The Management of Innovation: Experimental Evidence

Patrick Schmitz and David Kusterer

No 11215, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We report data from a laboratory experiment with 566 participants that was designed to test Aghion and Tirole's (1994a) management of innovation theory. A research unit and a customer can invest to increase the probability of making an innovation. When the innovation is made, the parties bargain over the division of the revenue. In line with Aghion and Tirole's (1994a) predictions based on the Grossman-Hart-Moore property rights approach, we find that ownership matters for the division of the revenue and the investments. However, communication can somewhat mitigate the theoretical problem that the customer will not relinquish ownership to the cash-constrained research unit.

Keywords: Property rights; Incomplete contracts; Investment incentives; Laboratory experiments (search for similar items in EconPapers)
JEL-codes: C92 D23 D86 O32 (search for similar items in EconPapers)
Date: 2016-04
New Economics Papers: this item is included in nep-cta, nep-exp, nep-ino and nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: The management of innovation: Experimental evidence (2017)
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