Beyond Simple Utility: Incentive Design and Trade–Offs for Corporate Employee–Entrepreneurs

Abstract

To strengthen the theoretical foundations of incentive system design for corporate entrepreneurship, we develop a moderated model of new venture participation, integrating financial, risk, and effort factors to more comprehensively understand the limits of economic utility maximization theory. We make explicit the trade–offs and opportunity costs for corporate employee–entrepreneurs. We use a conjoint field experiment to collect data on 1952 decisions made by 61 corporate employees to test how risk and effort moderate an employee's decision to participate in a new corporate venture. We find that these factors do interact to affect the choice to engage in corporate entrepreneurship projects.