Rewarding employee inventions in corporations

Abstract

PurposeReasonable remuneration of employee inventions is a controversial issue causing court litigations among employees and employers in many countries. The paper aims to shed light on the missing economic interpretation of the reasonable remuneration of employee inventions. Specifically, it focuses on the concept of “reasonability” at the issue.Design/methodology/approachIn an empirical qualitative multiple case-study setting, the paper explores inductively Czech corporate employee inventors' remuneration systems, using typological analysis and M. Weber's interpretative theoretical construct of “ideal type.”FindingsAt the first level, reasonability is a function of multi-amount rewarding, a certain level of total remuneration and identifiable benefits being a decisive factor. Additionally, the reasonability is conceptualised as a function of two dimensions – timing/risk and benefit–reward relation. At the second level, the reasonability is interpreted as a concept balancing seven points of view: timing, materiality, equity, risk management, transparency, system costs and exactness. At the third level, the paper offers an optimal remuneration system like the one that optimises developed seven-criterion framework.Research limitations/implicationsEven if analysed within one-country and nine-company context, the insights are generalisable across a broader sample of countries with statutory rules for employee inventions. Studying more cases may enrich the findings. The findings are based merely on a rational perspective and do not deal with psychological aspects of employees.Practical implicationsThe results may be helpful for intellectual property or R&D managers in building or reorganising employee invention remuneration systems within corporations. The developed seven-criteria model can serve as a discussion framework; the suggested optimal system as a reference point. The results may serve as well to consultants, judges or other parties involved in currently growing employee–employer controversies and litigations. The analysis may fuel public policy decisions, too.Originality/valueThe paper brings unique and detailed empirical insights into the issue of employee inventions. It offers a complex multi-perspective (employee/employer) framework through which the reasonability can be discussed and suggests an optimal system, which can serve as a reference point.

Remuneration of Employee Inventions: Building a Typology of Existing Approaches

“…The given results can also be explained by the concept of equifinality, often observed in typologies [53], meaning that an equivalent result (adequate remuneration system) can be reached in several ways. Research carried out at the level of individual organizations of one country [58] also suggests the samethe variability of ways how to comply with one given statutory rules.…”

“…At the same time, the selection is made in such a way that it is varied in terms of the size of the countries (we used GDP data from World bank), in terms of different legal systems, etc., so that several recognizable types can subsequently be identified in such a sample (cf. a similar strategy in [58]. We excluded from the study countries with strong authoritarian political leadership as they may have various specifics not comparable across analyzed market-economy countries.…”

“…Within this framework, many authors examine the relationship between the amount of remuneration (as an incentive) and the number and quality of inventions produced by employees, in the private [36,[42][43][44][45] or public [46,47] sector. The same framework also includes the examination of the relationship between the amount of remuneration and the number of inventions disclosed by employees to employers [48,49].…”

The Paradox of Public Service Innovation amid Regional Autonomy in Indonesia

“…According to Kim & Lee (2009), this form of appreciation includes incentives, promotions, and others. This means that system rewards can be provided through money or non-material means (Sva, 2021).…”

The impact of performance-based rewards and developmental performance appraisal on innovation: the mediating role of innovative work behaviour

“…According to SET, the introduction of rewards that recognise efforts and contributions to promoting innovation or engaging in higher job demands is likely to increase participation in the activities associated with both incremental and radical innovation (Svačina, 2021). Liao (2006) found that output-oriented rewards can have a negative impact on product innovation.…”