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The aim of this study was to determine whether customer satisfaction can be used as a reliable measure of the performance of the management of a research and development (R&D) department. A study of a research and development department of an Australian manufacturing company was undertaken in 1995. R&D performance and external customer satisfaction were measured using seven dimensions of technical performance and seven dimensions of service quality. Expectations of external customer satisfaction were measured from the internal (staff of R&D department) and external customers’ (production, sales and administration) points of view. This was to highlight the gap between the staffs’ perceptions and the external customers’ perceptions of service provided. The study provides research and development managers with an additional tool for measuring their management performance.

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