Fostering ambidexterity among R&D employees: The dilemma of performance measures and how to overcome it

Abstract

To remain competitive in the long run, organizations need to both explore new possibilities and exploit existing competencies in their innovation efforts. The pursuit of such ambidexterity, however, makes the choice of performance measures for evaluating R&D employees particularly challenging. In this paper, I investigate the effort-distorting effects of the most commonly used measures in R&D (patent-based and customer-based measures) and explore ways to overcome them. Building on the dilemma that each measure supports only one crucial innovation behavior (exploration or exploitation) while undermining the other, I suggest that simply combining both measures is not sufficient to promote ambidexterity. Instead, I argue that complementing patent-based and/or customer-based measures with organic controls helps employees recognize and realize synergies between exploration and exploitation, leading them to engage in both. I find support for my hypotheses using survey data from 269 companies in the chemical and pharmaceutical industries.