All for the Money? The Ambiguity of Monetary Rewards in Firm-Initiated Ideation with Users
42 Pages Posted: 21 Oct 2012
Date Written: October 20, 2012
In firm-initiated ideation with users, the hosting organization typically dominates the commercial exploitation of users’ revealed ideas. In light of this asymmetric exploitation, offering monetary prizes for the best performing participants or the most valued ideas seems to be a reasonable form of compensation and incentivation. However, we question the sole effectiveness of monetary rewards in the context of a contest and propose two boundary conditions where non-monetary benefits proposed in the private-collective model of user innovation better explains participation: (1) If users’ personal involvement and need in the innovation domain is high, an expectation of monetary rewards is deemed less important, because users expect to better internalize collective innovation outcomes and capture private benefits (non-monetary “compensation effect”). (2) If users are supposed to allocate effort to collectively oriented activities like commenting, improving or evaluating other users’ ideas, the expectation of monetary rewards is less effective, because it induces rivalry among users (“competition effect”). We find support for these hypotheses in an empirical study where user participation in a real ideation project is regressed on survey-based measures of motivating conditions that users perceived prior to the contest. We can conclude that monetary rewards can even have detrimental effects in firm-initiated ideation, if the two proposed boundary conditions are taken together.
Keywords: user innovation, idea contests, incentives, motivation
JEL Classification: M10
Suggested Citation: Suggested Citation