Application of factor analysis for service R&D classification: A case study on the Korean ICT industry

This paper introduces an application of factor analysis for classifying and illuminating the nature of distinct dimensions of service research and development (R&D) which are difficult to examine due to the unique characteristics of services. The application is based upon the concept that firms would benefit from clarifying R&D and R&D-like activities to assist their R&D decision. Using principal component analysis (PCA) of factor analysis, a number of possibly correlated R&D activities is transformed into a smaller number of uncorrelated activities called principal components, and firms can identify the patterns of service R&D, express their similarities and differences, and develop its R&D portfolio. A case example for service R&D in the Korean ICT industry is provided.