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Dynamics of incentives and value creation in (de-)centralised incentive systems

Zimmermann, N; (2016) Dynamics of incentives and value creation in (de-)centralised incentive systems. International Journal of Entrepreneurial Venturing , 8 (1) pp. 5-23. 10.1504/IJEV.2016.074407. Green open access

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Abstract

When young and small organisations grow into medium-sized organisations they often implement monetary incentive systems with unclear consequences. Whilst implemented to increase employee (innovative) output and value creation, they have ambiguous effects and may even reduce value creation. Due to the different effects of monetary incentives, this paper distinguishes reciprocal and opportunistic employees’ different reactions to incentives. It analyses the effects of decentralised incentive systems – and thus of incentive systems targeted better at opportunistic vs. reciprocal employees – on value creation. Here, it proposes a causal feedback structure explaining opportunistic and reciprocal employees’ different reactions and it investigates by simulation how incentives and value creation interact over time. The analysis reveals that behaviour is not pre-determined by employee disposition. It shows how dynamics evolve dependent on the interrelationships of employee dispositions and the organisational context. As such, it exemplifies the usefulness of studying dynamics of incentive systems and employee behaviour.

Type: Article
Title: Dynamics of incentives and value creation in (de-)centralised incentive systems
Open access status: An open access version is available from UCL Discovery
DOI: 10.1504/IJEV.2016.074407
Publisher version: http://dx.doi.org/10.1504/IJEV.2016.074407
Language: English
Additional information: This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Monetary incentives, incentive system, pay for performance, centralisation, decentralisation, innovation, value creation, organisational dynamics, system dynamics modelling
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Bartlett School Env, Energy and Resources
URI: https://discovery.ucl.ac.uk/id/eprint/1474849
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