The Use of Financial and Nonfinancial Measures within Innovation Management Control: Experience and Research

Abstract

Introduction - Why to Measure?Innovation contributes to the winning of competitive advantages (Kozubikova & Zoubkova, 2016; Lahovnik & Breznik, 2014). Substantial evidence exists that innovation process and resulting innovation outputs are the important determinants of company performance, indicating that innovators outperform non-innovating companies (Baldwin & Gellatly, 2003; Calabrese et al., 2013; Gronum et al., 2012; Guo et al., 2005; Klomp & van Leeuwen, 2001; Li & Atuahene-Gima, 2001; Mansury & Love, 2008; Pittaway et al., 2004; Rosenbusch et al., 2011; van Wijk et al., 2008; Zhou, 2006).Innovations are not separate activities in the company, but they proceed in the form of processes that encourage change and have to be successfully terminated (Cooper, 1998; Greve, 2003; Tidd et al., 2005). Successful innovations are the result of management, marketing, scientific, technological, organisational, financial, business and other types of activity. Market participants act together with employees, technologies and environmental influences, all of them being dynamic and relatively independent.For business success company's management has to regularly evaluate the performance of their innovations. This evaluation must be carried out comprehensively. In each phase of the innovation process (see Figure 1) the question must be asked as to whether it makes sense to continue with the task and not just from a technical perspective but also in marketing terms. It is essential to ascertain whether the set of technical parameters can be achieved and whether innovation has any prospects of success at some market. In addition, it is necessary to analyse deviations from the expected costs, term changes and their causes, and to assign responsibility for what has caused them. The aim is to learn how to better cope with the innovation process and thus build knowledge upon experience gained. If the company does not use this approach, then there is a risk that it will repeat the same mistakes in the future.Therefore, the cognitive aim of this study is to present knowledge and findings in the field of innovation performance and management control as these areas are currently being dealt with in Czech as well as foreign expert literature and in the practice of Czech manufacturing industry. There are many indicators for assessing company's success in a wider sense but if we refer to innovations it can be difficult to choose the right ones.Then, the creative aim is to contribute to the study of innovation management with a proposal of a conceptual performance measurement and management framework for innovation processes suitable for Czech business environment. The framework is based specifically on project management, the input-process-output-outcomes model (Brown, 1996), the Stage Gate approach (Cooper, 1998) and the Balanced Scorecard (Kaplan & Norton, 1996).The study begins with theory and definition of the essential terms. The theoretical part is followed by an empirical analysis investigating the current state of affaird in Czech manufacturing. On the basis of desk-based research and empirical study, a management control system approach to innovation performance measurement suitable for Czech business environment called the Innovation Scorecard is proposed in the discussion section.The research presented in this study is valuable for several reasons. Firstly, it is one of the few comprehensive studies to address the question of what methods of innovation performance measurement are implemented in innovative Czech manufacturing companies. Secondly, the research takes into account the specifics of the investigated issue, such as measurement in soft systems, the core microlevel of measurement, and the specifics of Czech business environment after the financial crisis. Thirdly, only a few recent studies provide an attempt to develop a Balanced Scorecard framework for innovations. …