Intrinsic and Extrinsic Motivation for Inventors

This paper evaluates the sources of inventor motivation, their impacts on inventor productivity, and the interaction between intrinsic and extrinsic motivations using novel data from a survey of Japanese inventors on 5,278 patents conducted by Research Institute of Economy, Trade and Industry (RIETI) in 2007. Our study reveals that two intrinsic motives--satisfaction from contributing to science and technology “taste for science”, and interests in solving challenging technical problems “taste for challenge”--are more important determinants for the inventor productivity than any other motives. Although it is sometimes argued that hiring those with strong science orientation can increase the absorptive capacity of the firm, we cannot find any strong support for this absorptive capacity explanation. To measure the incentive effect of monetary compensation for inventions, we estimate treatment effect models and find some evidence that monetary rewards may be raising the inventor productivity where they are introduced. However, our analyses also suggest that monetary compensation may be “crowding out” taste for science. More specifically, we show that (1) a successful introduction of monetary rewards is less likely where inventors have strong “taste for science”, and (2) the effect of “taste for science” on patent value is smaller in the presence of monetary rewards. One interpretation of the result is that inventors who otherwise pursue risky projects aimed at technological leap might shift to safer and predictable projects in the presence of monetary incentives. The “crowd-out” effect found in this paper also implies that the correlation between the R&D productivity and the “taste for science” is caused by its motivational effect rather than simple correlation between the “taste for science” and the inventor ability. *Professor, Graduate School of International Management, Aoyama Gakuin University, 4-4-25 Shibuya, Shibuya-ku, Tokyo 150-8366 Japan, Fax +81-3-3409-4167, Email: [email protected] **Professor, Institute of Innovation Research, Hitotsubashi University, 2-1, Naka, Kunitachi Tokyo 186-8601 Japan, Fax +81-42-580-8410, Email: [email protected]