The Effect of Reward Systems on the Development of Patents in High Technology Firms

Date of Submission

1990

Document Type

Dissertation

Degree Name

Doctor of Science in Management Systems (Sc.D.)

Department

Management

Advisor

Lynn W. Ellis

Committee Member

Judith A. Neal

Committee Member

William Pan

LC Subject Headings

Patents--United States, High technology industries--United States, Incentives in industry--United States, Research,Industrial--United States

Call No. at the Univ. of New Haven Library

AS36 .N290 Mgmt. Syst. 1991 no.2

Abstract

In response to a call by entrepreneurial researchers for research on reward systems, one of six major constructs identified in the literature on entrepreneurship, this study investigated the relationship of the development of patents to the reward systems for individual R&D personnel in high-technology firms.

This relationship, critical to the management of growth, creativity and productivity, was investigated using a sample of high-technology firms in Connecticut.

Survey research methodology was designed to yield descriptive data generated by the highest ranking technical officers in the sample firms. Thirty-three of these were small firms and 20 were large firms having a "patent-culture.” Twenty-nine were "non-patent- culture firms." Of particular interest in this study were the small high-technology firms.

This data was used to build a theoretical model to test whether certain types of rewards seem to motivate patent output by individuals. Both variable bonuses and informal or unpublicized awards were each shown to have increased patent output by around 30 percent. Sustained levels of R&D investment increased patent output at a decreasing rate as investment became larger. The inclusion in the model of both R&D and firm size with the significant rewards increased patent output but at a decreasing rate as firm size and investment increased. The operationalized form of the model, when tested on the small firm subset, produced results consistent with the patent-culture sample, although only variable bonuses were significant as rewards.

The effects of the two types of rewards, one monetary and one nonmonetary, were shown to be additive in the model and thus independently increased the number of patents.

This study established a quantitative relationship between patent output and firm size confirming diseconomies of scale suggesting that patent output grows at a slower rate than firm size.

This research also found that although somewhat collinear with firm size, R&D investment is sufficiently distinguishable as a major variable so that it ought to be included in any subsequent analysis.

This study calls for replication of the theoretical model to other samples of small high-technology firms and for application to the design of incentive systems in large "patent-culture" and R&D intensive firms.

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