PurposeThis paper aims to study the problem of designing a Performance Measurement System (PMS) for R&D. In particular, it aims at investigating the influence exerted by the type of activity being measured (i.e. Basic and Applied Research or New Product Development) on the design of the PMS constitutive elements.Design/methodology/approachFirst, a literature review made it possible to build a theoretical model that identifies the constitutive elements of the PMS for R&D. Second, a survey involving 129 Italian firms (with a response rate of 33 per cent) was performed to unearth a number of similarities and differences between PMSs used in Research and New Product Development settings. Finally, a follow‐up multiple case study investigation made it possible to understand the reason underlying the dissimilarities which emerged from the survey.FindingsThe analysis suggests that a specialisation of the performance measurement practices in research and development is pursued by the Italian firms in the sample, especially when a number of conditions are in place (e.g. high level of uncertainty in R&D, availability of resources, organisational separation between the research and development functions).Research limitations/implicationsThe empirical analyses reported here focus on R&D‐intensive firms, because they invest more heavily in R&D and hence are more interested in measuring its performance. The generalisability of these results to other empirical settings is discussed and represents a promising avenue for future research.Practical implicationsThe paper provides R&D managers with a number of criteria they should employ to design more effective PMSs for the R&D activities for which they are responsible. Moreover, it suggests that designing and using two different PMSs for research and new product development can be a valuable alternative but only under specific circumstances.Originality/valueThe paper is one of the first contributions that empirically assess the differences in the approaches employed to measure performance of research and new product development activities.