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Opening the floodgates: How big companies can reap the benefits of internal crowdfunding

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  • Schöttl, Claus P.
  • Homma, Christian
  • Schweisfurth, Tim G.
  • Raasch, Christina

Abstract

Digital technologies enable employees at all levels to participate in distributed decision-making. We examine the design principles, benefits, and challenges of a new type of distributed decision-making: internal crowdfunding. We build on a 5-year case study of internal crowdfunding contests at Siemens to deepen our understanding of the design principles of internal crowdfunding and its potential for corporate innovation. Based on this data, we discuss the three design choices in internal crowdfunding (contributors, configuration, and control), find four key benefits (decentralization, cross-collaboration, institutionalization, and intrapreneurship), and identify three key challenges (dealing with rejected ideas, evaluation biases, and implementation and follow-on funding) and potential actions by managers to overcome them. The article contributes to both the emerging literature on internal crowdfunding and the literature on distributed decision-making.

Suggested Citation

  • Schöttl, Claus P. & Homma, Christian & Schweisfurth, Tim G. & Raasch, Christina, 2025. "Opening the floodgates: How big companies can reap the benefits of internal crowdfunding," Open Access Publications from Kiel Institute for the World Economy 318394, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkie:318394
    DOI: 10.1016/j.bushor.2023.09.003
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    References listed on IDEAS

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    1. Mollick, Ethan, 2014. "The dynamics of crowdfunding: An exploratory study," Journal of Business Venturing, Elsevier, vol. 29(1), pages 1-16.
    2. Barry L. Bayus, 2013. "Crowdsourcing New Product Ideas over Time: An Analysis of the Dell IdeaStorm Community," Management Science, INFORMS, vol. 59(1), pages 226-244, June.
    3. Colombo, Massimo G. & Foss, Nicolai J. & Lyngsie, Jacob & Rossi Lamastra, Cristina, 2021. "What drives the delegation of innovation decisions? The roles of firm innovation strategy and the nature of external knowledge," Research Policy, Elsevier, vol. 50(1).
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