This study is to develop a framework of an integrated performance measurement and evaluation system for corporate R&D organization. Nowadays, technology and capability of technology creation are considered as key sources of competitive advantages in business strategy. However, only a few studies have been done on the measurement and evaluation of R&D performance, and there are no generally accepted framework due to different viewpoints and approaches taken by researchers. Previous researches show that non-repetitiveness, variety and uniqueness of R&D activities are major obstacles to the studies of R&D performance measurement and evaluation.
This study focuses on effective performance measurement and evaluation system for corporate R&D organization with the research questions as follows:
1) What are the limits and problems in the existing performance measurement and evaluation systems?
2) How can we effectively measure and evaluate corporate level R&D performance?
Reviewing literature on R&D management and analyzing seven corporate R&D organizations, we identified key problems and the limits of performance evaluation systems for R&D organizations.
The limits of existing systems can be summarized as follows: lack of alignment with the corporate or business strategy; little consideration of continuous improvement; little consideration of causal ambiguity; and information asymmetry.
In order to overcome the limits, we suggest a general framework of R&D performance measurement and evaluation system. The new system adopts the concepts of the Balanced Scorecard and the Performance Measurement and Feedback Scheme (PMFS).
The results of this study are as follows:
First, we demonstrated that an integrated performance measurement system is necessary for R&D evaluation. Second, we suggested a performance measurement system that can reduce the financial evaluation problem due to the uncertainty of R&D activities and the troubles due to the information asymmetry. Third, we applied the general ideas of the balanced scorecard to a focused area where performance measurement is known to be very difficult and ineffective.
In the case study of one Korean R&D organization, implementation approach of the proposed performance measurement and evaluation system is suggested.
