The effects of compensation plans for employee inventions on R&D productivity: New evidence from Japanese panel data

► I report the first results regarding the effects of compensation plans for employee inventions on R&D productivity. ► I use mainly system GMM to examine the effect of compensation plans. ► Revenue-based compensation plans based on patent performance lead to an increase in the number of high cited patents. ► Revenue-based compensation plans has a larger effect on patent quality in smaller firms ► These results indicate that monetary incentives is effective on the motivation of employee inventors.