Incentives and Innovation? R&D Management in Germany’s High-Tech Industries During the Second Industrial Revolution

Carsten Burhop () and Thorsten Lübbers ()
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Carsten Burhop: Max Planck Institute for Research on Collective Goods, Bonn
Thorsten Lübbers: Max Planck Institute for Research on Collective Goods, Bonn

No 2008_38, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: The allocation of intellectual property rights between firms and employed researchers causes a principal-agent problem between the two parties. We investigate the working contracts of inventors employed by German chemical, pharmaceutical, and electrical engineering firms at the turn of the 20th century and show that some firms were aware of the principal-agent problem and offered performance-related compensation schemes to their scientists. However, neither a higher total compensation nor a higher share of variable compensation in total compensation is correlated with a higher innovative output. Thus, incentives techniques were already used during the early history of industrial research laboratories, but their impact on innovative output was unsystematic.

Keywords: Compensation packages; incentives; innovation; economic history; Germany, pre-1913 (search for similar items in EconPapers)
JEL-codes: J33 N83 O31 (search for similar items in EconPapers)
Date: 2008-10
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Citations: View citations in EconPapers (1)

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