Specifics of R&D Performance Measurement in Medium-sized Firms: Evidence from International IT Companies

Abstract

Two research questions were put before the present master thesis, namely: “What are the specifics and key challenges of the R&D process in the medium-sized IT companies?” and “Which factors should be considered when designing an R&D PMS in medium-sized IT companies?” According to the research questions, the following research objectives have been formulated: To analyze the current approaches to R&D performance measurement: generic ones and those for medium-sized firms (if any) in the academic literature To specify key problems of R&D performance measurement To select international medium-sized IT companies and create individual case studies To contrast cases and elaborate a list of R&D performance measurement practices and challenges common to medium-sized IT companies To analyze the factors influencing the choice of R&D PMS metrics in medium-sized IT firms To formulate practical recommendations for companies analyzed. After conducting an extensive literature analysis, qualitative methodology with collective case study as method have been chosen. The main techniques used for data collection were face-to-face and phone semi-structured in-depth interviews, additionally, internal companies’ documents were analyzed. The insights gained from the literature analysis coupled with empirical data collected from three international medium-sized companied (Speech Technology Center, RAIDIX and AGT International) let the author come up with a number of theoretical findings and managerial implications. Answering the first research question, four main specifics and key challenges of R&D process in medium-sized companies have been formulated: Processes (especially concerning measurement and control) are not formalized enough to implement full-scale R&D PMS R&D and overall company strategic goals are not clearly formulated (or R&D goals do not correlate with company’s goals) Excessive focus on operational performance which leads to the lack of strategic focus R&D performance measurement is done on a casual basis so measurement results are non-systematic and non-collated Further on, eight factors influencing the importance of R&D dimensions and the choice of metrics have been elaborated, namely: (a) Degree of Project portfolio diversification, (b) Type of R&D (focus on disruptive vs. incremental innovations), (c) Degree of rivalry in the market(s) firm operates in, (d) Company’s image on the labour market, (e) Public Policy for IP, (f) Protection Customer’s complexity (e.g. single end-user vs. complex governmental structure), (g) Complexity of Product/Service and (h) Allocation of responsibility for the result among departments. The detailed explanation of how these factors influence the choice of metrics was provided. Finally, based on the main findings of the research, practical recommendations have been elaborated for the companies studied.