Academic journal article Journal of Global Business and Technology

Innovation Scorecard: Conceptual Framework of Innovation Management Control System

Academic journal article Journal of Global Business and Technology

Innovation Scorecard: Conceptual Framework of Innovation Management Control System

Article excerpt

INTRODUCTION

Innovation contributes to the winning of competitive advantages. Successfully launching innovation onto the market is one of the basic preconditions for the long-term survival of a company. Substantial evidence exists that the innovation process and resulting innovation outputs are important determinants of company performance, indicating that innovators outperform non-innovating companies (Baldwin and Gellatly, 2003; Calabrese et al., 2013; Mansury and Love, 2008; Prajogo, 2006). The professional literature provides the following impacts of innovation on company performance:

* Positive correlation (dos Santos Ferreira and Cardoso, 2014; Gronum et al., 2012; Markatous and Stournaras, 2013; Rosenbusch et al., 2011; Zizlavsky and Karas, 2014).

* Negative correlation (Danneels and Kleinschmidt, 2001; Min et al., 2006; Vermeulen et al., 2005).

* U-shaped correlation (Avlonitis et al., 2001; Li & Atuahene-Gima, 2001).

* No clear correlation (Henard & Szymanski, 2001).

Nowadays, it is not about whether to innovate or not, but how to innovate successfully (Hauschildt and Salomo, 2010). The old adage says "You cannot manage what you do not measure." Therefore, efficient and complex measurement systems are essential and crucial to the success of innovations. Measuring the performance and contribution to value of innovation has become a fundamental concern for managers and executives in recent decades (Kerssen-van Drongelen and Bilderbeek, 1999). Many studies have been written aimed at discussing the issue and suggesting possible approaches to performance measurement, innovation and R&D management literature (e.g. Bassani et al., 2010; Chiessa and Frattini, 2009; Merschmann and Thonemann, 2011; Wingate, 2015). Despite, Adams et al. (2006) stress the absence of frameworks for innovation management measurement indicators as well as "the relatively small number of empirical studies on measurement in practice".

This paper continues research activities and publications (Zizlavsky, 2013; 2015; Zizlavsky and Karas, 2014) and thereby closes long-term empirical research carried out in Czech manufacturing industry in 2009-2015. The purpose of the paper is to propose on the basis of desk research and empirical study a management control system approach to the assessment of innovation performance on a micro-level suitable for the Czech business environment - called Innovation Scorecard. It specifically extends the work of Kerssens van Drongelen et al. (2000) and Pearson et al. (2000) by integrating popular innovation management frameworks, the input-process-output-outcomes model (Brown, 1996) and the Stage Gate approach (Cooper, 1998), with the Balanced Scorecard (Kaplan and Norton, 1996a).

In doing so, paper has the following unique outcomes: (i) key insights and tools derived from the latest academic research, consulting companies' publications and practitioners' experience; (ii) a road map to developing a management control system called Innovation Scorecard and (iii) a list of concrete innovation metrics to choose or be inspired from.

LITERATURE REVIEW

What criteria should be selected for a IPMS? Werner and Souder (1997) reviewed the literature from 1956 to 1995 on techniques for measuring innovation performance. They concluded that integrated metrics that combine several types of quantitative and qualitative measures which are the most complex and costly to develop and use are the most effective. They viewed the choice of innovation measurement metric to be based on needs for comprehensiveness of measurement, the type of innovations being measured, the life stage of an innovation effort, the available data and the perceived information cost/benefit. Schumann et al. (1995) proposed a quality-based approach to innovation performance measurement that viewed innovation as a process. Their framework encompassed people, process, outputs and consequences linked to a market-driven objective. …

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