Competing Effects of Income Inequality on Corporate Innovation: Incentive and Deprivation
Date
2024
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Business Administration
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This study examines the effect of state income inequality on corporate innovation, focusing on its psychological dimensions. Income inequality is characterized by monetary incentives and relative deprivation. I investigate how these two characteristics of income inequality influence employee motivations, which in turn affects innovation quantity and quality. While monetary incentives boost innovation quantity, relative deprivation primarily hampers innovation quality. However, even when relative deprivation among employees remains low, income inequality can still positively impact both innovation quantity and quality. Policies aimed at reducing deprivation can enhance corporate innovation and contribute to social sustainability.
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Finance, Income inequality, Innovation, Motivation, Relative deprivation, Sustainability
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71 pages
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