The relationship between r&d and company performance

In setting R & D budgets, many companies compare their R & D intensity with that of the average intensity for global companies in their sector using an R & D scoreboard. However, it's important to define the sector or subsector for this purpose carefully since unduly broad sector definitions have led to misleading conclusions. Moreover, R & D is only one of the investments that should be compared in this way-both Capex and market development can be as or more important for some sectors. Competitive advantage can also be gained by increasing R & D at the start of a recession or downturn when competitors may be decreasing R & D; a number of companies have shown that this boosts the relative advantage of the company's products and services and hence leads to increased sales and market capitalization in the subsequent upturn.