2014
DOI: 10.1111/1748-8583.12036
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Can you pay employees to innovate? Evidence from the Canadian private sector

Abstract: Using 7 years of data representing the Canadian private sector, we estimate the effects of the major components of compensation on a rarely studied form of employee performance: innovation. Although there are some limitations inherent in the data, our results indicate the complex motivation required for consistent innovation success. Surprisingly, we find that fixed pay (salary) and individual performance pay have no effect on innovation, while variable group pay and indirect pay (employee benefits) have a pos… Show more

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citations
Cited by 64 publications
(48 citation statements)
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References 43 publications
(59 reference statements)
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“…Amabile et al (1986) explains that employees who are encouraged to achieve a reward will focus attention only on tasks necessary to pursue such an objective. As a result, employees pay less attention to making improvements and are less prone to exchange information to jointly solve problems (Lin 2007;Foss et al 2009;Wickramasinghe and Wickramasinghe 2011;Curran and Walsworth 2014). Our study contributes to HRM literature, suggesting that extrinsic motivators (such as rewards and incentives) are not sufficient to promote learning behaviors and enhance commitment to improvement initiatives.…”
Section: Discussionmentioning
confidence: 76%
“…Amabile et al (1986) explains that employees who are encouraged to achieve a reward will focus attention only on tasks necessary to pursue such an objective. As a result, employees pay less attention to making improvements and are less prone to exchange information to jointly solve problems (Lin 2007;Foss et al 2009;Wickramasinghe and Wickramasinghe 2011;Curran and Walsworth 2014). Our study contributes to HRM literature, suggesting that extrinsic motivators (such as rewards and incentives) are not sufficient to promote learning behaviors and enhance commitment to improvement initiatives.…”
Section: Discussionmentioning
confidence: 76%
“…This is a typical concern of studies that use large samples, which have higher amounts of unobserved heterogeneity, relative to smaller ones. For instance, research that examines HRM practices using large data sets report similar statistics (e.g., Booth, Park, & Glomb, , reported R 2 statistics from .05 to .22; Curran & Walsworth, reported R 2 statistics from .06 to .20). However, as Combs () explained, using larger samples brings benefits; for instance, using a larger sample enables us to obtain higher external validity, reduce the chances of committing a Type 2 error, and provide better estimates of the “real world” in the United Kingdom.…”
Section: Discussionmentioning
confidence: 90%
“…Individual and Collective PRP were measured using by the presence (0 = no; 1 = yes) of “payment by results, that is, piece rates, provisions (i.e., a form of commission typical of the real estate industry), brokerages, or commissions” for individual PRP, and “variable extra pay linked to the results of the company or establishment (profit sharing scheme)” for collective PRP. The use of dummy variables to capture the presence of different forms of PRP is common in compensation literature (e.g., Curran & Walsworth, ; De Spiegelaere et al, ). Our approach has the advantage to focus on specific forms of individual and collective PRP, whereas most of research has used combined indexes, thus making the overall understanding of the related findings quite unclear.…”
Section: Methodsmentioning
confidence: 99%