Research on the Impact of Schumpeterian Competition and Product Innovativeness on Innovation Incentives

Abstract

Building on the consensus that residual claim is the core of innovation incentives, this study extends the conceptual framework by incorporating contract duration and organizational form as key strategic variables. Drawing on data from 521 firms, we examine how Schumpeterian competition intensity and product innovativeness influence these incentive mechanisms. Our findings indicate that: (1) higher competition and innovativeness necessitate shorter contract durations; (2) integrated teams are optimal for high-innovativeness products, while specialized teams suit polarized innovation structures; (3) residual claim allocation should decrease as competition and product innovativeness intensify. This research contributes to innovation management by integrating external competitive pressures and internal organizational structures into a unified incentive design framework. By examining how incentive institutions can accelerate the pace and direct the direction of product innovation, this study offers insights for fostering sustainable innovation. Effective innovation incentive design not only enhances firms’ competitive resilience but also facilitates the timely development and diffusion of products that meet evolving social needs, thereby contributing to broader sustainability goals.