The effectiveness of reward systems on innovative output: An empirical analysis

This study investigated the relationship of patent output to the reward systems for individual R&D scientists in high technology firms. A survey of technical managers in 57 Connecticut firms collected information on firm size, R&D expenditure, and the frequency of use of eighteen different reward systems. Using a regression model, patent output was found to be dependent on firm size, R&D expenditure, and on monetary and non-monetary reward systems, informal award programs and variable bonuses based on the issue of patents. When a subset of small firms was investigated separately, non-monetary rewards were shown to be ineffective. However, variable bonuses remained important to patent output and large sum reward payments ($50,000) also demonstrated a significant effect.