There are five institutional research and experimental development sectors which cover the entire set of institutional units:
- Business enterprise sector,
- Higher education sector,
- Government sector,
- Private non-profit sector,
- the Rest of the world sector.
The underlying criterion for grouping institutional units into sectors is the homogeneity of the units in respect of economic objectives, principal functions and behaviour.
The classification of institutional units for research and experimental development (R&D) purposes aims to ensure full consistency with the definition of R&D and with the explicit needs of established R&D statistics users, as well as with the classification criteria used by the System of National Accounts (SNA). The latter includes the completeness and residence criteria and the reference to the type of economic activity and ownership and economic control. Funding may also be a factor.