In this paper, we develop an R&D productivity model by investigating performance measurement systems at R&D centers in Korean companies. To understand the company-level drivers of R&D performance, we first determined R&D inputs and outputs in a systematic way and identified critical factors that influence the R&D performance.
The model, therefore, is based on the hypothesis that complete performance evaluation is not possible without measures of both inputs and outputs. Since the overall performance is a function of both R&D unite performance and commercial performance at the firm level, the model is considering R&D processes.
For this research, we employed Data Envelopment Analysis (DEA) approaches, survey, and in-depth case studies. The findings suggest that effective R&D centers are more likely to measure their development processes and outcomes, use multifunctional teams, actively communicate both internally and externally, and allocate resources efficiently. While investigating several R&D centers, this research especially focuses on the systematic characteristics including structural factors, infrastructural factors and decision making unit perspectives, which eventually affect performance effectiveness.
The survey finding indicate that it is necessary that R&D performance should be evaluated more systematically, therefore the measurement system needs to be changed.
The analysis concludes that both generic productivity index (output/input) and process characteristics affect simultaneously R&D performance effectiveness. Therefore the managers should reorganize performance measurement system, organization structure and culture with respect to strategic objectives, and consider integration and coordination throughout the entire organization.
This study helps managers and researchers reconsider productivity evaluation process and factors to affect R&D performance in a systematic way. Even though collected data was not perfect to compare each center thoroughly, various methodologies conducted in this study could overcome these limits.
