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| Author: | Makri, M. Lane, P.J. Gomez-Mejia, L.R. |
| Title: | CEO incentives, innovation, and performance in technology-intensive firms: a reconciliation of outcome and behavior-based incentive schemes |
| Journal: | Strategic Management Journal
2006 : NOV, VOL. 27:11, p. 1057-1080 |
| Index terms: | chief executive officers PAY INCENTIVES innovation technology |
| Language: | eng |
| Abstract: | Based on the agency view of corporate governance, this paper proposes that technology-intensive firms use both outcome and behaviour-based performance criteria for rewarding CEOs. A sample of 206 firms from 12 US manufacturing indusries suggests that as technological intensity increases CEO bonuses are more closely linked to financial results and that total CEO incentives are associated with two indicators of desirable innovation behaviours: invention resonance and science harvesting. Invention resonance refers to the impact a firm's inventions have on other firms' inventions, whereas science harvesting reflects a firm's commitment to scientific research. As technological intensity increases, aligning bonus with financial performance, total incentives with invention resonance, and total incentives with science harvesting predict firm market performance. |
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