We use a novel panel data set of corporate inventors matched with their employers in Japan to examine the effects of output-based financial incentives on corporate inventors’ performance. We exploit heterogeneous industry responses to Japanese court decisions that forced Japanese firms to introduce stronger incentives. We show, first, that only industries facing a high risk of employee-inventor lawsuits adopted or significantly strengthened financial incentives based on the commercial success of inventions in response to the court decisions. Our estimations reveal that stronger financial incentives in such industries reduced the number of highly cited patents and significantly decreased the incidence of science-based patents after technology-specific year effects are controlled for. These results show that the compulsion to remunerate employee-inventors on the basis of the commercial success of their inventions could distort the efficiency of corporate research and development and illustrate the importance of contracting freedom.

中文翻译：

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发明者如何应对财务激励？来自日本法院对雇员发明的意外判决的证据

我们使用与日本雇主匹配的企业发明人面板数据集来检验基于产出的财务激励对企业发明人绩效的影响。我们利用异质行业对日本法院判决的反应，这些判决迫使日本公司引入更强有力的激励措施。首先，我们表明，只有面临员工-发明人诉讼高风险的行业才会根据法院判决的发明商业成功而采用或显着加强财务激励措施。我们的估计表明，在控制了特定技术年份的影响后，此类行业更强的财务激励减少了高被引专利的数量，并显着降低了基于科学的专利的发生率。