Incentives and Creativity – Enhancing Innovation in Europe’s Knowledge Economies
Project Description:
Ideas and innovations drive the success of companies and even of entire economies. Ultimately, it is a motivated workforce that determines the effectiveness and competitiveness of organizations in knowledge intensive environments. Companies are therefore faced with the question of how to incentivize idea and knowledge creation. To date, there is only a small literature in economics that studies the effectiveness of different kinds of incentives for creative output, and the existing evidence is mixed. The proposed study will build on this literature and provide insights into how creativity is affected by different kinds of rewards.
The project plans to investigate this question using personnel data from a large international software company that has implemented rewards for the generation of new ideas. Furthermore, the analysis will be complemented with an experiment that allows digging deeper into the question if, when and why different rewards affect creativity in a controlled setting. Therefore, a unique non-student sample from the population of Mannheim will be used. The experiment will compare financial and non-financial incentives and will investigate whether the effectiveness of these incentives differs between tasks that do and do not require creative thinking. The results of both studies have important implications for the optimal governance of organizations in knowledge economies.
Duration: April 2011 - September 2012
Research Team:
- Dr. Susanne Neckermann, ZEW – Leibniz Centre for European Economic Research, Department of Labour Markets, Human Resources and Social Policy
- Christiane Bradler, ZEW – Leibniz Centre for European Economic Research, Department of Labour Markets, Human Resources and Social Policy
- Prof. Dr. Dr. h.c. mult. Bruno S. Frey, University of Zurich, Department of Economics and CREMA – Center for Research in Economics, Management and the Arts
- Prof. Michael Gibbs, PhD, University of Chicago Booth School of Business, Department of Economics