Incentive System Design in Creativity-Dependent Firms

Incentive System Design in Creativity-Dependent Firms
Author: Isabella Grabner
Publisher:
Total Pages: 0
Release: 2014
Genre:
ISBN:

I empirically investigate the impact of an organization's creativity dependency on the design of its incentive system. In firms for which the primary source of value creation is the creativity of core employees, the designs of incentive systems are particularly challenging. The nature of creative work constrains the feasibility of extrinsic incentives but at the same time creates a need for them. Accordingly, there is concern that the use of incentives renders people not creative enough, but a lack of incentives makes employees “too creative.” I argue that a solution to this dilemma is the acknowledgment that the decision to use performance-based pay is not made in isolation, but as part of a set of complementary choices. I theoretically argue and empirically show that subjective evaluations of non-task-related performance and performance-based pay are complements in a creativity-dependent setting. I further argue that the intense use of both control mechanisms is the incentive system that best accommodates the control requirements of creativity-dependent firms and show that the likelihood of choosing this system increases with the creativity dependency.

Designing incentives in innovations processes. Gamification as an approach for creating an incentive system for the early stage of the innovation process

Designing incentives in innovations processes. Gamification as an approach for creating an incentive system for the early stage of the innovation process
Author: Lukas Weniger
Publisher: GRIN Verlag
Total Pages: 71
Release: 2020-06-12
Genre: Business & Economics
ISBN: 3346180921

Master's Thesis from the year 2019 in the subject Business economics - Business Management, Corporate Governance, grade: 1,7, Berlin School of Economics and Law, language: English, abstract: Incentive systems can contribute to the best possible exploitation of the employee’s abilities. A new way of setting those incentives and motivating employees is gamification. Gamification is defined as the application of game mechanics to a non-game setting, such as the business environment. Companies have discovered game-like incentives for motivating their employees, and now, this paper tries to create a gamified incentive system for motivating employees in the early stage of the innovation process. Innovation creates value, strengthens the market position and creates competitive advantages. Therefore innovation is widely seen as a critical source for economic success for companies. However, at the same time, innovation is expensive. For example, in 2018 alone, Apple invested as much as 14,24 billion dollars on research and development. This represented around 46% of their total operating expenses and approximately 2,6% of their total revenues. These costs are making it vital for companies to ensure the efficient use of innovation resources. This efficiency is largely determined by the competence, creativity and motivation of the employees working in the area of in research and development (R&D). Thus, companies have to generate adequate motivation in employees to deliver their innovative ideas, obtain a patent and develop the patentable idea into profitable innovation. Human resource (HR) management practices are considered as an essential instrument to fulfil this task. However, standard pay-for-performance schemes, which only reward short-term financial success, are not suitable for fulfilling this task in the innovation process, because innovation processes are likely to fail as they contain a high degree of uncertainty. In standard schemes, this failure would result in penalties by a lower compensation or a possible termination of the contract. This punishment has the potential to harm the innovative behaviour of employees. A company that wants to encourage innovation must design incentive systems that free employees to take risks, experiments and discover what practices and technologies are the most effective. These unique characteristics of innovation processes are the reason why analysing incentive systems in the context of innovation processes is of particular interest. Especially since incentive systems are considered as essential for ensuring the efficiency of innovation processes, as employees adapt their behaviour to these systems.

Design of Incentive Systems

Design of Incentive Systems
Author: Dennis D. Fehrenbacher
Publisher: Springer Science & Business Media
Total Pages: 265
Release: 2013-05-28
Genre: Business & Economics
ISBN: 3642335993

Monetary incentives, as a driving force for human behavior, are the main theme of this book. The primary goals underlying the application of monetary incentive systems in companies are motivating employees to strive for superior productivity in line with the interests of employers, and hiring adequately skilled employees. The first goal refers to incentive effects, the latter to sorting effects. This book introduces important theories and concepts concerning behavior under influence of monetary incentives; it reviews existing economic frameworks and identifies specific contingency variables. Based on an integrative framework of elements influencing incentive and sorting effects, a laboratory experiment is presented including detailed methodological discussion on experimentation and data analysis as well as an extensive presentation of findings and discussion of implications.​

The Oxford Handbook of Strategy Implementation

The Oxford Handbook of Strategy Implementation
Author: Michael A. Hitt
Publisher: Oxford University Press
Total Pages: 553
Release: 2017
Genre: Business & Economics
ISBN: 0190650230

Leading scholars examine the crucial role of implementation influencing how business and managerial strategies produce returns. They focus on governance, resources, human capital, and accounting-based control systems, advancing our understanding of strategy implementation and identifying opportunities for future research on this important process.

Design Elements and Requirements of Incentive Systems in Organizations

Design Elements and Requirements of Incentive Systems in Organizations
Author: Manuel Jacoby
Publisher: GRIN Verlag
Total Pages: 21
Release: 2021-02-09
Genre: Business & Economics
ISBN: 3346343243

Academic Paper from the year 2018 in the subject Leadership and Human Resources - Employee Motivation, grade: 1,3, International University of Applied Sciences, language: English, abstract: If you look for any specific definitions, you will find a huge variation considering the term incentive systems. Weber paraphrases incentive systems as having the aim to encourage employees positively through their performance, with benefits for the organization to reach its stated goals and objectives. In turn, Bartscher identifies incentive systems as the sum of all created working conditions, directly or indirectly to impact the motivation and thus work performance of employees, evoking a certain desired behavior. Coherently, incentive systems aim to control behavior of employees. But they do not only support a certain behavior, such systems additionally are designed to avoid unwanted behavior. Think of any internal regulations which intent to avoid behavior patterns by providing rules and/or punishments. Furthermore, as an example, a low performance might result in a curtailed income and loss of personal reputation.

Innovation Leadership in Practice

Innovation Leadership in Practice
Author: Karina R. Jensen
Publisher: Emerald Group Publishing
Total Pages: 406
Release: 2023-12-07
Genre: Business & Economics
ISBN: 1837533962

Innovation Leadership in Practice provides a unique source of new insights on the role of innovation leadership and effective practices through conceptual models, empirical case studies, development interventions, and tools.

Performance Measure Properties and Incentive System Design

Performance Measure Properties and Incentive System Design
Author: Michael Gibbs
Publisher:
Total Pages: 0
Release: 2009
Genre:
ISBN:

We analyze effects of performance measure properties (controllable and uncontrollable risk, distortion, and manipulation) on incentive plan design, using data from auto dealership manager incentive systems. Dealerships put the most weight on measures that are "better" with respect to these properties. Additional measures are more likely to be used for a second or third bonus if they can mitigate distortion or manipulation in the first performance measure. Implicit incentives are used to provide ex post evaluation, to motivate the employee to use controllable risk on behalf of the firm, and to deter manipulation of performance measures. Overall, our results indicate that firms use incentive systems of multiple performance measures, incentive instruments, and implicit evaluation and rewards as a response to weaknesses in available performance measures.

Information For Efficient Decision Making: Big Data, Blockchain And Relevance

Information For Efficient Decision Making: Big Data, Blockchain And Relevance
Author: Kashi R Balachandran
Publisher: World Scientific
Total Pages: 715
Release: 2020-11-19
Genre: Business & Economics
ISBN: 9811220484

Can there be reliable information that is also relevant to decision making? Information for Efficient Decision Making: Big Data, Blockchain and Relevance focuses on the consolidation of information to facilitate making decisions in firms, in order to make their operations efficient to reduce their costs and consequently, increase their profitability. The advent of blockchain has generated great interest as an alternative to centralized organizations, where the data is gathered through a centralized ledger keeping of activities of the firm. The decentralized ledger keeping is one of the main features of blockchain that has given rise to many issues of technology, development, implementation, privacy, acceptance, evaluation and so on. Blockchain concept is a follow-up to big data environment facilitated by enormous progress in computer hardware, storage capacities and technological prowess. This has resulted in the rapid acquiring of data not considered possible earlier. With shrewd modeling analytics and algorithms, the applications have grown to significant levels. This handbook discusses the progress in data collection, pros and cons of collecting information on decentralized publicly available ledgers and several applications.

Does Feedback Matter? The Impact of Incentive Type and Feedback on Creativity

Does Feedback Matter? The Impact of Incentive Type and Feedback on Creativity
Author: Alisa Gabrielle Brink
Publisher:
Total Pages: 48
Release: 2020
Genre:
ISBN:

Accounting research on the effects of incentives on creativity finds that paying for quantity of output yields the same level of high-creativity output as paying for only creativity or for both creativity and quantity (Kachelmeier et al. 2008). This finding is surprising and counter to economic theory, which suggest multi-dimensional performance measurement systems should lead to superior performance. However, research thus far has not examined whether the results hold up in the context of feedback. Feedback has the potential to change the effect of performance dependent incentives on creativity because it informs individuals about the success (or failure) of their prior task completion strategies. We use an experiment to investigate how feedback and incentive type influence creativity in a two-round setting. Our study examines the effect of feedback on output when incentives are fixed or incentivize either creativity-only, quantity-only, or quantity and creativity. We find that, after feedback, incentives with a quantity component (e.g., quantity-only and quantity and creativity incentives) result in superior production of high-creativity output compared to fixed or creativity-only incentives.

The Routledge Handbook of Public Sector Accounting

The Routledge Handbook of Public Sector Accounting
Author: Tarek Rana
Publisher: Taylor & Francis
Total Pages: 433
Release: 2023-11-03
Genre: Business & Economics
ISBN: 1000967190

The Routledge Handbook of Public Sector Accounting explores new developments and transformations in auditing, management control, performance measurement, risk management and sustainability work in the contemporary world of the public sector and the functioning of accounting and management in that realm. It focuses on critical analysis and reflection with respect to changing risk and crisis management patterns in the public sector in the current Covid- 19 and post- Covid- 19 era, across diverse social, political and institutional settings globally. This research-based edited book, targeted at scholars, professionals, teachers and consultants inthe fields of public sector accounting, auditing, accountability and management, offers high-level insights into the new architecture and execution of such activities in the emerging post-pandemic world. The chapters are written by leading scholars in the accounting and public administration disciplines internationally and provide important assessments, frameworks and recommendations concerning a wide variety of institutions, practices and policies with a view to addressing the many emerging societal, governmental and professional issues. Spanning theoretical, empirical and policy discussion contributions, the book’s chapters will be readily accessible to accounting, auditing and management audiences alike.