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The effects of compensation plans for employee inventions on R&D productivity: New evidence from Japanese panel data

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  • Onishi, Koichiro
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    Abstract

    This article reports the first results on how monetary compensation plans for employee inventions affect R&D productivity, based on the notable panel data of Japanese firms. The study finds that the introduction of revenue-based compensation plans that are linked to patent performance lead to an increase in the number of high cited patents, while this never leads to an increase in the number of patent applications. Furthermore, this is strongly effective in smaller firms. These results indicate that the monetary incentives based on patent performance are effective on enhancing the motivation of employee inventors.

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    Bibliographic Info

    Article provided by Elsevier in its journal Research Policy.

    Volume (Year): 42 (2013)
    Issue (Month): 2 ()
    Pages: 367-378

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    Handle: RePEc:eee:respol:v:42:y:2013:i:2:p:367-378

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    Web page: http://www.elsevier.com/locate/respol

    Related research

    Keywords: Employee invention; Monetary incentive; Patent productivity; R&D;

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    1. Canice Prendergast, 2008. "Intrinsic Motivation and Incentives," American Economic Review, American Economic Association, vol. 98(2), pages 201-05, May.
    2. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    3. Harhoff, Dietmar & Scherer, Frederic M. & Vopel, Katrin, 2003. "Citations, family size, opposition and the value of patent rights," Research Policy, Elsevier, vol. 32(8), pages 1343-1363, September.
    4. Hall, Bronwyn H & Jaffe, Adam B & Trajtenberg, Manuel, 2001. "The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools," CEPR Discussion Papers 3094, C.E.P.R. Discussion Papers.
    5. Wright, Brian Davern, 1983. "The Economics of Invention Incentives: Patents, Prizes, and Research Contracts," American Economic Review, American Economic Association, vol. 73(4), pages 691-707, September.
    6. Honig-Haftel, Sandra & Martin, Linda R, 1993. " The Effectiveness of Reward Systems on Innovative Output: An Empirical Analysis," Small Business Economics, Springer, vol. 5(4), pages 261-69, December.
    7. Harhoff, Dietmar & Hoisl, Karin, 2006. "Institutionalized Incentives for Ingenuity – Patent Value and the German Employees’ Inventions Act," Discussion Papers in Business Administration 1262, University of Munich, Munich School of Management.
    8. Scherer, F. M. & Harhoff, Dietmar, 2000. "Technology policy for a world of skew-distributed outcomes," Research Policy, Elsevier, vol. 29(4-5), pages 559-566, April.
    9. Reitzig, Markus, 2003. "What determines patent value?: Insights from the semiconductor industry," Research Policy, Elsevier, vol. 32(1), pages 13-26, January.
    10. Goto, Akira & Motohashi, Kazuyuki, 2007. "Construction of a Japanese Patent Database and a first look at Japanese patenting activities," Research Policy, Elsevier, vol. 36(9), pages 1431-1442, November.
    11. Todd R. Zenger & Sergio G. Lazzarini, 2004. "Compensating for innovation: Do small firms offer high-powered incentives that lure talent and motivate effort?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(6-7), pages 329-345.
    12. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
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