Category Archives: Innovation

Innovation “quid pro quo”: firms that treat workers better are more innovative

In my previous post, I described studies showing that giving stock option grants to both executive and non-executive employees fosters innovation, which points to the important role compensation plays in defining corporate innovation performance. However, compensation is only one factor … Continue reading

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Innovate today, get paid tomorrow

Theoretical analysis conducted by Gustavo Manso in 2011 suggests that the optimal incentives motivating employees to innovate must include a combination of tolerance for failures in the short term and reward for success in the long. Tolerance for early failures allows … Continue reading

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Are you innovating? We won’t be paying you today!

A solid body of evidence, from both controlled laboratory experiments and field studies, shows that compensation based on the pay-for-performance (P-f-P) principle—when individuals receive a fixed percentage of the profits resulted from their activities–is effective in inducing higher levels of … Continue reading

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One more time about “innovation terminology”

In a recent HBR article, Scott Kirsner suggests ditching the term “corporate entrepreneur.” Kirsner names a number of reasons why corporate innovation, especially in large firms, is different from true entrepreneurship. One is bureaucratic shackles that restrict the development of … Continue reading

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Freedom to fail, freedom to innovate

(This post originally appeared on InnovationManagement.se) Everyone seems to agree that innovation is a risky business: it involves a lot of experimentation, which often ends up in failure. High tolerance for failure, therefore, can be considered as a major prerequisite for … Continue reading

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Innovation and VC investors

Academic research provides abundant empirical evidence suggesting that corporate and socio-economic policies tolerating failure, both at individual and firm levels, foster innovation. For example, labor laws limiting firms’ ability to discharge employees at will were shown to stimulate corporate innovation. … Continue reading

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Innovation and bankruptcy

Recently, I described academic studies suggesting that corporate innovation is fostered by labor laws that limit firms’ ability to discharge employees at will. These studies provide support to the idea that the best way to encourage risk-taking and experimentation is … Continue reading

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