Corporate decision-making for allocations to research and development

The analysis developed here suggests that conventional project based approaches to R & D budget determination do not provide a satisfactory explanation of the actual behaviour of typical large modern corporations. An alternative frame of reference for modelling such behaviour based on a gestalt interpretation is suggested and an examination conducted of differences in corporate R & D budgeting techniques described in a number of studies. It is suggested that the frame of reference developed here provides a useful explanation of differences in budgeting conventions.The interpretation developed is also used to analyse variation in industrial innovative activity. Studies in this area have frequently been based on the concept of rival firms matching each others R & D budgets. Models based on this concept have produced conflicting evidence in this respect. It is suggested here that an alternative approach based on a gestalt interpretation may provide a rather better explanation.