Intrinsic and Extrinsic Motivations of Inventors

This paper theoretically and empirically evaluates the relationship between the strength of inventors' motives and their productivity, and the interaction between intrinsic and extrinsic motivation. For our empirical analyses, we use novel data from a survey of Japanese inventors on 5,278 patents conducted by the Research Institute of Economy, Trade and Industry (RIETI) in 2007 matched with a firm-level survey of remuneration policies for employee inventions conducted by the Institute of Intellectual Property (IIP) in 2005. The RIETI survey contains rich information about inventors, patents, and project characteristics, as well as two new measures of inventor productivity. Our study first reveals that satisfaction from contributing to science and technology and interest in solving challenging technical problems are highly associated with inventor productivity. Most notably, the science motivation measure has the largest and the most significant correlation with our measures of inventor productivity. Science orientation may be strongly associated with high R&D productivity because early access to scientific discoveries gives inventors an advantage or because interest in science correlates with inventive ability. However, careful analysis using additional measures of knowledge spillovers from academia and a proxy of inventor ability find little support for either explanation. This result makes the third explanation (science orientation) plausible, that is, the above two task motives simply encourage researchers to dedicate themselves to challenging projects. In order to explore further and based on our interpretation of motivation mentioned above, we present a principal-agent model where the agent selects the type of research projects and exerts effort in the presence of monetary incentives. The model offers the following two empirical implications: (a) firms with many intrinsically motivated employees are less likely to introduce revenue-based pay; and (b) the average value of patents is more positively correlated with the strength of intrinsic motivation in the absence of revenue-based pay than in its presence. Finally, we test the above empirical implications using the matched dataset from the RIETI and IIP surveys and we find little significant support for either prediction. We offer possible explanations for the result.