Performance Evaluation in Multistep Processes—A Comparison of Evaluation Types With Special Emphasis on R&D

The construction of efficient performance evaluation and incentive systems is an important element of modern R&D management. As R&D activities are characterized by a high degree of sequentiality, there is an ongoing discussion as to whether R&D staff that provides the basis for following projects should be evaluated only on the basis of their individual performance or on the basis of measures that incorporate the subsequent projects. This paper analyzes the merits of both approaches, with special emphasis on the risk factors that affect R&D activities. The analysis provides a scheme that differentiates several types of R&D activities, locates them within a broader group of multistep processes of firms, and provides an adequate approach to performance evaluation for each of these processes.