30TH MARCH, 2023

Understanding the Main Types of R&D

Research and development (R&D) is critical in today's ever-evolving business landscape. It is the process of exploring new ideas, technologies and methodologies to create new products, services and solutions or improve existing ones. Essentially, it is the engine that fuels innovation and growth. For businesses, it can be a game-changer in terms of staying competitive and relevant in the marketplace.

The importance of R&D cannot be overstated. It allows businesses to differentiate themselves from their competitors by continuously developing and improving their offerings. Furthermore, it helps them stay ahead of industry trends and changing customer needs and expectations. R&D also fosters creativity and collaboration within an organisation, leading to a culture of innovation that can drive growth and success over time.

The purpose of this article is to provide a comprehensive guide to the main types of R&D, including basic research, applied research, and experimental development. We will explore the key characteristics, goals, and examples of each type, so entrepreneurs, business owners, and researchers can gain a better understanding of the different forms of R&D and how they can benefit their organisation. By doing so, we aim to equip Irish businesses with the knowledge and insights they need to stay competitive and innovative in today's fast-paced business landscape. Whether you are looking to develop new products, improve existing ones or explore new business models, this article will provide valuable insights to help you achieve your goals. Let's dive into the exciting world of R&D and discover the power of innovation.

Basic Research:

Basic research is the systematic study of the fundamental principles of a subject matter, without any specific application or intended commercial outcome.

Its main objective is to answer universal and theoretical questions, which can enrich human knowledge, rather than to solve specific practical problems. Basic research is characterised by the curiosity-driven exploration of scientific concepts or natural phenomena, which may not have immediate commercial viability, but can contribute to the development of future research or innovation.

Some of the key characteristics of basic research include the pursuit of new knowledge or discovery, the use of scientific methods and rigorous experimentation, the emphasis on theoretical concepts rather than practical applications, as well as a long-term view of potential benefits.

Examples of basic research include studies of the fundamental laws of physics, the structure of the universe or the genetics of living organisms. Basic research serves as a critical foundation for applied research or experimental development, since it provides the necessary knowledge and insights that are required for future innovation.

Moreover, basic research can lead to the discovery of new materials, technologies or concepts that can have a transformative impact on society, even if they were not initially intended for commercial use. In summary, basic research is crucial to the advancement of human knowledge, as well as to the generation of new ideas and avenues for future research and development.

Applied Research

Applied research is a type of research and development (R&D) that focuses on the practical application of scientific knowledge in solving real-world problems. It involves the use of existing knowledge to solve specific problems or develop new products, technologies or processes.

Characteristics of applied research include its goal-directed and problem-solving nature, its emphasis on practical application, and its close collaboration with industry and other stakeholders. Examples of applied research include the development of new drug treatments, the design of more efficient technologies, and the implementation of new management practices.

The importance of applied research lies in its ability to generate practical solutions to complex problems, drive innovation and improve competitiveness. It also helps companies to stay up to date with emerging trends and changes in customer needs, and to remain competitive in an ever-changing market.

By investing in applied research, companies can gain a better understanding of their customers and markets, develop new products or services that meet these needs, and improve their overall performance and profitability. In conclusion, applied research is a key driver of innovation and competitiveness, and a critical component of R&D for companies of all sizes and sectors.

By applying scientific knowledge to real-world problems, businesses can not only improve their own performance but also contribute to societal progress and sustainable development.

Experimental Development:

Experimental development is a type of research and development (R&D) that involves creating new or improved products, processes, or services through practical application and testing. It is a hands-on approach to R&D that aims to translate new ideas or concepts into tangible results.

The characteristics of experimental development include a systematic and iterative process towards creating a feasible prototype or model, as well as the use of various testing methods to assess its functionality, reliability, and potential marketability.

This type of R&D is often undertaken by businesses in high-tech industries, such as biotechnology, aerospace, and software development, where innovation is critical to staying competitive in the market. Examples of experimental development projects include the development of new medical devices, the creation of new energy-efficient technologies, and the design of cutting-edge software applications.

The importance of experimental development lies in its ability to drive innovation and competitiveness, as businesses that invest in R&D are better equipped to meet the changing needs and demands of customers and the market. Moreover, successful experimental development projects can lead to intellectual property protection, stronger brand reputation, and increased profitability.

In recent years, the Irish government has taken steps to foster a culture of innovation and R&D among Irish businesses, offering various grants and incentives to support experimental development projects. Therefore, Irish businesses that prioritise experimental development can leverage these resources to gain a competitive edge in their respective industries and contribute to the overall growth and development of the Irish economy.

Key Differences between Basic Research, Applied Research, and Experimental Development

Research and development (R&D) is an essential component of businesses and organisations to remain competitive and innovative. The three main categories of R&D are Basic Research, Applied Research, and Experimental Development. Basic research aims to expand knowledge without any specific application in mind. The primary focus is on discovering new facts and understanding underlying theories. Applied research, on the other hand, has a specific application in mind, with the primary goal of developing new products, processes, or services. It uses existing knowledge from basic research to solve particular problems or create new opportunities. Finally, experimental development aims to develop new products, processes or services to meet customers' needs using applied research findings through the development of prototypes.

The methods used in each category of R&D also differ significantly. In Basic Research, researchers aim to explore their hypothesis and theories, formulate concepts in their field, and conduct experiments to gather data. In contrast, Applied Research uses established knowledge from Basic Research to solve specific problems, normally through scientific experimentation, prototype testing or feasibility studies. Experimental Development primarily relies on applied research findings to create an ultimate product, service or functioning business process through prototyping, development of a minimum viable product (MVP), testing, and optimisation.

The outcomes also differentiate between the three approaches. Basic Research provides fundamental knowledge and understanding, along with potential applications, laying the groundwork for further research and discovery. Applied Research generates outcomes in the form of prototypes, feasibility projects, pilot schemes and product development, whereas Experimental Development's outcome is the actualisation and commercialisation of a product or service through successful prototyping and testing.

While Basic Research, Applied Research and Experimental Development have similarities in the scientific process, they differ significantly in their aims, methods and outcomes. Understanding these differences is essential for businesses and organisations to determine the best approach to achieve their R&D objectives. A comprehensive R&D strategy can promote innovation, increase competitiveness and create growth opportunities in the market.

Importance of R&D for Businesses and Organisations

Research and development (R&D) is a key component for businesses and organisations who are seeking to remain competitive and innovative within their respective industries. There are several reasons why R&D is essential for the success of any business or organisation. Firstly, R&D allows businesses to innovate and create new products, services, or technologies that can help to differentiate them from their competitors. By investing in the research for new ideas or improving existing ones, businesses can develop innovative solutions that address the needs of their customers, thus increasing their market share and overall success.

Secondly, R&D facilitates product development by enabling businesses to refine their existing products and services, making them more efficient, cost-effective, or appealing to customers. This can help businesses to stay ahead of the curve, and keep their customers engaged and satisfied. For instance, medical device manufacturers constantly engage in R&D to improve the design and functionality of their products, thereby enhancing their efficacy and usability.

Moreover, R&D is key to building a competitive advantage. By researching and developing new products, systems, or processes, businesses can create a unique value proposition that sets them apart from their competitors. This can help businesses to establish a competitive advantage that is difficult to replicate, and ultimately increase their profitability and long-term sustainability.

Finally, R&D is crucial for future growth. Businesses cannot rely on past successes to stay relevant and profitable in the long run. R&D creates opportunities for businesses to explore new areas, innovate new products and technologies, and grow their revenue and scale of operations. Companies that invest in R&D can enjoy sustainable long-term growth and profitability.

In conclusion, R&D is a vital aspect of any business or organisation that seeks to remain competitive, relevant, and profitable. It enables businesses to innovate, develop new products, establish a competitive advantage, and achieve sustained growth in the future.


In this comprehensive guide to research and development (R&D), we learned about the various types of R&D that businesses and organisations engage in to stay competitive and innovative. We covered the main categories of R&D, including basic research, applied research, and experimental development, as well as their key characteristics, goals, and examples.

We discovered that Basic Research is purely exploratory and has no immediate commercial application, Applied Research is aimed at solving specific practical problems, and Experimental Development involves developing prototypes and conducting trials to create new and improved products or services.

Moreover, we learned about the importance of R&D, especially for businesses that want to stay ahead of their competition. By engaging in R&D, companies can enhance their products or services, reduce production costs, and improve their overall efficiency.

In conclusion, research and development (R&D) is a vital component of driving innovation, competitiveness, and economic growth. By investing in R&D, businesses can unlock their full potential and stay ahead of the competition.

However, R&D can be a complex and costly process, which is why it is essential to have the right knowledge, skills, and resources. Small businesses in Ireland should encourage government support for their R&D efforts, particularly through the R&D tax credit scheme.

If you are a business owner in Ireland, we encourage you to invest in research and development. Start by identifying your specific R&D needs, goals, and objectives. Then, develop a creative and strategic R&D plan while taking advantage of government support and funding programs.

With the right approach, R&D can help your business stay competitive, innovative, and successful in Ireland's dynamic economy.

Contact us

If you would like to speak to us about anything we’ve raised in this article, please do contact our team on +353 1 566 2001 or use our contact page.

Don’t forget our excellent Tax Cloud portal for businesses. It’s specially developed by the experts at Myriad Associates to guide you through the R&D tax relief claims process and help you submit . It’s a highly accurate tool, offering a great value solution that’s easy to use - can your company afford to miss out?

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
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