| Review of Economics and Statistics
Innovation and Incentives: Evidence from Corporate R&D
Beginning in the late 1980s, American corporations began increasingly linking the compensation of central research personnel to the economic objectives of the corporation. This paper examines the impact of the shifting compensation of the heads of corporate research and development. Among firms with centralized R&D organizations, a clear relationship emerges: more long-term incentives (e.g. stock options and restricted stock) are associated with more heavily cited patents. These incentives also appear to be associated with more patent filings and patents of greater originality. Short-term incentives appear to be unrelated to measures of innovation.
Keywords: Innovation and Invention;
Motivation and Incentives;
Goals and Objectives;
Research and Development;
Employee Stock Ownership Plan;