IDEAS home Printed from https://ideas.repec.org/a/taf/ecinnt/v15y2006i7p665-678.html
   My bibliography  Save this article

Contribution-proportional remuneration rule for employee inventions and its effects on effort and investment incentives

Author

Listed:
  • Yoshihito Yasaki
  • Akira Goto

Abstract

The practice of the Japanese court in case of a dispute between the employer and employee regarding the amount of remuneration for an employee invention has been to order that the additional profit from the invention be divided proportionally to their respective input contributions. We show that, if the employer's investment and employee's effort are weakly complementary, this rule causes the share effect (excessive incentives on the part of each party to expend investment or effort in order to increase his/her share of the surplus) to dominate the probability effect (insufficient incentives arising from the fact that each party obtains only part of the increase in the expected surplus), and thus leads to excessive investment and effort relative to the joint-payoff-maximising levels. If the court cannot capture the employer's investment as fully as the employee's effort, the employer's investment may be too low compared to the joint-payoff-maximising level.

Suggested Citation

  • Yoshihito Yasaki & Akira Goto, 2006. "Contribution-proportional remuneration rule for employee inventions and its effects on effort and investment incentives," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(7), pages 665-678.
    • Handle: RePEc:taf:ecinnt:v:15:y:2006:i:7:p:665-678
    DOI: 10.1080/10438590500418976
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/10438590500418976
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10438590500418976?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Aghion, Philippe & Tirole, Jean, 1994. "Opening the black box of innovation," European Economic Review, Elsevier, vol. 38(3-4), pages 701-710, April.
    2. Philippe Aghion & Jean Tirole, 1994. "The Management of Innovation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 1185-1209.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nisvan Erkal & Deborah Minehart, 2007. "Optimal Sharing Strategies in Dynamic Games of Research and Development," EAG Discussions Papers 200707, Department of Justice, Antitrust Division.
    2. Guido Cozzi & Silvia Galli, 2014. "Sequential R&D and blocking patents in the dynamics of growth," Journal of Economic Growth, Springer, vol. 19(2), pages 183-219, June.
    3. Maurseth, Per Botolf & Svensson, Roger, 2020. "The Importance of Tacit Knowledge: Dynamic Inventor Activity in the Commercialization Phase," Research Policy, Elsevier, vol. 49(7).
    4. Jose E. Gomez-Gonzalez & Oscar Mauricio Valencia, 2014. "Innovation and Growth under Private Information," Borradores de Economia 845, Banco de la Republica de Colombia.
    5. Guido Cozzi & Silvia Galli, 2009. "Upstream Innovation Protection: Common Law Evolution and the Dynamics of Wage Inequality," Working Papers 2009_20, Business School - Economics, University of Glasgow.
    6. María Morales, 2004. "Research policy and endogenous growth," Spanish Economic Review, Springer;Spanish Economic Association, vol. 6(3), pages 179-209, October.
    7. Schmitz, Patrick W., 2012. "The hold-up problem, innovations, and limited liability," Economics Letters, Elsevier, vol. 117(3), pages 841-843.
    8. Shungo Sakaki, 2019. "Equality in Income and Sustainability in Economic Growth: Agent-Based Simulations on OECD Data," Sustainability, MDPI, vol. 11(20), pages 1-32, October.
    9. Dechenaux, Emmanuel & Thursby, Marie & Thursby, Jerry, 2009. "Shirking, sharing risk and shelving: The role of university license contracts," International Journal of Industrial Organization, Elsevier, vol. 27(1), pages 80-91, January.
    10. Aikaterini KOKKINOU, 2010. "Economic growth, innovation and collaborative research and development activities," Management & Marketing, Economic Publishing House, vol. 5(1), Spring.
    11. Eva I. Hoppe & Patrick W. Schmitz, 2013. "Public-private partnerships versus traditional procurement: Innovation incentives and information gathering," RAND Journal of Economics, RAND Corporation, vol. 44(1), pages 56-74, March.
    12. Schmitz, Patrick W., 2019. "Incomplete contracts, limited liability, and the optimality of joint ownership," Economics Letters, Elsevier, vol. 183(C), pages 1-1.
    13. Kanatas George & Stefanadis Christodoulos, 2010. "Can Venture Capital Be a Curse?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-28, July.
    14. Richard Jensen & Marie Thursby, 1998. "Proofs and Prototypes for Sale: The Tale of University Licensing," NBER Working Papers 6698, National Bureau of Economic Research, Inc.
    15. Oscar Mauricio Valencia, 2014. "Endogenous Growth and Research Activity under Private Information," Borradores de Economia 12169, Banco de la Republica.
    16. Kusterer, David J. & Schmitz, Patrick W., 2017. "The management of innovation: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 104(C), pages 706-725.
    17. repec:bla:scotjp:v:56:y:2009:i:s1:p:474-491 is not listed on IDEAS
    18. Patrick Legros & Andrew F. Newman & Eugenio Proto, 2014. "Smithian Growth through Creative Organization," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 796-811, December.
    19. Ozgur Aydogmus & Erkan Gürpinar, 2022. "Science, Technology and Institutional Change in Knowledge Production: An Evolutionary Game Theoretic Framework," Dynamic Games and Applications, Springer, vol. 12(4), pages 1163-1188, December.
    20. Schmitz, Patrick W., 2021. "On the optimality of outsourcing when vertical integration can mitigate information asymmetries," Economics Letters, Elsevier, vol. 202(C).
    21. Jarle Moen, 2005. "Is Mobility of Technical Personnel a Source of R&D Spillovers?," Journal of Labor Economics, University of Chicago Press, vol. 23(1), pages 81-114, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ecinnt:v:15:y:2006:i:7:p:665-678. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/GEIN20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.