I actually work in a corporate research lab, with 1000+ researchers working on all kinds of things. One thing that proves to be tricky is the "mission" these kinds of labs have. There is always a tension between direct work for business units on next years product, and research for novel ideas and methods. The former is what what keeps the lab afloat, financially. The latter is what is hoped to keep the company as a whole afloat in the future. But this includes investing money in projects that will not pan out and just burn money. Finding this balance is hard.

Tensions like these might very well be the reason corporate research has declined.