Microbusinesses Performed $6.1 Billion of R&D in the United States in 2021

National Center for Science and Engineering Statistics (NCSES)

Microbusinesses Performed $6.1 Billion of R&D in the United States in 2021

NSF 24-302

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October 30, 2023

This InfoBrief presents research and development (R&D) data on microbusinesses,^{Microbusinesses are defined as having between one to nine domestic employees. Employees are defined as individuals who worked for the business and received a W-2 issued by the business for salary or wages.} defined here as businesses with one to nine domestic employees. In 2021, microbusinesses in the United States reported a total of $8.1 billion in R&D expenditures, of which $7.3 billion (89%) was for domestic costs and $6.1 billion (75%) was performed by the microbusinesses themselves (table 1). R&D costs include the amount that businesses spent of their own money and from other sources on R&D they perform, as well as the amount they paid others to perform R&D. This InfoBrief makes a distinction between all R&D costs and R&D performance costs, which are the costs only for R&D performed by the business.

Table 1

Annual Business Survey aggregate R&D estimates, by questionnaire reference and employment size, for companies with 1–9 employees in selected industries: 2021

(Thousands of U.S. dollars)


Company and financial information	All companies		1–4 employees		5–9 employees
Number of companies	15,855	empty	9,993	empty	5,861	empty
Total R&D cost	8,131,847	empty	3,659,817	empty	4,472,030	empty
Foreign R&D costs	877,630	empty	489,208	empty	388,422	empty
Domestic R&D costs	7,254,217	empty	3,170,609	empty	4,083,608	empty
Domestic R&D costs for salaries, wages, and fringe benefits	4,036,146	empty	1,660,533	empty	2,375,613	empty
Domestic R&D costs for expensed machinery and equipment (not capitalized)	199,530	empty	78,328	empty	121,202	empty
Domestic R&D costs for materials and supplies	573,007	empty	230,443	empty	342,565	empty
Domestic R&D costs for payments to others for R&D	1,129,548	empty	579,812	empty	549,737	empty
Domestic R&D costs for depreciation on R&D property and equipment	74,926	empty	26,770	empty	48,156	empty
Domestic R&D costs for other costs	1,241,060	empty	594,723	empty	646,336	empty
Domestic R&D performance	6,124,669	empty	2,590,797	empty	3,533,871	empty
Domestic R&D performance paid for by the company	4,550,744	empty	1,980,752	empty	2,569,991	empty
Domestic R&D performance paid for by foreign owner	179,119	empty	59,662	empty	119,457	empty
Domestic R&D performance paid for by another U.S. business	270,888	empty	135,905	empty	134,983	empty
Domestic R&D performance paid for by other businesses located outside the United States	16,580	empty	11,384	empty	5,196	empty
Domestic R&D performance paid for by U.S. university or college	7,685	empty	6,383	empty	1,302	empty
Domestic R&D performance paid for by U.S. nonprofit organization	26,720	empty	11,660	r	15,061	empty
Domestic R&D performance paid for by U.S. federal government	1,004,852	empty	340,324	empty	664,528	empty
Domestic R&D performance paid for by U.S. state or local government	63,157	empty	42,372	empty	20,785	empty
Domestic R&D performance paid for by all other organizations outside the United States	4,923	empty	2,355	r	2,568	empty
Domestic R&D performance for basic research	715,225	empty	329,829	empty	385,395	empty
Domestic R&D performance for applied research	2,221,924	empty	869,487	empty	1,352,437	empty
Domestic R&D performance for development	3,187,520	empty	1,391,481	empty	1,796,039	empty

r = relative standard error > 50%.

Note(s):

Detail may not add to total because of rounding. Statistics are representative of companies located in the United States that performed or funded R&D. Selected industries include the 2017 North American Industry Classification System sectors 31, 32, 33, 42, and 51 and industries 5413, 5415, and 5417.

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, 2022 Annual Business Survey: Data Year 2021.

Data for this InfoBrief are from the Annual Business Survey (ABS), developed and cosponsored by the National Center for Science and Engineering Statistics (NCSES) within the National Science Foundation and by the Census Bureau. The ABS is the primary source of information on R&D expenditures by microbusinesses. Additionally, the ABS collects data related to innovation, intellectual property, technology, and business owner characteristics from both microbusinesses and companies with 10 or more employees. This InfoBrief reviews both the R&D totals for the microbusiness population and the specifics for selected industries.

The ABS is a single survey that combines efforts that have historically been from multiple separate business surveys: the Survey of Business Owners, the Annual Survey of Entrepreneurs, the 2016 Business R&D and Innovation Survey–Microbusiness (BRDI-M), and an innovation survey modeled on Eurostat’s Community Innovation Survey. This InfoBrief and the related full set of data tables result from the fifth year of a collaboration on the ABS between NCSES and the Census Bureau.

Microbusiness R&D Trends

Figure 1 presents the trajectory of total R&D costs, total domestic R&D costs, and R&D performance for microbusinesses for the 2018–21 time frame. Total domestic R&D performance increased 35% over the 3-year period (from $4.5 billion in 2018 to $6.1 billion in 2021), whereas total R&D costs and domestic R&D costs each increased 26% over the same period (from $6.5 billion to $8.1 billion and from $5.8 billion to $7.3 billion, respectively).

Figure 1

Total R&D costs, total domestic R&D costs, and R&D performance for companies with 1–9 employees: 2018–21

Data View

(Thousands of U.S. dollars)

Year	Domestic R&D performance	Total domestic R&D costs	Total R&D costs
2018	4,526,838	5,766,729	6,467,338
2019	5,218,911	6,316,312	7,245,649
2020	5,600,668	6,743,889	7,522,839
2021	6,124,669	7,254,217	8,131,847

Note(s):

Detail may not add to total because of rounding. Statistics are representative of companies located in the United States that performed or funded R&D.

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, 2022 Annual Business Survey: Data Year 2021.

R&D by Type of Costs

Of the $7.3 billion in domestic R&D costs (including performance and nonperformance costs) in 2021, 56% were for salaries, wages, and fringe benefits. Outsourced R&D—payments to others for R&D, including purchasing R&D services—was 16% of total domestic R&D costs. An additional 17% of microbusiness domestic R&D costs was for other expenses such as consultants, contractors, travel, or rent. Another 8% was spent on materials and supplies, 3% on machinery and equipment, and 1% on depreciation on R&D property and equipment (table 2).

Table 2

Domestic R&D costs, by selected industry and type of cost, for companies with 1–9 employees: 2021

(Thousands of U.S. dollars)


Industry	NAICS code	Total		Salaries, wages, and fringe benefits		Expensed machinery and equipment		Materials and supplies		Payments to others for R&D		Depreciation on R&D property and equipment		All other costs
All selected industries	31–33, 42, 51, 5413, 5415, 5417	7,254,217	empty	4,036,146	empty	199,530	empty	573,007	empty	1,129,548	empty	74,926	empty	1,241,060	empty
Manufacturing industries	31–33	920,331	empty	425,563	empty	27,714	empty	128,070	empty	173,207	empty	9,581	empty	156,196	empty
Food, beverage, and tobacco products	311–12	19,097	r	11,185	empty	2,710	r	3,718	r	827	r	57	r	600	empty
Textile, apparel, and leather products	313–16	7,096	r	2,523	r	39	empty	493	empty	0	empty	16	empty	4,024	r
Wood products	321	138	empty	106	empty	14	empty	3	empty	4	empty	0	empty	11	empty
Paper	322	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty
Printing and related support activities	323	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty
Petroleum and coal products	324	739	empty	444	empty	30	empty	148	empty	0	empty	0	empty	118	empty
Chemicals	325	208,440	empty	59,578	empty	8,664	empty	25,060	empty	76,185	empty	3,357	empty	35,595	empty
Pharmaceuticals and medicines	3254	163,546	empty	37,379	empty	6,958	r	22,124	empty	66,881	empty	2,717	empty	27,488	empty
Chemicals, excluding pharmaceuticals	other 325	44,894	empty	22,199	empty	1,706	empty	2,937	empty	9,305	r	640	empty	8,107	empty
Plastics and rubber products	326	6,486	empty	3,001	empty	491	empty	940	empty	59	r	115	empty	1,880	empty
Nonmetallic mineral products	327	3,808	r	3,250	r	0	empty	327	r	170	r	8	empty	52	empty
Primary metals	331	2,240	empty	930	r	348	empty	253	empty	123	empty	209	r	376	empty
Fabricated metal products	332	15,819	r	5,495	r	1,130	r	2,569	r	3,836	r	367	r	2,422	r
Machinery	333	76,360	empty	46,830	empty	1,091	empty	6,670	empty	12,252	r	81	empty	9,437	empty
Computer and electronic products	334	330,785	empty	172,865	empty	7,014	empty	50,420	empty	51,582	empty	4,163	empty	44,741	empty
Semiconductor and other electronic components	3344	105,362	empty	48,223	empty	3,199	empty	7,767	empty	34,082	r	2,006	empty	10,084	empty
Navigational, measuring, electromedical, and control instruments	3345	179,628	empty	102,953	empty	2,865	empty	35,825	r	14,829	empty	1,141	empty	22,014	empty
Other computer and electronic products	other 334	45,795	empty	21,689	empty	950	empty	6,828	empty	2,672	empty	1,016	r	12,642	r
Electrical equipment, appliances, and components	335	41,714	empty	25,638	empty	1,707	r	6,881	empty	1,682	empty	426	empty	5,381	empty
Transportation equipment	336	36,042	empty	20,951	empty	1,703	empty	9,961	empty	2,131	empty	185	empty	1,112	empty
Aerospace products and parts	3364	13,903	empty	9,043	empty	311	empty	3,031	empty	900	empty	45	empty	573	empty
Other transportation equipment	other 336	22,139	empty	11,907	empty	1,391	r	6,930	empty	1,231	r	139	r	540	r
Furniture and related products	337	1,471	r	273	r	286	empty	54	empty	0	empty	36	r	821	r
Miscellaneous manufacturing	339	170,097	empty	72,495	empty	2,487	r	20,574	empty	24,356	r	560	r	49,626	r
Selected nonmanufacturing industries	42, 51, 5413, 5415, 5417	6,333,886	empty	3,610,583	empty	171,816	empty	444,937	empty	956,342	empty	65,345	empty	1,084,863	empty
Wholesale trade	42	154,712	empty	71,006	empty	7,676	empty	43,108	r	11,649	r	1,159	r	20,114	empty
Information	51	784,850	empty	617,001	empty	39,065	r	17,102	empty	28,193	empty	6,171	empty	77,319	empty
Software publishers	5112	560,818	empty	460,456	empty	9,596	empty	13,299	empty	24,868	empty	6,109	empty	46,490	empty
Information, excluding software publishers	51 less 5112	224,032	empty	156,545	empty	29,469	r	3,803	empty	3,325	empty	61	empty	30,829	r
Architectural, engineering, and related services	5413	647,610	empty	447,922	empty	27,288	empty	59,372	empty	41,424	empty	7,188	r	64,415	empty
Computer systems design and related services	5415	1,690,254	empty	1,226,739	empty	27,900	empty	40,717	empty	74,064	empty	5,269	r	315,566	empty
Scientific research and development services	5417	3,056,460	empty	1,247,915	empty	69,886	empty	284,639	empty	801,012	empty	45,559	empty	607,450	empty
Research and development in nanotechnology	541713	201,891	empty	111,127	empty	5,676	empty	17,371	empty	29,309	empty	2,815	empty	35,595	empty
Research and development in biotechnology (except nanobiotechnology)	541714	1,288,461	empty	441,338	empty	18,479	empty	115,229	empty	419,881	empty	20,267	empty	273,267	empty
Research and development in the physical, engineering, and life sciences (except nanotechnology and biotechnology)	541715	1,538,246	empty	677,439	empty	45,557	empty	151,157	empty	344,568	empty	22,421	empty	297,103	empty
Social sciences and humanities research and development	541720	17,262	empty	9,856	empty	174	empty	474	empty	5,215	empty	56	r	1,485	empty

r = relative standard error > 50%.

NAICS = 2017 North American Industry Classification System.

Note(s):

Detail may not add to total because of rounding or unavailable NAICS detail for select records beyond the 4-digit industry classification. Industry classification is based on dominant establishment payroll. Statistics are representative of companies located in the United States that performed or funded R&D

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, 2022 Annual Business Survey: Data Year 2021.

Manufacturing industries spent 46% of their domestic R&D costs on salaries, wages, and fringe benefits, whereas selected nonmanufacturing industries spent 57% on salaries, wages, and fringe benefits; however, this difference is not statistically significant. Computer systems design and related services (NAICS 5415) and scientific research and development services (NAICS 5417)—the two largest industries by domestic R&D performance costs—spent 73% and 41% on salaries, wages, and fringe benefits, respectively.

Characteristics of Microbusiness R&D Performance

By Industry

As was the case in previous ABS surveys, microbusiness R&D is highly concentrated within a few industries.^{R&D questions were asked only of manufacturers and certain selected nonmanufacturing industries that in previous NCSES surveys (2017 ABS, BRDI-M, and Business R&D Innovation Survey) represented almost all R&D of microbusinesses in the United States.} In 2021, domestic R&D costs by microbusinesses in the United States were approximately $7.3 billion (table 1), of which $1.1 billion was for outsourced R&D and the remaining $6.1 billion (or 84%) was R&D performed by the microbusinesses themselves. This proportion was nearly identical to findings from 2020, where 83% of domestic R&D was performed by microbusinesses.

Selected nonmanufacturing industries accounted for 88% of the domestic R&D performance costs in 2021. Scientific research and development services (NAICS 5417) accounted for 37% of domestic R&D performance, and just over one-half (53%) of this from R&D in the physical, engineering, and life sciences (except nanotechnology and biotechnology) (NAICS 541715) (table 2). One-quarter (26%) of domestic R&D performance costs were from the computer systems design and related services industry (NAICS 5415).

By Type of R&D

There are three types of R&D: basic research, applied research, and development.^{As defined by the Frascati Manual, basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view. Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily toward a specific, practical aim or objective. Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes. See Organisation for Economic Co-operation and Development (OECD). 2015. Frascati Manual: Guidelines for Collecting and Reporting Data on Research and Experimental Development. The Measurement of Scientific, Technological and Innovation Activities. Paris: OECD Publishing.} In 2021, just over one-half (52%) of microbusiness R&D performance was for development, 36% was for applied research, and 12% was for basic research (table 3). The allocation of R&D across the three types was similar between microbusinesses in manufacturing and nonmanufacturing industries.

Table 3

Domestic R&D performed by the company, by selected industry and type of R&D, for companies with 1–9 employees: 2021

(Thousands of U.S. dollars)


Industry	NAICS code	Total		Basic research		Applied research		Development
All selected industries	31–33, 42, 51, 5413, 5415, 5417	6,124,669	empty	715,225	empty	2,221,924	empty	3,187,520	empty
Manufacturing industries	31–33	747,124	empty	59,635	empty	275,850	empty	411,640	empty
Food, beverage, and tobacco products	311–12	18,270	r	704	empty	3,942	empty	13,624	r
Textile, apparel, and leather products	313–16	7,096	r	1,425	r	1,980	r	3,691	r
Wood products	321	134	empty	14	empty	21	empty	99	empty
Paper	322	0	empty	0	empty	0	empty	0	empty
Printing and related support activities	323	0	empty	0	empty	0	empty	0	empty
Petroleum and coal products	324	739	empty	0	empty	148	empty	592	empty
Chemicals	325	132,255	empty	14,608	empty	52,897	empty	64,750	empty
Pharmaceuticals and medicines	3254	96,666	empty	11,004	empty	38,762	empty	46,899	empty
Chemicals, excluding pharmaceuticals	other 325	35,589	empty	3,604	empty	14,135	empty	17,850	empty
Plastics and rubber products	326	6,427	empty	204	empty	3,787	empty	2,436	r
Nonmetallic mineral products	327	3,638	r	2,236	r	811	r	590	empty
Primary metals	331	2,117	empty	295	empty	806	r	1,016	r
Fabricated metal products	332	11,983	r	3,864	r	3,509	r	4,609	r
Machinery	333	64,109	empty	4,914	empty	18,164	empty	41,031	empty
Computer and electronic products	334	279,203	empty	21,513	empty	87,924	empty	169,765	empty
Semiconductor and other electronic components	3344	71,280	empty	8,498	empty	29,458	empty	33,324	empty
Navigational, measuring, electromedical, and control instruments	3345	164,799	empty	10,675	empty	46,797	empty	107,327	empty
Other computer and electronic products	other 334	43,124	empty	2,340	empty	11,670	empty	29,114	empty
Electrical equipment, appliances, and components	335	40,032	empty	1,809	r	16,157	empty	22,065	empty
Transportation equipment	336	33,911	empty	1,208	r	6,696	empty	26,007	empty
Aerospace products and parts	3364	13,003	empty	266	empty	4,607	empty	8,130	empty
Other transportation equipment	other 336	20,908	empty	942	r	2,090	r	17,876	empty
Furniture and related products	337	1,471	r	0	empty	559	empty	912	r
Miscellaneous manufacturing	339	145,741	empty	6,841	empty	78,446	r	60,454	empty
Selected nonmanufacturing industries	42, 51, 5413, 5415, 5417	5,377,544	empty	655,590	empty	1,946,074	empty	2,775,881	empty
Wholesale trade	42	143,063	empty	20,107	r	49,941	empty	73,015	empty
Information	51	756,657	empty	80,314	empty	217,708	empty	458,635	empty
Software publishers	5112	535,950	empty	62,233	empty	164,325	empty	309,391	empty
Information, excluding software publishers	51 less 5112	220,707	empty	18,080	empty	53,383	empty	149,244	empty
Architectural, engineering, and related services	5413	606,186	empty	75,293	empty	155,913	empty	374,980	empty
Computer systems design and related services	5415	1,616,190	empty	170,785	empty	595,870	empty	849,535	empty
Scientific research and development services	5417	2,255,449	empty	309,092	empty	926,641	empty	1,019,716	empty
Research and development in nanotechnology	541713	172,582	empty	27,987	empty	73,792	empty	70,804	empty
Research and development in biotechnology (except nanobiotechnology)	541714	868,580	empty	146,062	empty	308,060	empty	414,458	empty
Research and development in the physical, engineering, and life sciences (except nanotechnology and biotechnology)	541715	1,193,678	empty	133,318	empty	538,713	empty	521,647	empty
Social sciences and humanities research and development	541720	12,047	empty	1,725	empty	6,076	empty	4,246	empty

r = relative standard error > 50%.

NAICS = 2017 North American Industry Classification System.

Note(s):

Detail may not add to total because of rounding or unavailable NAICS detail for select records beyond the 4-digit industry classification. Industry classification is based on dominant establishment payroll. Statistics are representative of companies located in the United States that performed or funded R&D.

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, 2022 Annual Business Survey: Data Year 2021.

By Source of Funds

In 2021, three-fourths (74%) of microbusiness domestic R&D performance was paid from the companies’ own funds; 17% was from federal, state, or local governments combined; 4% came from another U.S. company; and 3% was from a foreign owner (table 4). Few differences were found across industries. In the scientific research and development services industry (NAICS 5417), the industry with the most domestic R&D performance costs, 66% of microbusiness R&D performance was self-funded and 22% was funded by federal, state, or local governments combined. In 2021, 82% of all government funding (federal, state, or local) for microbusinesses went to three industries: architectural, engineering, and related services (NAICS 5413); computer systems design and related services (NAICS 5415); and scientific research and development services industry (NAICS 5417).

Table 4

Domestic R&D performed by the company, by selected industry and source of funds, for companies with 1–9 employees: 2021

(Thousands of U.S. dollars)


Industry	NAICS code	Total		Paid for by the company		Foreign owner		Another U.S. company		Other businesses outside the United States		U.S. university or college		U.S. nonprofit organization		U.S. federal government		U.S. state or local government		All other organizations outside the United States
All selected industries	31–33, 42, 51, 5413, 5415, 5417	6,124,669	empty	4,550,744	empty	179,119	empty	270,888	empty	16,580	empty	7,685	empty	26,720	empty	1,004,852	empty	63,157	empty	4,923	empty
Manufacturing industries	31–33	747,124	empty	533,030	empty	41,326	empty	13,745	empty	2,068	empty	1,444	empty	2,178	empty	142,418	empty	10,098	empty	818	r
Food, beverage, and tobacco products	311–12	18,270	r	16,920	r	0	empty	0	empty	0	empty	484	empty	0	empty	865	r	0	empty	0	empty
Textile, apparel, and leather products	313–16	7,096	r	7,096	r	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty
Wood products	321	134	empty	134	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty
Paper	322	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty
Printing and related support activities	323	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty
Petroleum and coal products	324	739	empty	739	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty
Chemicals	325	132,255	empty	105,357	empty	12,466	empty	2,993	empty	404	empty	26	empty	1,323	empty	9,686	empty	0	empty	0	empty
Pharmaceuticals and medicines	3254	96,666	empty	71,680	empty	12,466	empty	1,988	r	152	r	0	empty	1,323	empty	9,056	empty	0	empty	0	empty
Chemicals, excluding pharmaceuticals	other 325	35,589	empty	33,676	empty	0	empty	1,005	empty	252	empty	26	empty	0	empty	630	empty	0	empty	0	empty
Plastics and rubber products	326	6,427	empty	4,712	empty	0	empty	0	empty	0	empty	0	empty	0	empty	1,715	empty	0	empty	0	empty
Nonmetallic mineral products	327	3,638	r	3,151	r	0	empty	0	empty	0	empty	0	empty	0	empty	486	r	0	empty	0	empty
Primary metals	331	2,117	empty	2,117	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty
Fabricated metal products	332	11,983	r	11,687	r	0	empty	296	r	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty
Machinery	333	64,109	empty	46,810	empty	0	empty	5,921	r	690	r	329	r	0	empty	8,376	empty	1,983	r	0	empty
Computer and electronic products	334	279,203	empty	218,156	empty	7,113	r	1,818	r	973	empty	186	empty	855	r	48,733	empty	552	empty	818	r
Semiconductor and other electronic components	3344	71,280	empty	63,840	empty	0	empty	0	empty	0	empty	161	empty	129	empty	6,159	empty	173	empty	818	r
Navigational, measuring, electromedical, and control instruments	3345	164,799	empty	118,083	empty	5,818	r	344	empty	588	empty	24	empty	726	r	38,853	empty	362	empty	0	empty
Other computer and electronic products	other 334	43,124	empty	36,232	empty	1,296	empty	1,474	r	385	r	0	empty	0	empty	3,721	r	16	empty	0	empty
Electrical equipment, appliances, and components	335	40,032	empty	24,452	empty	10,662	r	0	empty	0	empty	345	empty	0	empty	468	empty	4,105	r	0	empty
Transportation equipment	336	33,911	empty	26,796	empty	0	empty	559	empty	0	empty	74	empty	0	empty	3,219	empty	3,264	r	0	empty
Aerospace products and parts	3364	13,003	empty	8,931	empty	0	empty	559	empty	0	empty	74	empty	0	empty	3,219	empty	221	empty	0	empty
Other transportation equipment	other 336	20,908	empty	17,865	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	3,043	r	0	empty
Furniture and related products	337	1,471	r	1,185	r	0	empty	0	empty	0	empty	0	empty	0	empty	286	empty	0	empty	0	empty
Miscellaneous manufacturing	339	145,741	empty	63,719	empty	11,085	r	2,158	r	0	empty	0	empty	0	empty	68,584	r	195	empty	0	empty
Selected nonmanufacturing industries	42, 51, 5413, 5415, 5417	5,377,544	empty	4,017,713	empty	137,793	empty	257,144	empty	14,513	empty	6,241	empty	24,542	empty	862,434	empty	53,059	empty	4,106	empty
Wholesale trade	42	143,063	empty	120,053	empty	507	r	0	empty	1,488	empty	183	r	0	empty	20,777	r	54	r	0	empty
Information	51	756,657	empty	726,206	empty	1,343	r	3,675	empty	2,745	empty	0	empty	513	empty	20,623	empty	1,551	empty	0	empty
Software publishers	5112	535,950	empty	511,079	empty	471	empty	3,307	empty	2,745	empty	0	empty	280	r	16,517	empty	1,551	empty	0	empty
Information, excluding software publishers	51 less 5112	220,707	empty	215,127	empty	872	r	368	r	0	empty	0	empty	233	r	4,107	empty	0	empty	0	empty
Architectural, engineering, and related services	5413	606,186	empty	461,332	empty	2,580	empty	61,996	empty	1,021	empty	1,233	r	4,544	r	70,603	empty	2,877	empty	0	empty
Computer systems design and related services	5415	1,616,190	empty	1,230,848	empty	23,820	r	53,930	empty	0	empty	227	r	9,867	r	295,102	r	1,764	r	631	r
Scientific research and development services	5417	2,255,449	empty	1,479,275	empty	109,543	empty	137,542	empty	9,258	empty	4,597	empty	9,618	empty	455,328	empty	46,813	empty	3,475	empty
Research and development in nanotechnology	541713	172,582	empty	116,927	empty	5,374	r	6,006	empty	267	empty	659	r	2,046	r	40,900	empty	404	empty	0	empty
Research and development in biotechnology (except nanobiotechnology)	541714	868,580	empty	610,670	empty	38,829	empty	49,949	empty	3,284	empty	968	r	4,448	empty	130,369	empty	28,243	r	1,821	r
Research and development in the physical, engineering, and life sciences (except nanotechnology and biotechnology)	541715	1,193,678	empty	735,709	empty	65,340	empty	80,924	empty	5,707	empty	1,765	empty	2,924	empty	281,490	empty	18,165	empty	1,654	empty
Social sciences and humanities research and development	541720	12,047	empty	7,408	empty	0	empty	664	r	0	empty	1,205	r	200	r	2,570	empty	0	empty	0	empty

r = relative standard error > 50%.

NAICS = 2017 North American Industry Classification System.

Note(s):

Detail may not add to total because of rounding or unavailable NAICS detail for select records beyond the 4-digit industry classification. Industry classification is based on dominant establishment payroll. Statistics are representative of companies located in the United States that performed or funded R&D.

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, 2022 Annual Business Survey: Data Year 2021.

By State

In 2020, five states (California, New York, Massachusetts, Michigan, and Washington) accounted for 51% of all domestic microbusiness R&D performance cost.^{Kindlon A; National Center for Science and Engineering Statistics (NCSES). 2022. Microbusinesses Performed $5.6 Billion of R&D in the United States in 2020. NSF 23-305. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf23305/.} In 2021, the five states (California, Texas, Florida, Massachusetts, Washington) also accounted for 51% of all domestic microbusiness R&D performance cost (table 5). California made up nearly one-third of all domestic microbusiness R&D performance cost in 2021 and its estimated costs were more than six times the estimated costs of Texas (which had the next highest estimated costs).

Table 5

Domestic R&D performed by the company, by state and employment size, for companies with 1–9 employees in selected industries: 2021

(Number and thousands of U.S. dollars)


State	All companies				1–4 employees				5–9 employees
State	Companies (number)		Amount		Companies (number)		Amount		Companies (number)		Amount
All states	15,339	empty	6,124,669	empty	9,611	empty	2,590,797	empty	5,727	empty	3,533,871	empty
Alabama	80	empty	27,599	empty	68	empty	18,036	empty	13	empty	9,563	empty
Alaska	4	empty	826	empty	4	empty	826	empty	0	empty	0	empty
Arizona	256	empty	88,693	empty	162	empty	38,821	empty	93	empty	49,871	empty
Arkansas	56	empty	19,073	empty	19	empty	5,784	empty	38	empty	13,289	empty
California	3,953	empty	2,012,984	empty	2,547	empty	701,550	empty	1,407	empty	1,311,433	empty
Colorado	602	empty	234,304	empty	316	empty	91,543	empty	287	empty	142,761	empty
Connecticut	98	empty	48,150	empty	60	empty	18,600	empty	37	empty	29,550	empty
Delaware	165	empty	69,107	empty	109	empty	44,344	empty	57	empty	24,763	empty
District of Columbia	27	empty	17,781	empty	17	empty	12,430	empty	11	empty	5,351	empty
Florida	711	empty	281,389	empty	455	empty	170,107	empty	257	empty	111,282	empty
Georgia	337	empty	96,196	empty	272	empty	46,919	empty	64	empty	49,277	empty
Hawaii	11	empty	2,953	empty	10	empty	1,828	empty	2	empty	1,125	empty
Idaho	49	empty	18,782	r	15	empty	2,493	empty	36	r	16,289	r
Illinois	429	empty	150,100	empty	289	empty	54,633	empty	139	empty	95,467	r
Indiana	194	empty	62,734	empty	145	empty	40,815	empty	48	empty	21,919	empty
Iowa	78	empty	18,990	empty	56	empty	11,902	empty	23	empty	7,088	empty
Kansas	106	r	23,961	empty	83	r	16,546	r	24	empty	7,414	empty
Kentucky	97	empty	25,048	empty	69	empty	14,846	empty	29	empty	10,202	empty
Louisiana	23	empty	5,739	empty	10	empty	3,548	empty	11	r	2,192	empty
Maine	46	r	8,666	empty	32	r	4,995	r	15	empty	3,670	empty
Maryland	422	empty	172,731	empty	305	empty	92,600	empty	117	empty	80,131	empty
Massachusetts	570	empty	278,140	empty	331	empty	115,643	empty	239	empty	162,497	empty
Michigan	310	empty	102,184	empty	153	empty	40,265	empty	157	empty	61,919	empty
Minnesota	430	empty	128,300	empty	300	empty	52,184	empty	129	empty	76,117	empty
Mississippi	31	empty	7,556	empty	20	empty	4,695	empty	10	empty	2,862	empty
Missouri	171	empty	32,212	empty	108	r	16,055	r	64	empty	16,158	empty
Montana	34	empty	14,611	empty	14	empty	2,292	empty	19	empty	12,319	empty
Nebraska	19	empty	7,014	empty	16	empty	5,925	empty	2	empty	1,089	empty
Nevada	111	empty	43,669	empty	75	empty	25,364	empty	35	empty	18,305	empty
New Hampshire	67	empty	43,419	empty	34	empty	9,529	empty	34	empty	33,890	empty
New Jersey	256	empty	134,415	empty	161	empty	84,273	empty	95	empty	50,142	empty
New Mexico	63	empty	25,502	empty	35	empty	11,867	empty	28	empty	13,635	empty
New York	665	empty	226,485	empty	424	empty	83,783	empty	242	empty	142,702	empty
North Carolina	431	empty	144,595	empty	280	empty	71,987	empty	150	empty	72,608	empty
North Dakota	12	empty	3,068	empty	5	empty	1,491	empty	8	empty	1,577	empty
Ohio	542	empty	144,642	empty	236	empty	54,361	empty	307	empty	90,281	empty
Oklahoma	107	empty	30,764	empty	89	r	19,605	r	20	empty	11,159	empty
Oregon	238	empty	80,522	empty	147	empty	43,015	empty	92	empty	37,507	empty
Pennsylvania	527	empty	183,302	empty	348	empty	131,770	empty	178	empty	51,532	empty
Rhode Island	18	empty	6,696	empty	16	empty	5,937	empty	3	empty	758	empty
South Carolina	178	empty	95,782	r	36	empty	14,113	empty	144	empty	81,669	r
South Dakota	12	empty	3,156	empty	7	empty	966	r	6	r	2,190	r
Tennessee	116	empty	47,601	empty	65	empty	19,105	empty	50	empty	28,496	empty
Texas	842	empty	301,057	empty	479	empty	133,984	empty	362	empty	167,073	empty
Utah	189	empty	66,559	empty	140	empty	31,699	empty	48	empty	34,860	empty
Vermont	71	r	17,876	r	3	empty	948	empty	67	r	16,928	r
Virginia	543	empty	137,037	empty	385	empty	57,374	empty	158	empty	79,663	empty
Washington	572	empty	243,051	empty	425	empty	105,850	empty	147	empty	137,201	empty
West Virginia	20	empty	3,795	empty	18	empty	2,426	empty	2	empty	1,369	empty
Wisconsin	348	empty	147,494	empty	165	empty	39,997	r	182	empty	107,497	r
Wyoming	73	empty	30,242	r	40	r	5,834	r	34	r	24,408	r
Undistributed	18	empty	8,117	empty	8	r	5,295	r	9	empty	2,822	empty

r = relative standard error > 50%.

Note(s):

Detail may not add to total because of rounding. Statistics are representative of companies located in the United States that performed or funded R&D.

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, 2022 Annual Business Survey: Data Year 2021.

Total Employment and R&D Employees

Just under 39,000 domestic R&D employees (78% male, 22% female) worked for microbusinesses in 2021, and 88% of those domestic R&D employees were in the selected nonmanufacturing microbusinesses (table 6). Among all domestic R&D employees, the largest percentages worked in the computer systems design and related services industry (NAICS 5415) and scientific research and development services industry (NAICS 5417) (30% and 26%, respectively), but these percentages are not significantly different.

Table 6

Domestic R&D employees, by selected industry, by sex and by R&D work activity, for companies with 1–9 employees: 2021

(Number)


Industry	NAICS code	All companies		Male		Female		Researchers (including R&D scientists, engineers, and their managers)		R&D technicians and equivalent staff		R&D support staff (clerical and other)		Researchers with PhD (excluding MD, JD, and EdD)
All selected industries	31–33, 42, 51, 5413, 5415, 5417	38,962	empty	30,340	empty	8,622	empty	28,417	empty	7,478	empty	3,066	empty	7,358	empty
Manufacturing industries	31–33	4,686	empty	3,735	empty	951	empty	3,432	empty	882	empty	372	empty	945	empty
Food, beverage, and tobacco products	311–12	89	r	79	r	10	r	88	r	2	empty	0	empty	4	empty
Textile, apparel, and leather products	313–16	25	empty	21	empty	4	empty	11	empty	3	empty	11	r	0	empty
Wood products	321	6	empty	4	empty	1	empty	3	empty	1	empty	1	empty	3	empty
Paper	322	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty
Printing and related support activities	323	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty	0	empty
Petroleum and coal products	324	9	empty	7	empty	1	empty	9	empty	0	empty	0	empty	1	empty
Chemicals	325	607	empty	438	empty	169	empty	387	empty	138	empty	82	empty	175	empty
Pharmaceuticals and medicines	3254	296	empty	201	empty	95	empty	227	empty	50	empty	19	empty	120	empty
Chemicals, excluding pharmaceuticals	other 325	311	empty	237	empty	74	empty	160	empty	88	empty	63	empty	55	empty
Plastics and rubber products	326	29	empty	26	empty	3	empty	15	empty	3	empty	12	r	1	empty
Nonmetallic mineral products	327	24	empty	23	empty	1	empty	18	empty	6	r	0	empty	9	r
Primary metals	331	11	r	7	empty	4	r	11	r	0	empty	0	empty	9	r
Fabricated metal products	332	159	r	156	r	3	empty	57	r	59	r	43	r	2	r
Machinery	333	512	empty	422	empty	90	empty	380	empty	104	empty	28	empty	59	empty
Computer and electronic products	334	1,950	empty	1,582	empty	368	empty	1,414	empty	400	empty	137	empty	367	empty
Semiconductor and other electronic components	3344	509	empty	440	empty	69	empty	329	empty	136	r	44	empty	127	empty
Navigational, measuring, electromedical, and control instruments	3345	1,110	empty	852	empty	258	empty	878	empty	176	empty	56	empty	211	empty
Other computer and electronic products	other 334	332	empty	290	empty	42	empty	207	empty	88	empty	37	empty	29	empty
Electrical equipment, appliances, and components	335	306	empty	255	empty	51	empty	204	empty	62	r	40	empty	42	r
Transportation equipment	336	190	empty	180	empty	10	empty	146	empty	34	empty	11	empty	17	r
Aerospace products and parts	3364	95	empty	88	empty	7	empty	69	empty	21	empty	5	empty	1	empty
Other transportation equipment	other 336	96	empty	93	empty	3	empty	77	empty	13	r	6	r	16	r
Furniture and related products	337	3	empty	3	empty	0	empty	3	empty	0	empty	0	empty	0	empty
Miscellaneous manufacturing	339	765	empty	531	empty	233	r	687	empty	70	empty	7	empty	253	empty
Selected nonmanufacturing industries	42, 51, 5413, 5415, 5417	34,276	empty	26,605	empty	7,671	empty	24,985	empty	6,596	empty	2,695	empty	6,412	empty
Wholesale trade	42	1,119	empty	954	empty	165	empty	860	empty	191	empty	68	r	137	empty
Information	51	5,859	empty	4,631	empty	1,228	empty	3,954	empty	1,333	empty	571	empty	630	empty
Software publishers	5112	4,299	empty	3,382	empty	917	empty	2,911	empty	892	empty	496	empty	499	empty
Information, excluding software publishers	51 less 5112	1,559	empty	1,248	empty	311	empty	1,043	empty	442	empty	75	empty	131	empty
Architectural, engineering, and related services	5413	5,330	empty	4,454	empty	876	empty	4,067	empty	920	empty	343	empty	505	empty
Computer systems design and related services	5415	11,653	empty	9,670	empty	1,983	empty	8,364	empty	2,444	empty	845	empty	936	empty
Scientific research and development services	5417	10,315	empty	6,897	empty	3,418	empty	7,740	empty	1,708	empty	868	empty	4,204	empty
Research and development in nanotechnology	541713	1,119	empty	763	empty	355	empty	812	empty	140	empty	167	empty	498	empty
Research and development in biotechnology (except nanobiotechnology)	541714	3,199	empty	1,955	empty	1,244	empty	2,355	empty	579	empty	266	empty	1,504	empty
Research and development in the physical, engineering, and life sciences (except nanotechnology and biotechnology)	541715	5,878	empty	4,113	empty	1,765	empty	4,474	empty	975	empty	429	empty	2,171	empty
Social sciences and humanities research and development	541720	110	empty	60	empty	50	empty	91	empty	13	empty	6	empty	27	empty

r = relative standard error > 50%.

NAICS = 2017 North American Industry Classification System.

Note(s):

Detail may not add to total because of rounding. Statistics are representative of companies located in the United States that performed or funded R&D.

Source(s):

National Center for Science and Engineering Statistics and Census Bureau, 2022 Annual Business Survey: Data Year 2021.

R&D employee occupations included researchers (e.g., R&D scientists, engineers, and their managers), R&D technicians and equivalent staff, and R&D support staff (clerical and other). Among domestic R&D employees in 2021, 73% (about 28,000 employees) were researchers; among these researchers, 26% had PhDs. Almost 7,500, or 19% of domestic R&D employees, were R&D technicians, and the remaining (about 3,000, or 8%) were R&D support staff.

Survey Information and Data Availability

In this InfoBrief, R&D costs and performance are expressed in current U.S. dollars and are not adjusted for inflation. For the ABS, a microbusiness is defined as a business organization located in the United States, either a U.S.-owned company or a U.S. affiliate of a foreign parent company, of one or more establishments under common ownership or control, with one to nine domestic employees.

The survey was administered to companies whether or not they were known to have R&D activity. The ABS collected detailed statistics from microbusinesses located in the United States on R&D expenditures, R&D employees, intellectual property, company and primary owner characteristics, and innovation activities.

Only microbusinesses (businesses with one to nine employees) are asked the R&D questions, and only those microbusinesses are presented in this InfoBrief.

The statistics from the survey are based on a sample; as such, they are subject to both sampling and nonsampling errors (see “Technical Notes” under the Methodology tab at https://ncses.nsf.gov/surveys/annual-business-survey/). Microbusinesses with less than $50,000 in R&D are excluded from the ABS national estimates and this InfoBrief.

For the full ABS 2022 (reference year 2021), 300,000 employer companies were sampled to represent the population of 4.9 million employer companies, and the unit response rate was 67.0%.

The full set of data tables on R&D, company demographics, innovation, technology, and patent and intellectual property protection from this survey will be listed under the Data tab at https://ncses.nsf.gov/surveys/annual-business-survey/. Individual data tables and tables with relative standard errors and imputation rates from the ABS 2022 are available from the Survey Manager upon request.

Notes

1Microbusinesses are defined as having between one to nine domestic employees. Employees are defined as individuals who worked for the business and received a W-2 issued by the business for salary or wages.

2R&D questions were asked only of manufacturers and certain selected nonmanufacturing industries that in previous NCSES surveys (2017 ABS, BRDI-M, and Business R&D Innovation Survey) represented almost all R&D of microbusinesses in the United States.

3As defined by the Frascati Manual, basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view. Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily toward a specific, practical aim or objective. Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes. See Organisation for Economic Co-operation and Development (OECD). 2015. Frascati Manual: Guidelines for Collecting and Reporting Data on Research and Experimental Development. The Measurement of Scientific, Technological and Innovation Activities. Paris: OECD Publishing.

4Kindlon A; National Center for Science and Engineering Statistics (NCSES). 2022. Microbusinesses Performed $5.6 Billion of R&D in the United States in 2020. NSF 23-305. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf23305/.

Suggested Citation

Kindlon A; National Center for Science and Engineering Statistics (NCSES). 2023. Microbusinesses Performed $6.1 Billion of R&D in the United States in 2021. NSF 24-302. Alexandria, VA: National Science Foundation. Available at https://ncses.nsf.gov/pubs/nsf24302.

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Audrey Kindlon
Survey Manager
NCSES
Tel: (703) 292-2332
E-mail: akindlon@nsf.gov

NCSES

National Center for Science and Engineering Statistics
Directorate for Social, Behavioral and Economic Sciences
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E-mail: ncsesweb@nsf.gov

NSF 24-302

|

October 30, 2023

NSF 24-302

|

October 30, 2023

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InfoBrief

Microbusinesses Performed $6.1 Billion of R&D in the United States in 2021

Annual Business Survey aggregate R&D estimates, by questionnaire reference and employment size, for companies with 1–9 employees in selected industries: 2021

Note(s):

Source(s):

Microbusiness R&D Trends

Total R&D costs, total domestic R&D costs, and R&D performance for companies with 1–9 employees: 2018–21

Chart

Note(s):

Source(s):

R&D by Type of Costs

Domestic R&D costs, by selected industry and type of cost, for companies with 1–9 employees: 2021

Note(s):

Source(s):

Characteristics of Microbusiness R&D Performance

By Industry

By Type of R&D

Domestic R&D performed by the company, by selected industry and type of R&D, for companies with 1–9 employees: 2021

Note(s):

Source(s):

By Source of Funds

Domestic R&D performed by the company, by selected industry and source of funds, for companies with 1–9 employees: 2021

Note(s):

Source(s):

By State

Domestic R&D performed by the company, by state and employment size, for companies with 1–9 employees in selected industries: 2021

Note(s):

Source(s):

Total Employment and R&D Employees

Domestic R&D employees, by selected industry, by sex and by R&D work activity, for companies with 1–9 employees: 2021

Note(s):

Source(s):

Survey Information and Data Availability

Notes

Suggested Citation

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