O INSPER E ESTE REPOSITÓRIO NÃO DETÊM OS DIREITOS DE USO E REPRODUÇÃO DOS CONTEÚDOS AQUI REGISTRADOS. É RESPONSABILIDADE DO USUÁRIO VERIFICAR OS USOS PERMITIDOS NA FONTE ORIGINAL, RESPEITANDO-SE OS DIREITOS DE AUTOR OU EDITORBarros, Henrique MachadoSERGIO GIOVANETTI LAZZARINI2023-07-132023-07-132009https://repositorio.insper.edu.br/handle/11224/5754We investigate whether meritocracy affects firms’ innovation performance. More specifically, we empirically evaluate the prediction that the use of higher performance-based pay and promotion should lead to a higher percentage of firm revenues coming from innovations in products and services. To test this prediction, we employ a survey of 370 Brazilian firms in a broad range of industries. Our two-stage regressions, devised to account for potential endogeneity, indicate that while the use of performance-based promotion strongly affects innovation, the effect of contingent pay is marginal. Apparently, the long-term feature of promotion-based meritocracy is more effective to tap into individuals’ creativity than is short-term pay. Our study sheds light on the debate about how organizational practices can affect the innovative potential of firms.31 p.DigitalInglêsworking paperinnovationincentivesmeritocracycompensationpromotionBEWP 072/2009