Advanced Search
MyIDEAS: Login to save this article or follow this journal

Innovation Contests, Open Innovation, and Multiagent Problem Solving

Contents:

Author Info

  • Christian Terwiesch

    ()
    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

  • Yi Xu

    ()
    (Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742)

Registered author(s):

    Abstract

    In an innovation contest, a firm (the seeker) facing an innovation-related problem (e.g., a technical R& D problem) posts this problem to a population of independent agents (the solvers) and then provides an award to the agent that generated the best solution. In this paper, we analyze the interaction between a seeker and a set of solvers. Prior research in economics suggests that having many solvers work on an innovation problem will lead to a lower equilibrium effort for each solver, which is undesirable from the perspective of the seeker. In contrast, we establish that the seeker can benefit from a larger solver population because he obtains a more diverse set of solutions, which mitigates and sometimes outweighs the effect of the solvers' underinvestment in effort. We demonstrate that the inefficiency of the innovation contest resulting from the solvers' underinvestment can further be reduced by changing the award structure from a fixed-price award to a performance-contingent award. Finally, we compare the quality of the solutions and seeker profits with the case of an internal innovation process. This allows us to predict which types of products and which cost structures will be the most likely to benefit from the contest approach to innovation.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://dx.doi.org/10.1287/mnsc.1080.0884
    Download Restriction: no

    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 54 (2008)
    Issue (Month): 9 (September)
    Pages: 1529-1543

    as in new window
    Handle: RePEc:inm:ormnsc:v:54:y:2008:i:9:p:1529-1543

    Contact details of provider:
    Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Email:
    Web page: http://www.informs.org/
    More information through EDIRC

    Related research

    Keywords: innovation; product development; open systems; contests;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Lettl, Christopher & Rost, Katja & von Wartburg, Iwan, 2009. "Why are some independent inventors 'heroes' and others 'hobbyists'? The moderating role of technological diversity and specialization," Research Policy, Elsevier, vol. 38(2), pages 243-254, March.
    2. Zschocke, Mark S. & Mantin, Benny & Jewkes, Elizabeth M., 2013. "Mature or emerging markets: Competitive duopoly investment decisions," European Journal of Operational Research, Elsevier, vol. 228(3), pages 612-622.
    3. Fu, Qiang & Lu, Jingfeng & Lu, Yuanzhu, 2012. "Incentivizing R&D: Prize or subsidies?," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 67-79.
    4. Schebesch Klaus Bruno, 2011. "Business Incubators And Sustainable Innovation," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 779-785, July.
    5. Oliver Baumann & Nils Stieglitz, 2011. "Motivating Organizational Search," DRUID Working Papers 11-08, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    6. Clark, Derek J. & Nilssen, Tore & Sand, Jan Yngve, 2012. "Motivating over Time: Dynamic Win Effects in Sequential Contests," Memorandum 28/2012, Oslo University, Department of Economics.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:54:y:2008:i:9:p:1529-1543. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.