R&D as a business – what are the implications for performance measurement?

Abstract

There have been considerable changes in the way that Research and Development (R&D) has been managed over recent years, many of which have been influenced by the external environment. These have been discussed in a number of publications with much of the debate centring around the movement from the so-called first generation to fifth generation models of R&D management.What has not been debated to the same extent are the implications of recent and likely future trends in R&D management for the way performance is, and should be, measured. In this paper we focus on these implications, drawing upon both the existing literature on performance measurement (PM) in R&D and our own research into organisations which have chosen to move towards a more profit-centred approach to the management of their technical resources.Finally, we present and discuss the findings of our review, which indicate that although there are common features, some differences, requiring careful consideration by management, can be identified when movement from a cost-to a profit-centred approach occurs.

Performance measurement in the construction research and development

“…In this context, PM on R&D helps to creates links between the organisation's strategy and R&D by translating the organisation's strategy into performance measures which could, in turn, be linked to R&D activities. A number of studies have revealed that PM of R&D plays a vital role by influencing and helping organisations to implement their strategies (Bremser and Barsky, 2004;Pearson et al, 2000;Kerssens-van Drongelen et al, 2000;Kerssens-van Drongelen and Bilderbeek, 1999;Werner and Souder, 1997;Brown and Svenson, 1988). Yawson et al (2006) argue that PM for R&D activities provide the basis to assess whether the organisation is progressing towards its goals, identifies the strengths and weaknesses, decides on the future actions needed for improvements and provides data to request additional resources hence facilitating the implementation strategies.…”

“…Concerns of investors and shareholders on R&D spending have demanded identification of the actual contribution from R&D investments towards the organisational goals, thus increasing the accountability of the proper usage of R&D investments (Osawa and Yamasaki, 2005).Therefore, Pearson et al (2000) and Nixon (1998) state that management has been forced to find ways to measure the return on R&D expenditure and to evaluate the performance of such activities. In addition to the identification of utilisation of resources, PM in R&D could identify the proper resource allocation within organisations (Bremser and Barsky, 2004;Pearson et al, 2000;Kerssen-van Drongelen and Bilderbeek, 1999). Furthermore, PM in R&D improves communication and coordination of the activities (Bremser and Barsky, 2004;Loch and Tapper, 2002).…”

“…Furthermore, PM in R&D improves communication and coordination of the activities (Bremser and Barsky, 2004;Loch and Tapper, 2002). Research carried out in various industries indicates that long-term competitive advantage highly depends on commitment to on going R&D work and the use of PM applications to evaluate its success (Osawa and Yamasaki, 2005;Pearson et al, 2000;Kerssens-van Drongelen and Bilderbeek, 1999;Werner and Souder, 1997;Tipping et al, 1995;Brown and Svenson, 1988). …”

Balanced Scorecard and Efficiency: Design and Empirical Validation of a Strategic Map in the University by Means of DEA

“…That study has been of considerable assistance to us in the final choice of the indicators proposed for the BSC in the University, although we have modified the strategic perspective, drawing on the model used for the financing of the public universities of Andalusia. Perhaps one very important factor in explaining the proliferation of different performance measurements in the University, and the lack of consensus on these, is that, while it is recognized that the two main areas of activity, teaching and research, should be aligned with the strategy of the Institution [2][3][4][5], in practice, few contributions have been published in respect of the measurement of academic research output that display its full complexity and show how it can, in fact, be aligned with the strategy of the organisation.…”

“…[5] reviewed the literature and reports on measurements of R & D performance; they advised the joint use of traditional techniques of measurement of returns focussed on controlling the costs of this type of activity, with strategic measurements in the longer term. For this process of integration, the application of a BSC is suggested.…”