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Scientific and Commercial Incentives in R&D: Research versus Development?

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Author Info

  • Albert Banal-Estañol
  • Inés Macho-Stadler

Abstract

"This paper proposes a framework to analyze the effects of scientific and commercial incentives in R&D organizations. We build a simple repeated model of a researcher capable of obtaining innovative ideas. Although they reduce the time spent on research, we show that commercialization incentives also affect the choice of research projects. Commercial rewards induce a more intensive search for (ex post) path-breaking innovations, which are more likely to be generated through (ex ante) riskier research programs. We derive the organization's optimal incentive scheme in terms of the researcher's characteristics. We show that organizations should use a high level of commercial incentives for scientists who have strong or weak intrinsic preferences for research. For those with strong preferences, the organization needs to induce development, whereas for those with weak ones, it needs to induce effort." Copyright (c) 2010, The Author(s) Journal Compilation (c) 2010 Wiley Periodicals, Inc..

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 19 (2010)
Issue (Month): 1 (03)
Pages: 185-221

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Handle: RePEc:bla:jemstr:v:19:y:2010:i:1:p:185-221

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Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

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Web: http://www.blackwellpublishing.com/journal.asp?ref=1058-6407&site=1

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Cited by:
  1. Hottenrott, Hanna & Thorwarth, Susanne, 2011. "Industry funding of university research and scientific productivity," ZEW Discussion Papers 10-105 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Hottenrott, Hanna & Lawson, Cornelia, 2012. "Research grants, sources of ideas and the effects on academic research," ZEW Discussion Papers 12-048, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Joshua Gans & Fiona E. Murray, 2011. "Funding Scientific Knowledge: Selection, Disclosure and the Public-Private Portfolio," NBER Working Papers 16980, National Bureau of Economic Research, Inc.
  4. David B. Audretsch & Werner Bönte & Stefan Krabel, 2010. "Who Do Scientists in Public Research Institutions Cooperate with Private Firms?," DRUID Working Papers 10-27, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  5. Christian Riis & Xianwen Shi, 2012. "Sequential Innovation and Optimal Patent Design," Working Papers tecipa-447, University of Toronto, Department of Economics.

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