CAR makers and computer giants dominated the list of companies which spent the most on Research and Development (R&D) last year, new data reveals.
And for the first time in almost a decade, a European company spent more on R&D than any other private firm, according to the 2013 EU Industrial R&D Investment Scoreboard.
But the EU continues to lag behind the US in the amount of money devoted by companies to boosting innovation.
Volkswagen topped the R&D list with a spend of €9.5bn, followed by Samsung Electronics, which invested €8.3bn, Microsoft at €7.9bn, Intel at €7.7bn and Toyota at €7.1bn.
The annual Scoreboard contains economic and financial data for the world's top 2,000 companies ranked by their R&D investments.
The sample contains 527 companies based in the EU and 1,473 companies from other parts of the world, including Asia, the US, South America and Caribbean.
Overall, EU-based firms stepped up R&D investment by 6.3pc, but Maire Geoghegan-Quinn, Europe's Research, Innovation and Science Commissioner, said the EU was still lagging behind its main competitors.
"Despite the positive results of top EU companies in important industrial sectors such as automobiles, we are still too weak in hi-tech sectors such as biotechnology and software," the commissioner added.
The 6.2pc increase on average in R&D growth of the Scoreboard companies came despite a slowdown of net sales growth and a 10.1pc decline in operating profits last year.
The EU's overall positive results were largely driven by the R&D growth rates of German companies, particularly in the car sector.
EU-based companies in the Automobiles and Parts sector showed strong growth at 14.4pc compared with a decline of 2.6pc for their US counterparts.
Companies in the 28-member bloc also outperformed US ones in Industrial Engineering and Defence and Aerospace.
But results in the IT sector were mixed, with software and computer services performing well but showing a decline in IT hardware.
By contrast, the US did well across both areas.
Ireland ranked third of 28 member states in the European Commission's proposed new Indicator of Innovation Output, published in September.
But despite this, the Organisation for Economic Co-operation and Development said that while Ireland offered a supportive innovation environment for hi-tech multinational companies, innovation in Irish firms needed to be boosted.
The 2013 Scoreboard is based on a sample of 2,000 companies – top investors in R&D who together account for an investment value equivalent to more than 90pc of the total expenditure on R&D by businesses worldwide.
Eleven companies based in Ireland were included in the scoreboard.