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Do incentive systems spur work motivation of inventors in high tech firms? A group-based perspective

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Abstract

In this paper, we explore with a model the potential tensions between the incentive system of groups of inventors and knowledge diversity in a high tech firm. We show that, when all groups are rewarded and able to interact freely with their peers, extrinsic and intrinsic motives are mutually self-reinforcing, leading to crowding in effects. As a result, the level of created knowledge increases in each group, reinforcing the diversity of the firm’s knowledge base. By contrast, competitive rewards and constrained autonomy are likely to produce motivating effects in a small number of groups, limiting knowledge creation to the firm’s core competencies. In this case, the firm can suffer from crowding out effects by the other groups, leading eventually to the extinction of creation in their fields and reduced diversity in the long run. The results are illustrated with empirical findings from a case study of a French high tech firm.

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Notes

  1. The policy was criticized by some business units on the basis of social network effects. In particular, there was a suspicion that engineers trained in the same French engineering schools as committee members were being favored.

  2. Engineers in the past had been recruited on the basis of known networks, including the Ecole Polytechnique (France’s most prestigious engineering school). Engineers who had graduated from the Ecole Polytechnique shared a set of values based on history, myth and technical culture, and used a common language (Kessler 2005). The new intake challenged the validity of these competencies and questioned their content.

  3. Patent applications increased by 50 % since 2008 with an average number of new inventions by researchers increasing from 350 in 2008, 359 in 2009 to 364 in 2010. The quality of these applications was also improved, with a significant growth in the number of patents with direct commercial application (See Ayerbe et al. 2012).

  4. We assume that − wbw, which implies that extrinsic motivation is non negative. In contrast, intrinsic motivation can be negative, leading to crowding out effects.

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Correspondence to Nathalie Lazaric.

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Lazaric, N., Raybaut, A. Do incentive systems spur work motivation of inventors in high tech firms? A group-based perspective. J Evol Econ 24, 135–157 (2014). https://doi.org/10.1007/s00191-013-0336-2

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