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Compensating for innovation: Do small firms offer high-powered incentives that lure talent and motivate effort?

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  • Todd R. Zenger

    (John M. Olin School of Business, Washington University, Campus Box 1133, St. Louis, MO 63130, USA)

  • Sergio G. Lazzarini

    (Ibmec São Paulo, R. Maestro Cardim 1170, São Paulo, SP 01323-001, Brazil)

Abstract

Empirical studies commonly confirm that small firms enjoy efficiency advantages in generating innovation. However, the origin of this advantage remains poorly understood. This study explores the hypothesis that small firms enjoy advantages over large firms in crafting effective, incentive-intensive employment contracts that lure top engineering talent and motivate high effort. These hypotheses are tested using data from a sample of R&D engineers in Silicon Valley and the Route 128 area. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Todd R. Zenger & Sergio G. Lazzarini, 2004. "Compensating for innovation: Do small firms offer high-powered incentives that lure talent and motivate effort?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(6-7), pages 329-345.
    • Handle: RePEc:wly:mgtdec:v:25:y:2004:i:6-7:p:329-345
    DOI: 10.1002/mde.1194
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    References listed on IDEAS

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