3 INSTITUTIONAL CLASSIFICATION

159.Five sectors are identified and discussed below:

–Business enterprise (see Section 3.4).

–Government (see Section 3.5).

–Private non-profit (see Section 3.6).

–Higher education (see Section 3.7).

–Abroad (see Section 3.8).

These, in turn, are divided into sub-sectors appropriate to each sector.

3.3.3. Problems of sectoring

160.In view of the diverse ways in which most contemporary institutions have developed, sector definitions cannot be precise because, like the SNA from which they are partly drawn, they are based on a combination of sometimes conflicting criteria such as function, aim, economic behaviour, sources of funds and legal status.

161.It is therefore not always clear in which sector a given institute should be classified, and an arbitrary decision may have to be made. Institutions may straddle two sectors; or, even if the conceptual distinction is clear, established legal and administrative affiliations or political considerations may prevent the application of this conceptual distinction in practice.

162.When two countries classify institutions with the same or similar functions in different sectors, national survey results will not be completely internationally comparable. Such divergences are unavoidable, as R&D surveys are primarily undertaken to serve national purposes. For international surveys, however, data should be collected and submitted in as much detail as possible to allow for rearrangement for international comparisons. This is the reason for the inclusion of “other institutional sub-classifications” for each sector. Figure 3.1 presents a decision tree as a guide for classifying R&D units by institutional sector.

3.4.Business enterprise sector

3.4.1.Coverage

163.The business enterprise sector includes:

●All firms, organisations and institutions whose primary activity is the market production of goods or services (other than higher education) for sale to the general public at an economically significant price.

●The private non-profit institutions mainly serving them.

54	FRASCATI MANUAL 2002 – ISBN 92-64-19903-9 – © OECD 2002

2002 OECD © – 9-19903-64-92 ISBN – 2002 MANUAL FRASCATI

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Figure 3.1.

Decision tree for sectoring R&D units

Institution

Does it purvey higher education?

Yes

No

Higher

Does it sell its output

education

at an economical price?

Yes

No

Business

Is it controlled and mainly financed

enterprise

by business enterprise units at home or abroad?

Yes

No

Business enterprise

Is it controlled and mainly financed government?

Yes

Is it administered by the higher education sector?

Yes

No

Higher

Government

education

No

Is it controlled and mainly financed by private non-profit units serving households?

Yes			No
Is it administered				Problem units where finance
by higher education?				and control do not match

Yes

No

Is the unit mainly financed by:

Higher

Private

Business enterprise?

Higher education?

Government?

education

non-profit

Yes

Yes

Yes

Business enterprise

Higher education

Government?

Source: OECD.

CLASSIFICATION INSTITUTIONAL 3