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

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  • 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..

Suggested Citation

  • Albert Banal-Estañol & Inés Macho-Stadler, 2010. "Scientific and Commercial Incentives in R&D: Research versus Development?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(1), pages 185-221, March.
  • Handle: RePEc:bla:jemstr:v:19:y:2010:i:1:p:185-221
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. António Freitas & Inés Macho-Stadler, 2014. "On the joint production of research and training," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 13(2), pages 71-94, August.
    3. Czarnitzki, Dirk & Doherr, Thorsten & Hussinger, Katrin & Schliessler, Paula & Toole, Andrew A., 2015. "Individual versus institutional ownership of university-discovered inventions," ZEW Discussion Papers 15-007, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Hottenrott, Hanna & Thorwarth, Susanne, 2010. "Industry funding of university research and scientific productivity," ZEW Discussion Papers 10-105, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Joshua S. Gans & Fiona Murray, 2011. "Funding Scientific Knowledge: Selection, Disclosure and the Public-Private Portfolio," NBER Chapters,in: The Rate and Direction of Inventive Activity Revisited, pages 51-103 National Bureau of Economic Research, Inc.
    6. Bralind Kiri & Nicola Lacetera & Lorenzo Zirulia, 2015. "Above a Swamp: A Theory of High-Quality Scientific Production," NBER Working Papers 21143, National Bureau of Economic Research, Inc.
    7. Hanna Hottenrott & Cornelia Lawson, 2014. "Research grants, sources of ideas and the effects on academic research," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 23(2), pages 109-133, March.
    8. 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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