Two staged incentive contract focused on efficiency and innovation matching in critical chain project management

Abstract

This paper analyzes a two staged incentive contract coordinated with efficiency and innovation in Critical Chain Project Management using learning real options, based on principle-agent theory. The situational experiment is used to detect the validity check of this basic model. Finding: The two staged incentive scheme is more suitable for employees to create and implement learning real options, which will throw themselves into innovation process efficiently in the situation of Critical Chain Project Management. We prove that the combination of tolerance for early failure and reward for long-term success is effective in motivating innovation.

The nexus of project management approaches in sustainable development: innovative behaviors as a mechanism in the Polish financial industry

“…The results also enrich the scant evidence on the antecedents of innovative behaviors in projects. The extant project management literature shows that incentive contracts (Zhang and Jin, 2014), slack resource availability (Horsthuis et al. , 2012), financial resource constraints, team climate (Weiss et al.…”

Cultivando talentos de inovação estratégica em organizações estabelecidas: o papel das práticas de gestão de recursos humanos.

“…While some scholars advocate that established firms should offer differentiated incentives for individuals who work with innovation, taking into account the individual's contribution (Koberg et al, 1996), rewarding long-term success, encouraging intellectual experimentation, and providing rich feedback (Zhang & Jin, 2014), in order to lead to higher levels of strategic innovation. Others claim that strategic innovation is collaboratively developed, and rewards based on individual performance may lead to a competitive environment, inhibiting cooperation, and information sharing.…”

“…Whereas many papers claim that financial incentives can have a positive impact on the development of strategic innovation (Andreeva et al, 2017;Hebda et al, 2012;Leifer et al, 2000;Marvel et al, 2007;O'Connor & McDermott, 2004;Thneibat et al, 2022), for Beugelsdijk (2008) Marx et al (2016) declare that a reward system implementation aimed at strategic innovation needs a genuine intent to innovate from the firm, represented by solid support from the TMT; an alignment with other HR processes for innovation, reinforcing the same messages for employees; a strong involvement of the low and middle managers in the rewards system's design; and to prepare employees for the use of risk rewards, using clear communication, training, and impact analysis to manage changes. Zhang & Jin (2014) proposed a situational experiment to be used as training to deal with strategic innovation challenges. The experiment is an innovation-motivating incentive scheme that displays substantial tolerance for early failure and reward for long-term success.…”

“…In addition, there are incentives for proactively developing opportunities or through company-sponsored idea programs, which encourage intellectual experimentation (Zhang & Jin, 2014).…”

“…Many papers analyzed the concomitant use of HRM practices, but no consensus has been reached since the presented combinations differ (Aagaard & Andersen, 2014;Andreeva et al, 2017;Farouk et al, 2016;Kelley et al, 2011;O'Connor et al, 2018;Zhang & Jin, 2014). Some papers highlighted the role of the TMT in strategic innovation management and development (Bruneel et al, 2012;Cho & Kim, 2017;Kanchanabha & Badir, 2021;Kelley et al, 2011;Marx et al, 2016;O'Connor et al, 2018).…”