledge and practical experience. The aim is to develop and maintain technological performance potentials or technological core competencies that enable direct practical applications. The term technology development is roughly equivalent to the term applied research in the natural and engineering sciences.


The pre-development is about the preparation of the series and market-oriented product development. New technologies are checked for their feasibility in products and processes. Product concepts are designed and functional models are built. The aim of pre-development is to anticipate the technical risk from the series / market development projects. In pre-development, new active principles from research (not industrial) are tested for transferability to your own product portfolio. There is a concentration on demanding, high-risk components or products that stand in the way of a quick and largely safe product launch.

The innovation management with its strategic derivation from the corporate strategy is based in the advance development. With a systematic idea management, using creativity techniques, the pre-development affects the entire company in order to generate new product ideas. So-called innovation scouts maintain contact with relevant external network partners in order to monitor relevant technological changes at an early stage.

Product and process development

In this last phase, all previously created potentials (knowledge, skills, processes, product prototypes) are converted into concrete, marketable products or processes. The goal is to launch a new or modified product.