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Compensating for innovation: Do small firms offer high-powered incentives that lure talent and motivate effort?

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Author Info

  • Todd R. Zenger

    (John M. Olin School of Business, Washington University, Campus Box 1133, St. Louis, MO 63130, USA)

  • Sergio G. Lazzarini

    (Ibmec São Paulo, R. Maestro Cardim 1170, São Paulo, SP 01323-001, Brazil)

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    Abstract

    Empirical studies commonly confirm that small firms enjoy efficiency advantages in generating innovation. However, the origin of this advantage remains poorly understood. This study explores the hypothesis that small firms enjoy advantages over large firms in crafting effective, incentive-intensive employment contracts that lure top engineering talent and motivate high effort. These hypotheses are tested using data from a sample of R&D engineers in Silicon Valley and the Route 128 area. Copyright © 2004 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/mde.1194
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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

    Volume (Year): 25 (2004)
    Issue (Month): 6-7 ()
    Pages: 329-345

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    Handle: RePEc:wly:mgtdec:v:25:y:2004:i:6-7:p:329-345

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    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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    References

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    1. Kandel, E. & Lazear, E.P., 1990. "Peer Pressure and Partnerships," Papers 90-07, Rochester, Business - Managerial Economics Research Center.
    2. Coughlan, Anne T & Narasimhan, Chakravarthi, 1992. "An Empirical Analysis of Sales-Force Compensation Plans," The Journal of Business, University of Chicago Press, vol. 65(1), pages 93-121, January.
    3. Idson, Todd L & Feaster, Daniel J, 1990. "A Selectivity Model of Employer-Size Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 99-122, January.
    4. Levinthal, Daniel, 1988. "A survey of agency models of organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 9(2), pages 153-185, March.
    5. Main, Brian G M & Reilly, Barry, 1993. "The Employer Size-Wage Gap: Evidence for Britain," Economica, London School of Economics and Political Science, vol. 60(238), pages 125-42, May.
    6. Bishop, John, 1987. "The Recognition and Reward of Employee Performance," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages S36-56, October.
    7. Mellow, Wesley, 1982. "Employer Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 495-501, August.
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    Cited by:
    1. Barros, Henrique M. & Lazzarini, Sergio G., 2009. "Meritocracy and Innovation: Is There a Link? Empirical Evidence from Firms in Brazil," Insper Working Papers wpe_162, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    2. Hart E. Posen & Dirk Martignoni & Daniel A. Levinthal, 2013. "E Pluribus Unum: Organizational Size and the Efficacy of Learning," DRUID Working Papers 13-09, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    3. M. Shyam Kumar, 2013. "Production knowledge and its impact on the mechanisms of governance," Journal of Management and Governance, Springer, vol. 17(2), pages 261-281, May.
    4. Onishi, Koichiro, 2013. "The effects of compensation plans for employee inventions on R&D productivity: New evidence from Japanese panel data," Research Policy, Elsevier, vol. 42(2), pages 367-378.
    5. Martin Wielemaker & Eric Gedajlovic, 2011. "Governance and capabilities: Asia’s entrepreneurial performance and stock of venture forms," Asia Pacific Journal of Management, Springer, vol. 28(1), pages 157-185, March.
    6. Claire Bonnard, 2012. "The Access of the Young Graduates in Sciences into R&D Profession: A Switching Model Treatment for the French Case," LABOUR, CEIS, vol. 26(1), pages 46-65, 03.
    7. Oliver Baumann & Nils Stieglitz, 2011. "Motivating Organizational Search," DRUID Working Papers 11-08, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.

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