lecture 5

Question 1

creativity is (definition)

Answer 1

the ability to produce work that is novel and useful

Question 2

Individual creativity is a function of

Answer 2

Knowledge, intellectual abilities, style of thinking, personality, movitation and environment

Question 3

innovators may have a taste for science: this means

Answer 3

preferences for interactin with discipline specific scientific communities and for receiving recognition for their discovery: they like disclosing and disseminating their research results to the broader scientific community. Scientists/inventors pay a compensating differential to participate in science

Question 4

Firms like science too: this means

Answer 4

it gives them access to new technologies. they may gain productivity benefits in terms of technological innovation and knowledge spillover (higher R&D productivity and a higher rate of technological innovation)

Question 5

Potential conflicts between scientists and firms

Answer 5

While scientists care about the scientific value enerated by their projects, firms care about the commercial value

Question 6

Three key challenges in the management of human capital for innovation

Answer 6

workers objectives do not perfectly align

workers effort is hardly observed directly by managers - hidden action concern

Workers output is hardly unambiguously verified - hard to use as a contractual term

Question 7

autonomy

Answer 7

workers freedom to make decisions within given organizational resource constraints for a specific task

Question 8

Delegation

Answer 8

act of transferring decision rights from the manager to the worker

Question 9

What is lamda in decision making?

Answer 9

Lamda is the portion of decision rights (autonomy) in a project controlled by the worker

Lamda 1 - lamda is the portion controlled by the firm

Question 10

Firms benefit formula

Answer 10

(apha + 1 - lamda)esA

s is workers skill
A is assets
e is effort

where alpha is spillovers

Question 11

workers benefit formula

Answer 11

lamdaesA

Question 12

firms Payoff formula

Answer 12

(alpha + 1 -lamda)esA - p

p = workers salary

Question 13

Workers Payoff

Answer 13

p + lamdaesA - 0.5e^2 (lazy assumption)

Question 14

IF F can observe effort e

Answer 14

the firm does not need to allocate decision rights to the worker lamda(s) = 0 because it can observe her effort and command es such that it is sufficient to compensate the worker for her costt of effort, paying her ps

The worker never obtains a payoff that is greater than her outside option

The firm attracts the worker by using only one instrument the salary p*s

Question 15

IF the firm cannot observe effort e

Answer 15

if the firm holds strong assets and capabilities (A) and moderate spillover (alpha), the personal benefits are sufficient to compensate the worker. To motivate workers, the firm should not release full autonomy to them, nor does it need ot offer them a higher salary

If the firm holds strong assets and capabilities (A) and high spillover (alpha), the firm grants to the worker full autonomy (lamda = 1), because the firm benefits anyway from strong spillover effects. the firm can still compensate and additional payment, p(s) > 0

if the firm has weak assets and capabilities , the project is unlikely to start

Question 16

The challenge of managing human capital for innovation

Answer 16

Loss of control in the industrial research setting means that researchers make decisions according to their own scope, targeting the scientific value of a given project, at the expense of the firms ultimate scope, the commercial value