The purpose of this paper is to clarify the concept of innovation capability and to show how the linkage between innovation capability and performance measurement can be formed.
The study is based on current literature of innovation capability and performance measurement and matching these two to find out how the measurement of innovation capability should be organized.
The paper describes the concept of innovation capability and presents a performance measurement framework for the measurement of innovation capability and its effects. As a result, a conceptual framework with five perspectives for measuring the relationship between innovation capability and business performance is presented. Also, the link between innovation capability and an organization's business performance is disclosed.
The paper shows a way forward of how to define measures of business performance in such a way that they are led from the development of innovation capability.
