Based on a comprehensive literaturereview and the activities of numerous casestudy companies, it is argued in this paperthat performance measurement in R&D isa fundamental aspect to quality in R&Dand to overall business performance.However, it is apparent from the casecompanies that many companies stillstruggle with the issue of R&D perfor-mance measurement. Excuses for notmeasuring are easily found, but there arealso empirical examples and literatureavailable with suggestions how it can bedone. In this article this literature isreviewed and placed within the context ofgeneral performance control and contin-gency theory. Furthermore, the mainmeasurement system design parametersare discussed and some basic systemrequirements are described as well asseveral design principles that can be use-ful for those who accept the challenge ofestablishing a meaningful measurementsystem.