Compensating for Innovation: Do Small Firms Offer High- Powered Incentives that Lure Talent and Motivate Effort?

Posted: 12 Jun 1997

See all articles by Todd Zenger

Todd Zenger

University of Utah

Sérgio G. Lazzarini

Insper Institute of Education and Research

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.

Keywords: incentives; diseconomies of scale; small firms; innovation; adverse selection

JEL Classification: J33, J41, M40, M46

Suggested Citation

Zenger, Todd R. and Lazzarini, Sérgio Giovanetti, Compensating for Innovation: Do Small Firms Offer High- Powered Incentives that Lure Talent and Motivate Effort?. Managerial and Decision Economics, Vol. 25, pp. 329-345, 2004. Available at SSRN: https://ssrn.com/abstract=8501

Todd R. Zenger (Contact Author)

University of Utah ( email )

David Eccles School of Business
1655 East Campus Center Drive
Salt Lake City, UT 84112
United States
801 585-3981 (Phone)
801 581-7939 (Fax)

Sérgio Giovanetti Lazzarini

Insper Institute of Education and Research ( email )

R Quata 300
Sao Paulo, 04542-030
Brazil
55-11-45042387 (Phone)

HOME PAGE: http://www.sergiolazzarini.insper.edu.br/indexelazza.html

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