Using performance measures conceptually in innovation control

In recent years, companies have been changing their innovation strategies, as they have realized that original new products can offer a major competitive advantage. Therefore, many companies are focusing on a more closely managed product-innovation process, and have consequently increased their use of performance-management frameworks. By doing so, such companies hope to increase the effectiveness and efficiency of their new-product-development activities. Within the performance-management framework, the use of innovation metrics plays an important and beneficial role. For this reason, the present paper investigates the relationship between the design of innovation performance management frameworks and the actual utilization of information obtained from the implemented innovation metrics. We collected data from 133 technology-intensive companies and employed structural equation modeling for empirical analysis. This method allowed us to determine which design factors positively affect the extent to which managers conceptually use innovation metrics. In particular, we investigated how the balance, coherence, adaption, and user know-how of innovation metrics relate to their conceptual use. Our results suggest that balance and user know-how of the metrics improve conceptual use of the performance measures, whereas no effect can be observed regarding coherence and adaption of the metrics. Thus, it seems highly advisable for firms to implement a simple, comprehensible performance management framework, consisting of financial and nonfinancial performance measures. Copyright Springer Verlag 2011