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This chapter investigates whether core competence of managers and their expansive (vs. specialized) managerial style affects firms' innovative ability, capacity, and efficiency. Using exogenous CEO departures as a natural experiment, it establishes a causal link between managerial capability and innovation. Importantly, it reveals that firms with talented managers receive significantly more nonself citations; make significantly lower self-citations and lesser citations to the others, indicating novel and explorative innovation achievements. Also, managers with higher general (specialized) ability are cited more (less) by patents from a wider range of fields. Lastly, career concern is identified as a mechanism linking higher ability and innovation.

Many corporations have annual expenditures in research and development in the range of billions of U.S. dollars. Senior managers have often been frustrated by the lack of innovation in their organizations and have been looking for better ways to implement an innovation strategy. To provide initial evidence on this significant topic, we conduct an empirical examination and contribute to the existing literature in two important areas. First, we examine how managers choose what measures to pay attention to in managing the innovation process – defined as the process of creative definition, development, and commercialization of substantially new products, services or businesses. We find that managers use measures about specific phases of the innovation process together. For example, measures that inform about the execution stage of the innovation process are grouped together rather than being grouped with measures informative about other phases of the innovation process, such as market performance. This pattern “focused” around specific phases is in contrast to the alternative “balanced” pattern where managers would use measures from various phases of the process together. This result provides the first empirical test of how managers combine measures to filter information about business processes. It also provides important new evidence on the use of measures and provides guidance to the design of measurement systems. Second, this paper provides empirical evidence on the relationship between innovation strategy and the use of measures. Though previous studies have linked innovation strategy and the use of management control systems in general, there is little empirical data on the relationship of strategy and the use of measures and on the innovation process. We find that different dimensions of strategy are positively associated with how managers use different types of measures.

This chapter develops a framework for classifying approaches to conceptualizing and measuring implementation of innovations. It first develops a typology that distinguishes rollout, modification, programmatic and transformation conceptualizations of implementation. The implications of each conceptualization for measurement of implementation are discussed. Following this a classification scheme for implementation measures is presented that distinguishes measures on the basis of their: (a) criterion for success of the implementation; (b) innovation unit; (c) source of data; (d) measurement scale; and (e) level of analysis. Issues related to various measurement choices are discussed along with recommendations for future research and development in the measurement of implementation.

This study aims to demonstrate the values and effects of innovation becomes a challenge when selecting clear and correlating measures. While there is extensive research in the area of innovation measurement, there is a lack of consistent quantifiable measures that organizations can use. The International Association of Innovation Professionals (IAOIP) has partnered with Spigit to crowdsource innovation measures via the Innovation Measurement Standard (IMS) challenge with IAOIP members and the global public to determine the various ways innovation is measured across industries.

This study used a mixed-methods approach and a sequential exploratory design to analyze the data collected during the IMS challenge. In the first phase, the qualitative methodology was used to analyze innovation measures submitted during the IMS challenge and participants’ interactions and comments. In the second phase, the innovation measures were analyzed quantitatively to identify the most prominent measures.

A total of 73 innovation measures were collected during the challenge. In total, 18 top measures were ranked based on the participants’ votes, and the top five measures were selected as the winning measures of the challenge. These five measures included intelligent failure rate, financial results of innovation, the results brought to the company, the number of innovative ideas selected for action and innovation portfolio balancing.

This study is the first to select the innovation metrics while considering their relevance to the community of innovators that included academics, CEOs, consultants, innovation managers, etc. Another original factor of this work is the crowdsourcing approach used to identify innovation measures. This approach allowed us to explore multiple perspectives on the significance of each submitted measure.

The purpose of this paper is to clarify the concept of innovation capability and to show how the linkage between innovation capability and performance measurement can be formed.

The study is based on current literature of innovation capability and performance measurement and matching these two to find out how the measurement of innovation capability should be organized.

The paper describes the concept of innovation capability and presents a performance measurement framework for the measurement of innovation capability and its effects. As a result, a conceptual framework with five perspectives for measuring the relationship between innovation capability and business performance is presented. Also, the link between innovation capability and an organization's business performance is disclosed.

The paper shows a way forward of how to define measures of business performance in such a way that they are led from the development of innovation capability.

The purpose of this paper is to define measures that small- and medium-sized enterprises (SMEs) can use for evaluating continuous innovation and to analyze types of SMEs, according to the innovation measures they use and their characteristics in terms of size and operational and financial performance.

The data were gathered with the help of a structured survey questionnaire from a cross-section of firms in both the manufacturing and service sectors in Finland. The data were analyzed in terms of factor and cluster analyses.

Three measures of continuous innovation and three types of SMEs were defined based on their continuous innovation measures. It was found that firms using all three types of innovation measures also register above-average financial and operational performance compared to those that do not.

This study attempts to improve the precision of performance measurement and the management of continuous innovation in firms by expanding and refining existing measurement guidelines and principles. In particular, this work approaches the subject of continuous innovation measurement from the standpoint of SMEs.

Exploiting a novel measure of innovation, the authors investigate whether independent directors improve innovation efficiency. This novel measure of innovation captures the extent to which the firm generates revenue from its research & development and is, therefore, more economically meaningful. The authors also use a text-based measure of innovation.

The authors rely on a quasi-natural experiment based on the passage of the Sarbanes-Oxley Act of 2002 that compelled certain firms to raise board independence. The difference-in-difference analysis is far less vulnerable to endogeneity and is more likely to show a causal influence, rather than a mere association.

The results show that more independent directors improve innovation efficiency significantly. Specifically, firms forced to raise board independence experienced a much higher increase in innovation than those not required to change their board composition. The authors also explore another novel measure of innovation, a text-based metric of innovation.

The research is original in several ways. First, the authors take advantage of an exogenous regulatory shock as a quasi-natural experiment. This approach is far less susceptible to endogeneity. Second, the authors use a novel measure of innovation efficiency, i.e. research quotient, which is more economically meaningful. Finally, the authors use a unique measure of innovation derived from powerful textual analysis.

By examining the impact of product innovation on abnormal financial returns following the launch of new products, this study aims to test the explanatory power of a new compound measure of product innovativeness (Ganbaatar and Douglas, 2019).

It is a longitudinal study in which the authors used the compound product innovativeness score (CPIS) for the first time to measure product innovativeness. The abnormal financial returns are estimated through the event study design, where four different models are used. Artificial neural network analysis is done to determine the impact of the CPIS on abnormal returns by utilising a hexic polynomial regression model.

The authors find effect sizes that substantially exceed practically significant levels and that the CPIS explain 65% of the variance in the firm’s abnormal returns in market valuation. Moreover, new-to-the-market novelty predicts 83% of the variation, while new-to-the-firm (catch-up) innovation insignificantly impacts firm value.

This paper demonstrates how the CPIS, an objective and direct measure of product innovativeness, can be used to gain more insight into the innovation effect.

Implications for the business practice of this study include the necessity of relentless innovation by firms in contested differentiated markets, particularly where technological advance is ongoing. Larger and mature firms must practice corporate entrepreneurship to renew their products on a continuous basis to avoid slipping backwards in their markets. Innovation leadership, rather than following the leader, is also important to increase competitive advantage, given the result that innovation followship does not produce abnormal financial returns.

In this study, the authors focused on the effect of product innovativeness on firm performance. While the literature affirms a positive relationship between innovation and firm performance, the effect size of this relationship varies, due largely to the authors contend to simplistic measures of innovativeness. In this study, the authors adopt the relatively novel “compound” measure of product innovativeness (Ganbaatar and Douglas, 2019) to better encapsulate the nuances of both technical novelty and market novelty. This measure of product innovativeness is applicable to firms of all sizes but is more easily applied to entrepreneurial new ventures and SMEs, and it avoids the shortcomings of prior firm-level and subjective measures of innovativeness for both smaller and larger firms. Using a more effective analytical method (Artificial Neural Network), the authors investigated whether there is a “practically” significant effect size due to product innovation, which could be valuable for entrepreneurs in practice. The authors show that the CPIS measure can very effectively explain abnormalities in the stock market, exhibiting a moderate effect size and explaining 65% of the variation in abnormal returns.

A current highly competitive and rapidly changing business environment requires companies to continually innovate to survive. An increasing number of companies are using teams to leverage the knowledge and experience of their employees in order to improve quality, reduce costs and ‘delight’ the customer. The growing prevalence of teams signals the need to examine the adequacy of management accounting information and its use in performance measurement and control systems.

Some research has examined the impact of team empowerment on creativity and innovation, while other research discusses the sometimes-hampering role of performance measures in team environments. This paper contributes to this research, with two major goals. First, it discusses innovation and empowerment and examines how performance measurement can both encourage and hinder team performance. The second purpose is to propose a team performance measurement system using ratios based on activity-based management that seeks to encourage innovation and empowerment while maintaining a system of control.

There is an established link between national cultural differences and documented variations in technological innovations across countries. To move beyond a narrow emphasis on national cultures, scholars have suggested using within‐country diversity to compensate for known limitations in national culture measures. Given that ethno‐linguistic diversity is a known source of cultural variation, this paper specifically aims to explore the relationship between culture, ethno‐linguistic diversity and national innovativeness.

The researchers used publicly available data on patents and trademarks in a multivariate regression context to study the effects of national culture and within‐country diversity on national levels of innovativeness.

The research found that culture and ethno‐linguistic diversity are independently positively associated with national innovation. More importantly, cultural and intra‐cultural variation measures when taken together account for significantly greater variance in levels of national innovation than does national culture when measured separately.

While this study points to the importance of ethno‐linguistic diversity in explaining national levels of innovativeness, there are other measures of within‐country diversity to be explored.

If national culture were the sole factor in innovativeness, then companies would be limited by their host cultural legacies; since within‐country diversity is also associated with innovation, it provides entrepreneurs, government policy makers and executives with important options for increasing innovativeness.

While previous studies pointed to the potential link between ethno‐linguistic diversity and innovation, prior research has generally not taken this variable into account.