Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • May 2011
  • Article
  • Management Science

Incentives and Problem Uncertainty in Innovation Contests: An Empirical Analysis

By: Kevin J. Boudreau, Nicola Lacetera and Karim R. Lakhani
  • Format:Print
  • | Pages:21
ShareBar

Abstract

Contests are a historically important and increasingly popular mechanism for encouraging innovation. A central concern in designing innovation contests is how many competitors to admit. Using a unique data set of 9,661 software contests, we provide evidence of two coexisting and opposing forces that operate when the number of competitors increases. Greater rivalry reduces the incentives of all competitors in a contest to exert effort and make investments. At the same time, adding competitors increases the likelihood that at least one competitor will find an extreme-value solution. We show that the effort-reducing effect of greater rivalry dominates for less uncertain problems whereas the effect on the extreme value prevails for more uncertain problems. Adding competitors thus systematically increases overall contest performance for high-uncertainty problems. We also find that higher uncertainty reduces the negative effect of added competitors on incentives. Thus uncertainty and the nature of the problem should be explicitly considered in the design of innovation tournaments. We explore the implications of our findings for the theory and practice of innovation contests.

Keywords

Motivation And Incentives; Problems And Challenges; Risk And Uncertainty; Innovation And Invention; Management Analysis, Tools, And Techniques; Value; Software; Competition; Performance; Theory; Practice

Citation

Boudreau, Kevin J., Nicola Lacetera, and Karim R. Lakhani. "Incentives and Problem Uncertainty in Innovation Contests: An Empirical Analysis." Management Science 57, no. 5 (May 2011): 843–863.
  • Find it at Harvard

About The Author

Karim R. Lakhani

Technology and Operations Management
→More Publications

More from the Authors

    • February 2021
    • Faculty Research

    Threadless: The Renewal of an Online Community

    By: Shane Greenstein, Karim Lakhani and Christian Godwin
    • 2021
    • Faculty Research

    Consuming Contests: Outcome Uncertainty and Spectator Demand for Contest-based Entertainment

    By: Patrick J. Ferguson and Karim R. Lakhani
    • 2020
    • Faculty Research

    Learning with People Like Me: The Role of Age-Similar Peers on Online Business Course Engagement

    By: Laura R. Huber, Jacqueline N. Lane and Karim R. Lakhani
More from the Authors
  • Threadless: The Renewal of an Online Community By: Shane Greenstein, Karim Lakhani and Christian Godwin
  • Consuming Contests: Outcome Uncertainty and Spectator Demand for Contest-based Entertainment By: Patrick J. Ferguson and Karim R. Lakhani
  • Learning with People Like Me: The Role of Age-Similar Peers on Online Business Course Engagement By: Laura R. Huber, Jacqueline N. Lane and Karim R. Lakhani
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College