Research and development, also known as R&D, is the process by which a company works to generate new knowledge that it might use to create new technology, products, services, or systems that it will either use or sell.

Many people think of pharmaceutical and technology companies when they hear “R&D,” but other firms, including those that produce consumer products, invest time and resources into R&D as well.

Any business that creates and sells a product or service, whether it’s software or spark plugs, invests in some level of R&D.

While the overarching goal of research and development is to add to a company’s bottom line, companies undertake R&D for a variety of reasons.