Topic:Compensation Structure and the Creation of Exploratory Knowledge in Technology Firms

Speaker: Dr. Waverly Ding R.H. Smith School of Business, University of Maryland

Time: 15:00-16:30pm, Friday, May 17, 2013

Location:Room 216, No. 2 Building of GSM, Peking University.

Abstract

Given the importance of exploration-oriented innovation, scholars have sought to understand organizational factors that give rise to exploration-oriented innovations. We propose theory and empirical evidence that relates firms’ (i) use of long-term incentives, and (ii) horizontal pay dispersion in R&D divisions to their exploratory innovation performance. We combine a unique unbalanced, 5-year panel dataset of 94 high technology firms in the U.S. with the patent database. Empirical results suggest that firms with high level of horizontal pay dispersion have less exploratory patent innovations. Surprisingly, firms that give pay R&D employees a higher proportion of long-term incentives in total compensation have lower level of exploratory innovation. This implies that long-term incentive plans such as stock options might have weaknesses in their designs or have been misused in practice. We discuss possible factors that might moderate the negative impact of long-term incentives on exploratory innovation.

Bio:

Dr. Waverly Ding is an Assistant Professor of Management & Organization at the University of Maryland's Robert H. Smith School of Business. Dr. Ding earned her MBA and Ph.D. in business from the University of Chicago. Prior to joining the Smith School faculty, she was an assistant professor at Haas School of Business, the University of California at Berkeley. Dr. Ding’s research focuses on high-tech entrepreneurship and strategy, knowledge transfer between universities and industrial firms, and the U.S. biotech industry. She has also conducted research relating to labor force in science and technology. Her work has been published in Science, American Journal of Sociology, Management Science, Journal of Industrial Economics, and Research Policy.

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