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What Makes Them Tick? Employee Motives and Firm Innovation

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  • Henry Sauermann
  • Wesley M. Cohen
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    Abstract

    We examine the impact of individual-level motives upon innovative effort and performance in firms. Drawing from economics and social psychology, we develop a model of the impact of individuals' motives and incentives upon their innovative effort and performance. Using data on over 11,000 industrial scientists and engineers (SESTAT 2003), we find that individuals' motives have significant effects upon innovative effort and performance. These effects vary significantly, however, by the particular kind of motive (e.g., desire for intellectual challenge vs. pay). We also find that intrinsic and extrinsic motives affect innovative performance even when controlling for effort, suggesting that motives affect not only the level of individual effort, but also its quality. Overall, intrinsic motives, particularly the desire for intellectual challenge, appear to benefit innovation more than extrinsic motives such as pay.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14443.

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    Date of creation: Oct 2008
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    Handle: RePEc:nbr:nberwo:14443

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    1. Josh Lerner & Jean Tirole, 2004. "The Economics of Technology Sharing: Open Source and Beyond," NBER Working Papers 10956, National Bureau of Economic Research, Inc.
    2. Camerer, Colin F. & Hogarth, Robin M., 1999. "The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework," Working Papers 1059, California Institute of Technology, Division of the Humanities and Social Sciences.
    3. Richard R. Nelson, 1959. "The Simple Economics of Basic Scientific Research," Journal of Political Economy, University of Chicago Press, vol. 67, pages 297.
    4. Tim Besley & Maitreesh Ghatak, 2005. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics 928, London School of Economics and Political Science, LSE Library.
    5. Lakhani, Karim R. & von Hippel, Eric, 2003. "How open source software works: "free" user-to-user assistance," Research Policy, Elsevier, vol. 32(6), pages 923-943, June.
    6. Wesley M Cohen & Richard R Nelson & John P Walsh, 2003. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," Levine's Working Paper Archive 618897000000000624, David K. Levine.
    7. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.
    8. N. Lacetera & L. Zirulia, 2008. "Knowledge Spillovers, Competition, and R&D Incentive Contracts," Working Papers 624, Dipartimento Scienze Economiche, Universita' di Bologna.
    9. William G. Ouchi, 1979. "A Conceptual Framework for the Design of Organizational Control Mechanisms," Management Science, INFORMS, vol. 25(9), pages 833-848, September.
    10. Frey, Bruno S & Jegen, Reto, 2001. " Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
    11. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, January.
    12. Schmookler, Jacob, 1962. "Economic Sources of Inventive Activity," The Journal of Economic History, Cambridge University Press, vol. 22(01), pages 1-20, March.
    13. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
    14. Paula E. Stephan, 1996. "The Economics of Science," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1199-1235, September.
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    Cited by:
    1. John P. WALSH & NAGAOKA Sadao, 2009. "Who Invents?: Evidence from the Japan-U.S. inventor survey," Discussion papers 09034, Research Institute of Economy, Trade and Industry (RIETI).
    2. KURODA, Sachiko & YAMAMOTO, Isamu, 2009. "How are hours worked and wages affected by labor regulations?: -The white-collar exemption and 'name-only managers' in Japan," ISS Discussion Paper Series (series F) f147, Institute of Social Science, The University of Tokyo.
    3. Jonathan T. Kolstad, 2013. "Information and Quality when Motivation is Intrinsic: Evidence from Surgeon Report Cards," NBER Working Papers 18804, National Bureau of Economic Research, Inc.

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