Abstract: R&D commercialization has become an important topic not only to researchers but increasingly to policy makers interested in improving the National Innovation System (NIS) of a country so as to improve its global competitiveness. The main measure of the returns to R&D expenditure is the rate of successful commercialization of the research output. The objective of this study is to set the context in which efficient and effective R&D expenditures (measured by the rate of successful commercialization) in Institutions of Higher Learning (IHLs) and Government Research Institutes (GRIs) in Malaysia could potentially contribute to the enhancement of the country’s NIS. The extensive literature review indicates a number of factors that affect the rate of R&D commercialization at IHLs and GRIs; market-orientation and industry relevance of the research outputs, the level of university-industry linkages and collaborations and availability of the appropriate resources and funding at the various stages of the commercialization process. A number of potential research areas were identified including, assessing the depth and richness of the linkages of the three components of Malaysia’s NIS, identification of acknowledged cases of successful R&D commercialization at IHLs and GRIs and understanding the mechanism for the success, comparing success rates of R&D commercialization across major fields of research for IHLs and GRIs and identifying the underlying factors and benchmarking study of Malaysia’s R&D commercialization versus those from more advanced economies. The proposed research areas in this study could provide needed information that would help with policy making for the government and related agencies to ensure Malaysia could advance from the current middle-income trap to the next level of knowledge-based economy.