70% of Large Corporations' R&D Projects Funded by Taxpayer Money Fail to Commercialize

Assemblyman Lee Gyumin: "Even if commercialization potential is rated high, actual results remain poor"

Exterior view of Changwon R&D Center. (Photo by LG Electronics)

[Asia Economy Reporter Moon Chaeseok] It has been pointed out that 7 out of 10 large-scale corporate research and development (R&D) projects funded by taxpayers do not lead to commercialization, highlighting the need to improve R&D efficiency.

According to data received on the 30th from the Ministry of Trade, Industry and Energy by Lee Gyumin, a member of the National Assembly’s Industry, Trade, Energy, Small and Medium Enterprises Committee from the Democratic Party of Korea, the commercialization success rate of industrial R&D projects conducted by large corporations over the past three years (2016?2018) was only 34.6%.

The commercialization success rate is an indicator that evaluates whether the developed technology has resulted in sales, cost reduction, or technology transfer to third parties.

The commercialization success rate of large corporations is the lowest among various lead institutions conducting industrial R&D projects under the Ministry’s jurisdiction.

Over the past three years, the commercialization success rates by lead institution were 54.3% for small businesses, 49.4% for medium-sized enterprises, 47.1% for universities, and 38.6% for research institutes, all higher than that of large corporations.

The most recent statistics from 2018 show that the commercialization success rate of large corporations’ R&D projects was only 28.1%, lower than that of medium-sized enterprises (54.2%) and small businesses (59.7%), and significantly below the overall average (53.2%).

Contrary to the low commercialization success rate, large corporations have received high grades in commercialization potential evaluations.

According to the Ministry’s “Final Evaluation of R&D Projects,” as of 2018 (for projects completed between 2017 and 2018), 90.0% of R&D projects conducted by large corporations received a “Moderate” grade.

The final evaluation grades are divided into four categories: ▲ Innovative ▲ Moderate ▲ Diligent Performance ▲ Negligent Performance, with “Moderate” or higher considered to indicate relatively high commercialization potential.

Large corporations also received “Moderate” or higher grades in 88.9% and 95.0% of evaluations in 2016 and 2017, respectively.

Generally, large corporations’ R&D projects tend to have a “High Risk-High Return” nature, making commercialization success more difficult compared to medium-sized and small enterprises.

Lee pointed out that the fact that commercialization potential is rated highly but actual production and sales results are poor indicates serious inefficiency in conducting R&D projects.

Lee said, “The Ministry of Trade, Industry and Energy should seek ways to increase the commercialization success rate of large corporations’ R&D by accurately reflecting market demand at the planning stage to avoid criticism that massive taxpayer money has been wasted.”