Effect of Performance Management System on Knowledge Innovation Process

The paper makes investigation on the effect of performance management system (PMS) on knowledge innovation process (KIP). Based on literature review, PMS is divided into four components, respectively performance monitoring mechanism, performance incentive mechanism, performance feedback mechanism, and performance appraisal mechanism. KIP is divided into four phases, respectively knowledge innovation (KI) needs finding phase, KI intention forming phase, KI project initiation phase and KI action execution phase. Then a concept model called "Effect of PMS on KIP" is proposed, and according to which several propositions on the intrinsic relationship between them are concluded. Firstly, performance monitoring mechanism improves KIP by influencing KI needs finding capability in the KI needs finding phase. Secondly, performance incentive mechanism improves KIP by influencing the transformation from KI needs finding phase to KI intention forming phase. Thirdly, performance feedback mechanism improves KIP by influencing the transformation from KI intention forming phase to the effective KI project initiation phase. Finally, performance appraisal mechanism improves KIP by influencing the success possibility of KI action execution phase. Furthermore, each mechanism has different influence strength just because of the different design of PMS components.