Small Business Economics

, Volume 5, Issue 4, pp 261–269 | Cite as

The effectiveness of reward systems on innovative output: An empirical analysis

  • Sandra Honig-Haftel
  • Linda R. Martin


This study investigated the relationship of patent output to the reward systems for individual R&D scientists in high technology firms. A survey of technical managers in 57 Connecticut firms collected information on firm size, R&D expenditure, and the frequency of use of eighteen different reward systems. Using a regression model, patent output was found to be dependent on firm size, R&D expenditure, and on monetary and non-monetary reward systems, informal award programs and variable bonuses based on the issue of patents. When a subset of small firms was investigated separately, non-monetary rewards were shown to be ineffective. However, variable bonuses remained important to patent output and large sum reward payments ($50,000) also demonstrated a significant effect.


Regression Model Empirical Analysis Firm Size Small Firm Technical Manager 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Acs, Zoltan and David B. Audretsch, 1989, “Patents as a Measure of Innovative Activity,”Kyklos 42(2), 171–180.Google Scholar
  2. Balkin, David B. and Luis R. Gomez-Mejia, 1985, “Compensation Practices in High-Technology Industries,”Personnel Administrator (June), 111–122.Google Scholar
  3. Balkin, David B. and Luis R. Gomez-Mejia, 1987, “Toward a Contingency Theory of Compensation Strategy,”Strategic Management Journal 8(2), 169–182.Google Scholar
  4. Birch, David L., 1990, “A Look Back and a Look Forward at Entrepreneurs and Their Role in the Economy.” Presentation at the Babson Entrepreneurship Conference, Thursday, 5 April.Google Scholar
  5. Brock, William A. and David S. Evans, 1989, “Small Business Economics,”Small Business Economics: An International Journal 1(1), 7–20.Google Scholar
  6. Chakrabarti, Alok K., 1990, “Scientific Output of Small and Medium Firms in High Tech Industries,”IEEE Transactions on Engineering Management 47(1), 48–52.Google Scholar
  7. Chakrabarti, Alok K. and Michael Halperin, 1990, “Technical Performance and Firm Size: Analysis of Patents and Publications of U.S. Firms,”Small Business Economics: An International Journal 2(3), 183–190.Google Scholar
  8. CorpTech, 1988,Connecticut Directory of Technology Companies, Wellesley Hills: CorpTechTM.Google Scholar
  9. Ellis, Lynn W. and Sandra Honig-Haftel, 1992, “Reward Strategy for R & D,”Research Technology Management 35(2), 16–20.Google Scholar
  10. Glaser, Barney G., 1964,Organizational Scientists: Their Professional Careers, Indianapolis: Bobbs-Merrill.Google Scholar
  11. Gomez-Mejia, Luis R. and David B. Balkin, 1989, “Effectiveness of Individual and Aggregate Compensation Strategies,”Industrial Relations 28(3), 431–445.Google Scholar
  12. Griggs, W. H. and S. Manning, 1986, “Increasing the Effectiveness of Technical Professionals,”Management Review (May), 62–64.Google Scholar
  13. Griliches, Zvi, 1990, “Patent Statistics as Economic Indicators: A Survey,”Journal of Economic Literature 28(4), 1661–1707.Google Scholar
  14. Hammer, W. Clay and Lawrence W. Foster, 1975, “Are Intrinsic and Extrinsic Rewards Additive: A Test of Deci's Cognitive Evaluation Theory of Task Motivation,”Organizational Behavior and Human Performance 14, 398–415.Google Scholar
  15. Knight, Russell M., 1987, “Corporate Innovation and Entrepreneurship: A Canadian Study,”Journal of Product Innovation Management 4, 284–297.Google Scholar
  16. Lepper, M. R., D. Greene and R. E. Nisbett, 1973, “Undermining Children's Intrinsic Interest With Extrinsic Rewards: A Test of the ‘Over-Justification Hypothesis’,”Journal of Personality and Social Psychology 28, 129–137.Google Scholar
  17. Mansfield, Edwin, 1968a,The Economics of Technological Change, New York: W. W. Norton.Google Scholar
  18. Mansfield, Edwin, 1968b,Industrial Research and Technological Innovation, Cowles Foundation for Research in Economics at Yale University, New York: W. W. Norton.Google Scholar
  19. Mansfield, Edwin, John Rappaport, Jerome Schnee, Samuel Wasner and Michael Hamburger, 1971,Research and Innovation in the Modern Corporation, New York: W. W. Norton.Google Scholar
  20. Pelz, Donald Campbell and Frank M. Andrews, 1976,Scientists in Organizations, New York: Wiley.Google Scholar
  21. Scherer, F. M., 1965, “Firm Size, Market Structure, Opportunity, and the Output of Patented Inventions,”American Economic Review 55(5), 1097–1125.Google Scholar
  22. Schuyler, William E. Jr., 1984, “Patents and the Entrepreneurial Environment,”The Environment of Entrepreneurship, ed. Calvin A. Kent, Lexington: D. C. Heath, 117–154.Google Scholar
  23. Shapiro, C., 1985, “Patent Licensing and R&D Rivalry,”American Economic Review 75(2), 25–30.Google Scholar
  24. Smayling, Miles-Maxwell, 1987, “Incentive Systems for Research and Development Scientists and Engineers,” Ph.D. diss., University of Minnesota.Google Scholar
  25. Souder, William E., 1985, “Award Programs for R&D Personnel,”Research Management 75(5), 1–18.Google Scholar
  26. Walcoff, Carol, Robert P. Ouelette and Paul N. Cheremisinoff, 1983,Techniques for Managing Technological Innovation: Overcoming Process Barriers, Ann Arbor Ann Arbor Science.Google Scholar

Copyright information

© Kluwer Academic Publishers 1993

Authors and Affiliations

  • Sandra Honig-Haftel
    • 1
    • 2
  • Linda R. Martin
    • 1
    • 2
  1. 1.Center for Entrepreneurship W. Frank Barton School of BusinessWichita State UniversityWichita
  2. 2.Economics Department Barney School of Business and Public AdministrationUniversity of HartfordWest Hartford

Personalised recommendations