R&D as a business – what are the implications for performance measurement?

There have been considerable changes in the way that Research and Development (R&D) has been managed over recent years, many of which have been influenced by the external environment. These have been discussed in a number of publications with much of the debate centring around the movement from the so‐called first generation to fifth generation models of R&D management. What has not been debated to the same extent are the implications of recent and likely future trends in R&D management for the way performance is, and should be, measured. In this paper we focus on these implications, drawing upon both the existing literature on performance measurement (PM) in R&D and our own research into organisations which have chosen to move towards a more profit‐centred approach to the management of their technical resources. Finally, we present and discuss the findings of our review, which indicate that although there are common features, some differences, requiring careful consideration by management, can be identified when movement from a cost‐ to a profit‐centred approach occurs.