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.