Facilitating innovation capability through performance measurement

Abstract

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The study aims to clarify the issue of whether measurement has a positive effect on different aspects of innovation capability. The study contributes to the current understanding in two ways; first by presenting the important aspects of organisational innovation capability, and second by showing the importance of measurement in promoting different aspects of innovation capability. Design/methodology/approach -The study has been executed by conducting a web-based survey in small-and medium-sized enterprises (SMEs). A sample of 2,400 SMEs was randomly selected. A representative of management and employees in each company received an invitation to participate in the study. A total of 311 valid responses were received. Findings -The study contains a comprehensive description of the impacts of measurement on different aspects of innovation capability in SMEs. According to the results, performance measurement has positive effects on issues related to innovation capability. The measurement of the aspects of innovation capability is rare in SMEs, although innovation capability and measurement are positively related. The study suggests that both academics and practitioners should focus on the development of new methods and practices for measuring issues related to innovation capability in order to develop innovation capability and further contribute to firm success. Originality/value -The paper discusses the value of measurement in a context of innovation management.

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“…The second aspect is the idea that innovation capability is an organizational process, practice or high-level organizational routine, as observed in Essman (2009), Esterhuizen et al (2012), O'Cass and Sok (2014), Tang et al (2015), Saunila and Ukko (2012) and Zhao et al (2005). At the same time, there are definitions that value the innovative outputs or successful results of these same processes or practices.…”

“…This implies an essentially intangible nature, making its study challenging and complex. As a result, generally separating it from the main organizational practices is not possible, since innovation capability is exactly the potential to make these practices, with an orientation towards innovation (Saunila & Ukko, 2013).…”

“…A firm's 'innovation capability' can be understood as the potential to innovate (Saunila & Ukko, 2012), or more specifically the "ability to continuously transform knowledge and ideas into new products, processes and systems for the benefit of the firm and its stakeholders" (Lerro, Linzalone & Schiuma, 2009, p. 11). It has been suggested that innovation capabilities are so-called higher-order capabilities or "the ability to mould and manage multiple capabilities" (Lawson & Samson, 2001, p. 380).…”

“…Lin, McDonough, Lin, and Lin (2013, p. 264) argue that it is not the capabilities themselves, but its application and use that enables the execution of activities that produce a competitive advantage. Given that capabilities are different than resources, better understanding the structure of innovation capability becomes a key issue for businesses that aspire to expand their potential to produce innovative outputs Romijn & Albaladejo, 2002;Saunila & Ukko, 2012). This implies the need to understand the nature of this organizational characteristic, as well as its configuration of evolution and maturation, according to the increase of organizational proficiency in relation to a set of routines and practices .…”

“…As innovation is "the multi-stage process whereby organizations transform ideas into new or improved products, service or processes, in order to advance, compete and differentiate themselves successfully in their marketplace" (Baregheh, Rowley & Sambrook, 2009, p. 1334, it is presumable that innovation can only occur if an organization possesses some level of innovation capability. In this sense, 'innovation capability' can be understood as the organization's potential to innovate (Saunila & Ukko, 2012). However, Francis (2000, p. 106) explains that understanding innovation capability can be difficult, since it: "(…) is an enabling set of attributes and is detectable only when exploited; (…) possibly requires a combination of factors, both hard and soft, interacting in a complex gestalt; (and) may not be unitary and may vary between organizational levels, configurations, national or firmspecific cultures, distinctive strategies, different threat levels, technological complexity or other factors".…”