Beyond Simple Utility: Incentive Design and Trade-Offs for Corporate Employee-Entrepreneurs

Authors


  • Notice of Prior Presentation: An earlier draft of this paper was presented at the 2006 Babson College Entrepreneurship Research Conference hosted by Indiana University in Bloomington, Indiana.

Erik Monsen, tel.: (+49) 3641-686736; e-mail: monsen@econ.mpg.de.

Abstract

To strengthen the theoretical foundations of incentive system design for corporate entrepreneurship, we develop a moderated model of new venture participation, integrating financial, risk, and effort factors to more comprehensively understand the limits of economic utility maximization theory. We make explicit the trade-offs and opportunity costs for corporate employee-entrepreneurs. We use a conjoint field experiment to collect data on 1952 decisions made by 61 corporate employees to test how risk and effort moderate an employee's decision to participate in a new corporate venture. We find that these factors do interact to affect the choice to engage in corporate entrepreneurship projects.

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