Key Performance Indicators for Measurement Effectiveness of Innovation in Czech Enterprises

Veronika Bumberová, František Milichovský

Abstract


Purpose. This article represents a study examining the key metrics that could serve as key performance indicators of successfully implemented and completed innovation projects in Czech enterprises. A number of indicators are used in measuring company´s innovativeness such as a company´s percentage sales from products introduced in last five years, performance measurement including net sale of new products, profitability of new products and many others. However, at present we still do not know what distinguishes company´s successful innovative projects from unsuccessful ones.

Methodology. The empirical evidence is based on a quantitative data gathered through an email questionnaire which yielded 194 qualified responses from total number of respondents 427. The analysis is based on factor analysis by evaluation factorial loadings. The data are reduce into groups of variables showing similar variability and create new variables – factor indexes. Individual factors we found have been put under evaluation, where coefficient Cronbach’s alpha is used.

Results. Empirical evidence suggests that performance indicators such as turnover, profit, market share, total revenue from new products, operating costs, inventories of raw materials and final products are statistical significant due to the respondent answers. In terms of similar variability were identified four factors, from which met criteria of Cronbach’s alpha only two indexes: 1) index of market revenue, and 2) index of inventory stock.

The theoretical contribution. The objective of this study is to identify aggregate performance indexes based on financial and non-financial metrics and indicators used. Thus, those metrics that are important to measure in terms of respondents' answers and test it in terms of effectiveness measured in percentage share on the success the implemented and completed innovative projects in Czech companies.

Practical implications. The study has its scope limits owing to the character of the cross-sectional research performed at a fairly small sample of enterprises. Higher reliability should be reached by specification of industry or company’s size (or both of them). It is obvious, that manufacturers are focusing on different kind if innovations than service producers. Results of the paper show, which indicators have become key one for Czech companies to improve success of innovations. Both of indexes help to improve the successes through consistent effective management.


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