Managing Autonomy in Industrial Research and Development: A Project-Level Investigation

Abstract

Management practices explain an important part of the heterogeneity in firm productivity, but the literature has largely focused on manufacturing, while leaving out research in the industrial setting. A key managerial practice in industrial research projects is the use of autonomy (through the delegation of decision rights). Our paper clarifies the drivers and the effects of autonomy in settings where other managerial instruments are less effective. We discuss that in industrial research projects, autonomy is set for efficiency reasons—autonomy allows researchers to make more competent decisions about a specific problem—as well as for motivational considerations—autonomy motivates researchers to exert greater effort. We also argue that project-relevant capital—the resources that enhance the productivity of researchers on a given project—is a key driver of autonomy. We theorize that the efficiency and motivational channels have opposite implications for the relationship between project-relevant capital and autonomy and find that, empirically, this relationship is U-shaped, which is suggestive evidence of the presence of both channels.