Innovation through research and development (R&D) has always been a cornerstone of Royal Philips Electronics' business strategy, says the global electronic appliance maker, which started out as a small lighting business 120 years ago.

Frans van Houten, the president and chief executive, said innovation has been the key driver of profitable growth, especially amid the present challenging global economy.

The Dutch multinational earmarks at least 7 percent of sales per year to R&D as its way of retaining its market leadership.