Performance Measurement in Digital Innovation Units - An Exploratory Study on Barriers and Potential Enablers

Many incumbent firms have set up Digital Innovation Units - dedicated organizational units tasked with exploring and developing new digital services, products, and business models - to cope with new competitors in the market and successfully develop digital innovations. While attention for those Digital Innovation Units is increasing, actual evidence of their performance and success is rare. Addressing this gap, our study investigates factors that hinder or enable performance measurement systems from reducing information asymmetries between members of the Digital Innovation Unit and the representatives of the mother firm. Based on 21 exploratory interviews with both sides, we propose a framework showing three barriers (Exploratory Goal Setting, Outcome Uncertainty and Assessment Misfit) and three enablers (High Autonomy, Transparency & Involvement, Soft Factor Recognition) for the use of Performance Measurement Systems in Digital Innovation Units. Our findings contribute to expanding knowledge on how to measure digital innovation efforts and to assess the performance of Digital Innovation Units. Thus, our framework provides valuable insights into the design of Performance Measurement Systems and serves as a robust foundation to develop new ways of assessing performance in such explorative contexts.