Relationships Between Performance Measurement Systems, Intrapreneurial Culture and Innovation Capabilities: A Longitudinal Field Case Stud

While innovation is a key driver of long term success, established companies often lose their Innovation Capabilities for the sake of operational efficiency. On one hand, Intrapreneurial Corporate Cultures have often been correlated with high Innovation Capabilities. On the other hand, Performance Measurement Systems (PMS) play a role in the types of projects that are prioritized, and can hinder innovation.;This study explores the relationships between Intrapreneurial Culture, PMS and Innovation Capabilities, a subject that is sparse in the literature. It aims to achieve a better understanding of the transformational dynamics required to help an established company rejuvenate its Innovation Capabilities. As the intent of this study is to better understand complex human dynamics, an inductive research approach was considered appropriate. An iterative research design with a combination of four research strategies and multiple data collection methods was developed to help bridge the gap between practice and literature on the research subject. The 'Levels of Perspectives' iceberg model was used to help organize and analyze the data.;As a result of the intervention-research strategy, it was possible to experience firsthand key challenges and tensions of the rejuvenation of Innovation Capabilities in an execution-oriented company. The key challenges identified through this Case Study are the company's (1) risk aversion, (2) execution mindset, (3) lack of internal alignment, (4) lack of environmental alignment, and (5) low level of maturity of innovation processes. Three interrelated prerequisites to the successful implementation of Key Performance Indicators (KPIs) to measure innovation success were identified: (1) minimal level of maturity of innovation processes, (2) strategic alignment, and (3) commitment to innovation.;Grounded Research Theory was used to make sense of the field observations and provide four research propositions, as well as a conceptual framework that could be further explored in future research. Our first proposition suggests that an execution-oriented company that introduces well-aligned innovation-oriented strategic objectives, PMS and reward systems could stimulate innovation initiatives and support the future development of Innovation Capabilities and of an Intrapreneurial Culture. Our second proposition states that otherwise, the employees are likely to resist implementation of innovation initiatives and measures, and prioritize execution-oriented KPIs, even to measure innovation, further reinforcing the execution-oriented culture and impeding the development of Innovation Capabilities. Moreover, learnings from this study suggest that when the goal is to rejuvenate Innovation Capabilities in an execution-oriented company, it is more effective to begin with the introduction of KPIs that stimulate behaviours conducive to innovation rather than KPIs that aim to measure the success of innovation activities (Proposition 3). When the company reaches a higher level of innovation management process maturity and develops a more Intrapreneurial Culture, the implementation of KPIs to measure innovation performance will be more likely to succeed (Proposition 4). This study is concluded with a hypothesis that could be further explored in future research: different types of KPIs are appropriate for different levels of innovation process management maturity.;This study's main contributions are the learnings on the dynamic relationships between Intrapreneurial Culture, PMS and Innovation Capabilities made possible by the unique field research design used.