Innovation is currently defined for measurement purposes in the third edition of the Oslo Manual (OECD/Eurostat, 2005) with a sole focus on the Business enterprise sector. In summary, it has to do with putting new or significantly improved products on the market or finding better ways (through new or significantly improved processes and methods) of getting products to the market. R&D may or may not be part of the activity of innovation, but it is one among a number of innovation activities. These activities also include the acquisition of existing knowledge, machinery, equipment and other capital goods, training, marketing, design and software development. These innovation activities may be carried out in-house or procured from third parties.
Care must be taken to exclude activities that, although part of the innovation process, do not satisfy the criteria required to be classified as R&D. For example, patent application and licensing activity, market research, manufacturing start-up, and tooling up and redesign for the manufacturing process are not in their own right R&D activities and cannot be assumed
to be part of an R&D project. Some activities, such as tooling up, process development, design and prototype construction, may contain an appreciable element of R&D, making it difficult to identify precisely what should or should not be defined as R&D. This is particularly true for defence and large-scale industries such as aerospace. Similar difficulties may arise in distinguishing public technology-based services such as the inspection and control of food and drugs from related R&D. (Frascati Manual, 2015)
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