Measuring the effectiveness of R & D activities

Abstract

Purpose – The purpose of this paper is to validate empirically a measurement scale of the effectiveness of R & D activities, starting from previous work in which the content was validated. Design/methodology/approach – Following psychometric standards the authors have addressed the analysis phases of construct dimensionality, reliability and validity (convergent, discriminant and nomologic), and the scale criteria are shown to be valid in their three temporal manifestations (retrospective, concurrent and predictive). The empirical evidence was drawn from a sample of 85 companies belonging to the Spanish pharmaceutical sector. Findings – Globally the authors provide evidence of reliability, validity of construct and validity of criterion in their diverse manifestations, for the scale designed and validated, on effectiveness in R & D. The authors divide the results into two groups: one for content of the scale and the other for relationships of the scale with other variables. With respect to the first, it is notable that, although in general the variables analyzed coincide with the previous broad and multidisciplinary theory on the success factors of R & D activities, what the authors provide is empirical evidence of the most important factors and variables for effectiveness in R & D; the authors emphasize that the results of the sample analyzed indicate that the most important factor is the close integration of the R & D activities with the corporate strategy, followed by the proper planning of these activities, and the achievement of financial results for the company. With respect to the relationship of the scale with other variables, the authors have found positive and significant relationships between the effectiveness in R & D and the following financial variables: net turnover and earnings after taxes. The authors have also found positive and significant relationships between different characteristics of the company and the achievement of success in R & D activities. Thus, being a company of larger size, the existence of an R & D department, the existence of specific incentive systems for the R & D personnel, the adoption of new management techniques in the R & D department, and the patents policy of the company are all factors that have a positive influence. Research limitations/implications – There are three main limitations of the study: the size of the sample; the decision to use a very particular highly innovatory sector, the pharmaceutical industry; and conducting the study in only one specific country, Spain. The results should be interpreted taking into account these limitations. Another limitation is the absence of previously validated scales. This meant that the authors were unable to do any comparative analyses. Practical implications – The authors have contributed by summarizing and testing the existing theories on the factors of success in R & D. This should give R & D managers a more comprehensive and useful picture of the variables that have been considered more important, and should enable them to choose from among the range of variables proposed those that may be considered most relevant for inclusion in their own balanced scorecard. More generally, the results should help them in the management of their activity. For researchers the authors make available an already validated scale with which to work in various different samples and settings. Originality/value – The originality of the work resides in two aspects. First, a very wide set of variables proposed in the literature is analyzed, with the object of establishing the relationships and the ranking of these variables, which would not be clear if the variables were analyzed in isolation. Second, there is originality in the methodology employed for measuring the result of activities with a high level of uncertainty and risk, specifically R & D activities in the highly innovative companies of the pharmaceutical industry. It is original because, to date, the scale has only been validated theoretically – there is no work in the literature validating it empirically.