Our Privacy Statment & Cookie Policy

All LSEG websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.

September 11, 2023

Chart of the Week: America – a skilled corporate innovator

by Fathom Consulting.

The US leads the world in corporate innovation. This is due partly to the sheer volume of its spending on R&D (the main input of innovation), but primarily to its unrivalled ability to convert R&D to sales. No investor has a bottomless pocket – whether an ‘angel’ or a common or garden investor, everyone expects a return on their money. Looking at US corporates, there is a clear positive correlation between past R&D intensity (measured as R&D spending over sales) and five-year-ahead growth in sales. The same cannot be said of any of the other major R&D hubs. Investors in UK and Chinese companies cannot guarantee that the company in which they place their money will generate any increased sales from it in the future – this is shown by the flat fitted lines in the UK and Chinese panes of the chart below. There is a slightly positive correlation between past R&D intensity and future sales in Japan, but that is by no means statistically significant. US companies have the know-how, the resources, the support mechanism (for example, through R&D-enhancing CapEx) and the framework to leverage their R&D investments and bring their new products into the global marketplace, promoting them and at the end of the road reaping the benefits. For Japan, the UK or indeed China to challenge the US’s dominance in innovation, they should focus their efforts on making the returns on private corporate R&D more attractive.

Refresh this chart in your browser | Edit the chart in Datastream

The views expressed in this article are the views of the author, not necessarily those of Refinitiv Lipper or LSEG.

Join a growing community of asset managers and stay up to date with the latest research from Refinitiv and partners to help you inform your investment decisions. Follow our Asset Management LinkedIn showcase page.


Refinitiv Datastream

Financial time series database which allows you to identify and examine trends, generate and test ideas and develop view points on the market.

Refinitiv offers the world’s most comprehensive historical database for numerical macroeconomic and cross-asset financial data which started in the 1950s and has grown into an indispensable resource for financial professionals. Find out more.

Article Topics Uncategorized
Article Keywords ,

Get In Touch


We have updated our Privacy Statement. Before you continue, please read our new Privacy Statement and familiarize yourself with the terms.x