Performance measurement approach for innovation capability in SMEs

Purpose – The purpose of this paper is to present a framework for improving innovation capability through performance measurement in small- and medium-sized enterprises (SMEs). The development of an organisation’s innovation capability is considered increasingly important in the current literature. Developing such capability is essential, as innovation plays a key role in the survival and growth of organisations. A review of current literature highlights the need for a framework on the development of innovation capability, especially in SMEs. Design/methodology/approach – A literature review was used to form an understanding of previous work in the research area. Previous literature was used to define the key concepts and further to build the conceptual framework. Findings – As a result of the study, a framework for improving innovation capability through performance measurement in SMEs is presented. Key issues that must be addressed are highlighted and discussed. Practical/implications – The paper contains suggestions for improving innovation capability through performance measurement. Using the results of this study, practitioners can enhance their innovation capability by measurement and by taking better account of different situations regarding the development of innovation capability. The framework clarifies the issue of how innovation capability and its determinants can be managed through measurement, and therefore it assists especially SMEs in their attempts to cope with the increasing need for innovation as an asset of their business performance. Originality/value – There are very few examples in the current literature of frameworks for the issue, especially for SMEs. The role of performance measurement in developing innovation capability is also ignored in the current literature. The paper is relevant for academics, as it clarifies the existing body of knowledge and provides a platform for future research.