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

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  • 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 Kiel).
  • Handle: RePEc:zbw:ifwkwp:2095
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    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.

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    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

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