IDEAS home Printed from https://ideas.repec.org/p/zbw/ifwkwp/2095.html
   My bibliography  Save this paper

Hierarchical similarity biases in idea evaluation: A study in enterprise crowdfunding

Author

Listed:
  • Schweisfurth, Tim
  • Zaggl, Michael A.
  • Schöttl, Claus P.
  • Raasch, Christina

Abstract

To be successful innovators, organizations must select the best ideas for implementation. Extant research shows that idea selection is distorted by a number of biases, but has failed to consider hierarchy, a key element of organizations. We examine how hierarchical distance between an idea's creator and its evaluator affects evaluation outcomes and thus advance three competing theoretical predictions based on homophily, competition, and status. To test our predictions, we use a unique dataset from an enterprise crowdfunding initiative at Siemens where 265 employees evaluated 77 ideas by allocating corporate funds, resulting in 20,405 evaluation dyads. We find that idea evaluations are more favorable if the idea creator is hierarchically similar to the evaluator, thus supporting the homophily perspective. Idea novelty amplifies this bias, inducing more social evaluations. Our findings are robust to various specifications and tests, and are absent in a subsample where idea creators remained anonymous. We contribute to the idea evaluation research and inform organizational idea selection process designs.

Suggested Citation

  • Schweisfurth, Tim & Zaggl, Michael A. & Schöttl, Claus P. & Raasch, Christina, 2017. "Hierarchical similarity biases in idea evaluation: A study in enterprise crowdfunding," Kiel Working Papers 2095, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkwp:2095
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/172003/1/100642153X.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Thomas Åstebro & Samir Elhedhli, 2006. "The Effectiveness of Simple Decision Heuristics: Forecasting Commercial Success for Early-Stage Ventures," Management Science, INFORMS, vol. 52(3), pages 395-409, March.
    2. Ethan Mollick & Ramana Nanda, 2016. "Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts," Management Science, INFORMS, vol. 62(6), pages 1533-1553, June.
    3. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(2), pages 238-249, April.
    4. Adam M. Kleinbaum & Toby E. Stuart & Michael L. Tushman, 2013. "Discretion Within Constraint: Homophily and Structure in a Formal Organization," Organization Science, INFORMS, vol. 24(5), pages 1316-1336, October.
    5. Jerry W. Kim & Brayden G King, 2014. "Seeing Stars: Matthew Effects and Status Bias in Major League Baseball Umpiring," Management Science, INFORMS, vol. 60(11), pages 2619-2644, November.
    6. Ray Reagans, 2005. "Preferences, Identity, and Competition: Predicting Tie Strength from Demographic Data," Management Science, INFORMS, vol. 51(9), pages 1374-1383, September.
    7. William Greene, 2004. "The behaviour of the maximum likelihood estimator of limited dependent variable models in the presence of fixed effects," Econometrics Journal, Royal Economic Society, vol. 7(1), pages 98-119, June.
    8. Elina H. Hwang & Param Vir Singh & Linda Argote, 2015. "Knowledge Sharing in Online Communities: Learning to Cross Geographic and Hierarchical Boundaries," Organization Science, INFORMS, vol. 26(6), pages 1593-1611, December.
    9. Anthony M. Marino & Ján Zábojník, 2004. "Internal Competition for Corporate Resources and Incentives in Teams," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 710-727, Winter.
    10. Franke, Nikolaus & Gruber, Marc & Harhoff, Dietmar & Henkel, Joachim, 2006. "What you are is what you like--similarity biases in venture capitalists' evaluations of start-up teams," Journal of Business Venturing, Elsevier, vol. 21(6), pages 802-826, November.
    11. Kevin J. Boudreau & Eva C. Guinan & Karim R. Lakhani & Christoph Riedl, 2016. "Looking Across and Looking Beyond the Knowledge Frontier: Intellectual Distance, Novelty, and Resource Allocation in Science," Management Science, INFORMS, vol. 62(10), pages 2765-2783, October.
    12. N. Sharon Hill & Myeong-Gu Seo & Jae Hyeung Kang & M. Susan Taylor, 2012. "Building Employee Commitment to Change Across Organizational Levels: The Influence of Hierarchical Distance and Direct Managers' Transformational Leadership," Organization Science, INFORMS, vol. 23(3), pages 758-777, June.
    13. Ozer, Muammer, 2009. "The roles of product lead-users and product experts in new product evaluation," Research Policy, Elsevier, vol. 38(8), pages 1340-1349, October.
    14. Olivier Toubia & Laurent Florès, 2007. "Adaptive Idea Screening Using Consumers," Marketing Science, INFORMS, vol. 26(3), pages 342-360, 05-06.
    15. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Can AI ever rival human creativity? Here’s what the science says
      by ? in Co.Exist on 2020-02-06 09:00:00

    Citations

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


    Cited by:

    1. Starling David Hunter & Henrik Bentzen & Jan Taug, 2020. "On the “missing link” between formal organization and informal social structure," Journal of Organization Design, Springer;Organizational Design Community, vol. 9(1), pages 1-20, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nikolaus Franke & Peter Keinz & Katharina Klausberger, 2013. "“Does This Sound Like a Fair Deal?”: Antecedents and Consequences of Fairness Expectations in the Individual’s Decision to Participate in Firm Innovation," Organization Science, INFORMS, vol. 24(5), pages 1495-1516, October.
    2. Erin L. Scott & Pian Shu & Roman M. Lubynsky, 2020. "Entrepreneurial Uncertainty and Expert Evaluation: An Empirical Analysis," Management Science, INFORMS, vol. 66(3), pages 1278-1299, March.
    3. Trevor Young-Hyman & Adam M. Kleinbaum, 2020. "Meso-Foundations of Interorganizational Relationships: How Team Power Structures Shape Partner Novelty," Organization Science, INFORMS, vol. 31(6), pages 1385-1407, November.
    4. Goldberg, Amir & Srivastava, Sameer B & Manian, Govind & Monroe, William & Potts, Christopher, 2016. "Fitting In or Standing Out? The Tradeoffs of Structural and Cultural Embeddedness," Institute for Research on Labor and Employment, Working Paper Series qt9bf631rg, Institute of Industrial Relations, UC Berkeley.
    5. Pollok, Patrick & Lüttgens, Dirk & Piller, Frank T., 2019. "Attracting solutions in crowdsourcing contests: The role of knowledge distance, identity disclosure, and seeker status," Research Policy, Elsevier, vol. 48(1), pages 98-114.
    6. Thomas Clauss & Thomas Niemand & Sascha Kraus & Patrick Schnetzer & Alexander Brem, 2019. "Increasing Crowdfunding Success Through Social Media: The Importance Of Reach And Utilisation In Reward-Based Crowdfunding," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 24(03), pages 1-30, May.
    7. Dushnitsky, Gary & van Praag, Mirjam & Zunino, Diego, 2017. "Badge of Honor or Scarlet Letter? Unpacking Investors' Judgment of Entrepreneurs' Past Failure," CEPR Discussion Papers 12329, C.E.P.R. Discussion Papers.
    8. Chan, C.S. Richard & Park, Haemin Dennis, 2015. "How images and color in business plans influence venture investment screening decisions," Journal of Business Venturing, Elsevier, vol. 30(5), pages 732-748.
    9. Adam M. Kleinbaum, 2018. "Reorganization and Tie Decay Choices," Management Science, INFORMS, vol. 64(5), pages 2219-2237, May.
    10. Sameer B. Srivastava, 2015. "Intraorganizational Network Dynamics in Times of Ambiguity," Organization Science, INFORMS, vol. 26(5), pages 1365-1380, October.
    11. Stefan Wagner & Martin C. Goossen, 2018. "Knowing me, knowing you: Inventor mobility and the formation of technology-oriented alliances," ESMT Research Working Papers ESMT-18-01, ESMT European School of Management and Technology.
    12. Kim Claes & Balagopal Vissa, 2020. "Does Social Similarity Pay Off? Homophily and Venture Capitalists’ Deal Valuation, Downside Risk Protection, and Financial Returns in India," Organization Science, INFORMS, vol. 31(3), pages 576-603, May.
    13. Adam M. Kleinbaum & Toby E. Stuart & Michael L. Tushman, 2013. "Discretion Within Constraint: Homophily and Structure in a Formal Organization," Organization Science, INFORMS, vol. 24(5), pages 1316-1336, October.
    14. Laurent Bergé, 2018. "Efficient estimation of maximum likelihood models with multiple fixed-effects: the R package FENmlm," CREA Discussion Paper Series 18-13, Center for Research in Economic Analysis, University of Luxembourg.
    15. Mary M. Maloney & Priti Pradhan Shah & Mary Zellmer-Bruhn & Stephen L. Jones, 2019. "The Lasting Benefits of Teams: Tie Vitality After Teams Disband," Organization Science, INFORMS, vol. 30(2), pages 260-279, March.
    16. Susan Biancani & Daniel A. McFarland & Linus Dahlander, 2014. "The Semiformal Organization," Organization Science, INFORMS, vol. 25(5), pages 1306-1324, October.
    17. Isabel Fernandez-Mateo & Marko Coh, 2015. "Coming with Baggage: Past Rejections and the Evolution of Market Relationships," Organization Science, INFORMS, vol. 26(5), pages 1381-1399, October.
    18. Paolo Roma & Esther Gal-Or & Rachel R. Chen, 2018. "Reward-Based Crowdfunding Campaigns: Informational Value and Access to Venture Capital," Information Systems Research, INFORMS, vol. 29(3), pages 679-697, September.
    19. Joshua Becker & Abdullah Almaatouq & EmH{o}ke-'Agnes Horv'at, 2020. "Network Structures of Collective Intelligence: The Contingent Benefits of Group Discussion," Papers 2009.07202, arXiv.org, revised Mar 2021.
    20. Marco Tortoriello & Bill McEvily & David Krackhardt, 2015. "Being a Catalyst of Innovation: The Role of Knowledge Diversity and Network Closure," Organization Science, INFORMS, vol. 26(2), pages 423-438, April.

    More about this item

    Keywords

    idea evaluation; idea selection; crowdfunding; hierarchy; homophily; status; competition;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • M19 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Other
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ifwkwp:2095. 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: (ZBW - Leibniz Information Centre for Economics). General contact details of provider: http://edirc.repec.org/data/iwkiede.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.