**3. Innovation funding sources**

In the broad sense of innovation, which is bigger than corporate entrepreneurship because it involves start-ups and non-corporate organizations, there are three recognized funding sources which are the following: businesses, governments, and higher education organizations. In OECD countries, R&D funding is dominated by business organizations. In 2017, they represented 64% of all research and development funding with government funding coming in a distant second at 24% [1]. It is interesting to note that in the period from 1992 to 2017, funding from companies had more than doubled and funding from colleges and universities had tripled, obviously from a smaller base. Funding from governments, however, had not kept pace, only increasing by 50% over the same period [1].

Investigating funding sources in corporate organizations is somewhat complex. Not all corporate organizations are equal when considering innovation and their spending on it. Globally in 2020, the industry sector that spent the most on research and development was categorized as 'software and internet'. It represented 19.5% of all R&D funding [25]. This was followed by health industries (16.8%); however, this likely also reflected spend on research due to COVID-19. The chemicals industry was third (13.1%) [25].

Large, global, corporate organizations are usually involved in more than one level of innovation, if not all three. Scholars believe that, in general, these organizations are involved at various intensities among the three levels of innovation. Consensus has followed that industrial companies focus 70% of their resources on core innovation, 20% on adjacent innovation, and 10% on transformational [14, 26]. However, this is an over generalization, and researchers have found that organizations in different industries place resources in different levels of innovation, with consumer goods companies focusing most heavily on core innovations and midstage technology firms focusing more on 'outside the core' innovations [14]. Research conducted by the authors of this chapter also discovered that global, industrial companies were more aligned with the general expectations stated above in a mix of 70% core, 20% adjacent, and 10% transformational innovation. However, interviews with other companies, including one identifying itself as a 'transformational healthcare company,'

#### *Corporate Entrepreneurship: Innovation in Global, Corporate Environments DOI: http://dx.doi.org/10.5772/intechopen.111805*

indicated that only 20% of its resources were dedicated to core innovation, with 60% at adjacent and 20% at transformational.

Analyzing data from corporate innovation investment is not only compounded by different rates in various industries but also by the size and age of the organization. Researchers at Stanford University analyzed over 4000 U.S. companies with a combined market capitalization of over US\$21 trillion. They determined that 42% of these companies were backed by venture capital. Their investment in innovation represented over a quarter of all research and development spending in the three sources we previously identified: private industry, government, and higher education. The data also depicted that the VC-backed organizations were much smaller than their counterparts. While they represented 42% of innovation investment, they represented only 20% of market capitalization [27].
