Knowledge Spillovers, Competition, and R&D Incentive Contracts
Nicola Lacetera and
Lorenzo Zirulia
Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna
Abstract:
This paper models the optimal provision of incentives to corporate scientists, within an environment where effort is multidimensional, firms compete on the product market, knowledge spills over across companies, and scientists have both monetary and non-monetary motivations. The simultaneous consideration of these aspects generates a number of novel results. First, knowledge spillovers lead firms to soften incentives in order not to bene.t competitors, but only when product market competition is high. By contrast, greater knowledge spillovers positively affect the provision of incentives when competition is low. Second, the relationship between the intensity of competition and the power of incentives is U-shaped, and the region where the relationship is positive is smaller the higher the knowledge spillovers. Finally, both the incentives for applied and basic research increase with non-pecuniary benefits scientists obtain from basic research, while a trade-o between monetary pay and non-monetary rewards may occur at the level of the fixed salary. These results provide a novel interpretation of some observed R&D organizational choices by companies, offer insights for the management of scientific and other creative workers, and have implications for public policy.
Date: 2008-01
New Economics Papers: this item is included in nep-com, nep-cta, nep-ipr, nep-pr~, nep-knm, nep-mic and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)
Downloads: (external link)
http://amsacta.unibo.it/4626/1/624.pdf (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:624
Access Statistics for this paper
More papers in Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna Contact information at EDIRC.
Bibliographic data for series maintained by Dipartimento Scienze Economiche, Universita' di Bologna ().