Work

Motivating Innovation

Year: 2011

Type: article

Abstract: ABSTRACT Motivating innovation is important in many incentive problems. This paper shows that the optimal innovation‐motivating incentive scheme exhibits substantial tolerance (or even reward) for early failure and reward for long‐term success. Moreover, commitment to a long‐term compensation plan, job security, and timely feedback on performance are essential to motivate innovation. In the context of managerial compensation, the optimal innovation‐motivating incentive scheme can be implemented via a combination of stock options with long vesting periods, option repricing, golden parachutes, and managerial entrenchment.

Source: The Journal of Finance

DOI: 10.1111/j.1540-6261.2011.01688.x

Author: GUSTAVO MANSO

Institutions: University of California, Los Angeles, University of Chicago, Massachusetts Institute of Technology, Columbia University, University of California, Berkeley

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

OpenAlex ID: W4242361829

FWCI: 65.07

Cites: 72

Cited by: 1,966

Related to: 10