Samuel Bowles has written a very nice article on the March issue of HBR, When Economic Incentives Backfire.

From the article:

Organizations and societies rely on fines and rewards to harness people’s self-interest in the service of the common good. The threat of a ticket keeps drivers in line, and the promise of a bonus inspires high performance. But incentives can also backfire, diminishing the very behavior they’re meant to encourage.
 

Samuel Bowles (his home page is here) is Research Professor and Director of the Behavioral Sciences Program, Santa Fe Institute and Professor of Economics, University of Siena.

He has written several books, among them Microeconomics: Behavior, Institutions, and Evolution; the Italian version is available  free online.

Italian design firm Alessi has evolved from a local housewares factory into an international organization, collaborating with well-known designers including Michael Graves, Aldo Rossi, and Philippe Starck. 

The McKinsey Quarterly has interviewed the CEO of Alessi design,  Alberto Alessi,  the third generation to lead his family’s iconic design firm. Founded and still based in Crusinallo, about an hour north of Milan, Italy, the firm remains privately owned.  Cultivating innovation: An interview with the CEO of a leading Italian design firm.

After the interview in February 2009, The McKinsey Quarterly presents in March 2009, a multimedia article where  it explores how design firm Alessi manages innovation—from working with collaborators, to how design constraints help shape products, to assessing new innovations’ potential. Managing innovation: Pages from Alessi’s handbook.