Motivating Innovation: Tunnels vs. Funnels

Ronald Klingebiel ()
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Ronald Klingebiel: Frankfurt School of Finance and Management, Frankfurt 60322, Germany

Strategy Science, 2022, vol. 7, issue 4, 300-316

Abstract: The tentative pursuit of parallel projects in an innovation funnel helps firms improve selection under uncertainty. Yet a risk of premature project termination may make employees more hesitant to innovate. Rewards to innovation, if at risk, become less attractive. My laboratory experiment indeed shows that employees who believe they have low task efficacy and, thus, face a high risk of termination often forego innovation. But funnels also attract: employees with high efficacy beliefs choose innovation more often although they, too, face an additional, albeit smaller, termination risk. Their innovation choices reveal a preference for allocation regimes that are more likely to spot and reward the ultimately most deserving innovators. Such meritocracy increases alongside project-selection accuracy. The uncertainty of innovation, thus, proves a rare context in which employees view a lack of organizational commitment positively. The meritorious self-sorting I document has implications for motivating risk-taking and organizing innovation within firms.

Keywords: resource allocation strategy; organization design; innovation management (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orstsc:v:7:y:2022:i:4:p:300-316

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