Why Cash Rewards Don't Always Produce Better Ideas
Analysis of 2,376 observations of individual inventors at publicly listed Chinese firms found that identical financial incentives produced opposite behaviours depending on the inventor's professional identity. Specialists with narrow technical focus produced fewer inventions but ones that were more novel and technically significant; generalists spanning multiple domains responded by increasing volume.
Incentives do not simply raise innovation, they steer what kind of innovation gets pursued — so anyone designing an innovation reward should know whether they are paying specialists or generalists, because the same scheme pulls the two toward depth and breadth respectively.
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