Pay-for-performance incentives may put innovation at risk

Managers looking to create social conditions that lead to open, diversified and large networks—which are known to spur innovation—should avoid implementing pay-for-performance incentives that rest on short-term and quantitative performance metrics. According to new research published in Strategic Management Journal, such pay incentives result in more closed and smaller networks in organizations, suggesting that managers can use incentive plans to design innovation networks in their organizations.

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