Wednesday, November 22, 2017 | 2:00pm-3:30pm | Room 335, HSBC Business School Building

Abstract

This paper examines the role of intrinsic incentives and corporate identity in motivating innovation. We show that when innovation is ambiguous, the use of extrinsic, high-powered incentives can deter innovation when it is not complemented with strong intrinsic incentives - the degree of self-motivation, and the extent to which the agent identifies with firm's goals and mission. The paper predicts that extrinsic and intrinsic incentives are not simple substitutes, but play a complementary role in motivating innovation, which explains why many innovative companies that provide generous extrinsic incentives also invest heavily in fostering corporate culture.