Use and impact of performance measurement results in R&D and NPD: an exploratory study

Abstract

Performance measurement of R&D and new product development (NPD) activities is gaining increased importance because the effectiveness and efficiency of these activities not only determine a firm's competitive advantage, but its very survival. The literature is rich on descriptions of measurement techniques and methods, but pays less attention to the actual use of the performance results in operations and decision‐making. In this paper, reporting results from interviews conducted in three large companies in the electronics industry, we validate and further specify key areas of use and impact of R&D and NPD performance measurement results including ensuring better coherence and relevance of product portfolios, reorienting projects before failure, deciding on corrective actions, supporting the launching decision, enhancing staff motivation, and facilitating well‐balanced decision‐making. We identify implications for practice and research and propose a framework for future empirical work focusing on the interplay between the operation of the performance measurement system, the use and the impacts of measurement results.

AN EXPLORATORY STUDY ON R&D PERFORMANCE MEASUREMENT PRACTICES: A SURVEY OF ITALIAN R&D-INTENSIVE FIRMS

“…units, subunits, projects) of the firm's R&D activities and organisation whose performance are to be monitored. In R&D context, the relevant control objects identified by the literature are [Ojanen and Vuola, 2006;Kerssens-van Drongelen and Bilderbeek, 1999;Godener and Soderquist, 2004]:…”

“…• The type of activities carried out (basic research and/or applied research and/or development) and the associate level of risk [Pappas and Remer, 1985]; • The resources available for the design, implementation and use of the PMS, in terms of time, money, people technology and know-how [Emmanuel et al, 1990;Godener and Soderquist, 2004];…”

“…technology fusion and proliferation, shortening of product life-cycles, intensified competition), that pushed top managers interest toward the measurement and assessment of R&D performance [Ortt and Smits, 2006]. Therefore R&D started to be considered accountable in terms of its efficiency, effectiveness, internal and external customer focus and alignment to corporate and business strategy [Kumpe and Bolwijn, 1994;Pearson et al, 2000] and the possibility to adopt PMSs in R&D settings raised the attention of both academics and practitioners [e.g., Pappas and Remer, 1985;Brown and Svenson, 1988;Chiesa and Masella, 1996;Sivathanu and Srinivasa, 1996;Werner and Souder, 1997;Hauser, 1998;Driva and Pawar, 1999;Driva et al, 2000;Poh et al, 2001;Godener and Soderquist, 2004;Ojanen and Vuola, 2006]. As a result of this increased interest for the measurement of R&D activities performance, scholars started investigating the topic from different although complementary perspectives.…”

“…(i) how to design a PMS that fits the characteristics of R&D activities [Kerssens-van Drongelen and Cook, 1997;Kerssens-van Drongelen and Bilderbeek, 1999;Kerssens-van Drongelen et al, 2000;Davila, 2000;Ojanen and Vuola, 2006]; (ii) how the PMS should be implemented and which are the major effects of its use [Bisbe and Otley, 2004;Godener and Soderquist, 2004]; (iii) how metrics and indicators should be selected in an uncertain and unpredictable context like R&D [Ojanen and Vuola, 2006;Nixon, 1998]. …”

CSIR the motivational role of interactive control in the research sector: a case study

“…Although the issue of project selection was not questioned in the survey, the results of the case study interviews highlight the importance of this interactive process in a research organisation (Jamsen et al, 2002;Godener & Soderquist, 2004).…”