Posted Content•
The Value of Crowdsourcing: Can Users Really Compete with Professionals in Generating New Product Ideas?
TL;DR: It is suggested that, at least under certain conditions, crowdsourcing might constitute a promising method to gather user ideas which can complement those of a firm’s professionals at the idea generation stage in NPD.
Abstract: Generating ideas for new products used to be the exclusive domain of marketers, engineers, and/or designers. Users have only recently been recognized as an alternative source of new product ideas. Whereas some have attributed great potential to outsourcing idea generation to the “crowd” of users (“crowdsourcing”), others have clearly been more skeptical. The authors join this debate by presenting a real-world comparison of ideas actually generated by a firm’s professionals with those generated by users in the course of an idea generation contest. Both professionals and users provided ideas to solve an effective and relevant problem in the consumer goods market for baby products. Executives from the underlying company evaluated all ideas (blind to their source) in terms of key quality dimensions, including novelty, customer benefit, and feasibility. The study reveals that the crowdsourcing process generated user ideas that score significantly higher in terms of novelty and customer benefit, and somewhat lower in terms of feasibility. However, the average values for feasibility – in sharp contrast to novelty and customer benefit – tended to be relatively high overall, meaning that feasibility did not constitute a narrow bottleneck in this study. Even more interestingly, it is found that user ideas are placed more frequently than expected among the very best in terms of novelty and customer benefit. These findings, which are quite counterintuitive from the perspective of classic new product development (NPD) literature, suggest that, at least under certain conditions, crowdsourcing might constitute a promising method to gather user ideas which can complement those of a firm’s professionals at the idea generation stage in NPD.
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TL;DR: This article found that personal networks and underlying project quality are associated with the success of crowdfunding efforts, and that geography is related to both the type of projects proposed and successful fundraising, while the vast majority of founders seem to fulfill their obligations to funders, but that over 75% deliver products later than expected, with the degree of delay predicted by the level and amount of funding a project receives.
Abstract: Crowdfunding allows founders of for-profit, artistic, and cultural ventures to fund their efforts by drawing on relatively small contributions from a relatively large number of individuals using the internet, without standard financial intermediaries. Drawing on a dataset of over 48,500 projects with combined funding over $237M, this paper offers a description of the underlying dynamics of success and failure among crowdfunded ventures. It suggests that personal networks and underlying project quality are associated with the success of crowdfunding efforts, and that geography is related to both the type of projects proposed and successful fundraising. Finally, I find that the vast majority of founders seem to fulfill their obligations to funders, but that over 75% deliver products later than expected, with the degree of delay predicted by the level and amount of funding a project receives. These results offer insight into the emerging phenomenon of crowdfunding, and also shed light more generally on the ways that the actions of founders may affect their ability to receive entrepreneurial financing.
2,621 citations
TL;DR: In this article, existing definitions of crowdsourcing are analysed to extract common elements and to establish the basic characteristics of any crowdsourcing initiative.
Abstract: 'Crowdsourcing' is a relatively recent concept that encompasses many practices. This diversity leads to the blurring of the limits of crowdsourcing that may be identified virtually with any type of internet-based collaborative activity, such as co-creation or user innovation. Varying definitions of crowdsourcing exist, and therefore some authors present certain specific examples of crowdsourcing as paradigmatic, while others present the same examples as the opposite. In this article, existing definitions of crowdsourcing are analysed to extract common elements and to establish the basic characteristics of any crowdsourcing initiative. Based on these existing definitions, an exhaustive and consistent definition for crowdsourcing is presented and contrasted in 11 cases.
1,616 citations
Cites background or methods from "The Value of Crowdsourcing: Can Use..."
...[13] speak of the exploitation of creative ideas, and Poetz and Schreier [39] contemplate idea generation....
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...With respect to the type of call used to propose tasks to the crowd, only ten documents make reference to the use of an open call [1,13,28,32,33,39,46,36,40,43]....
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...With regard to the type of process addressed by crowdsourcing, there are authors who identify it as an outsourcing process, such as in the case of Amazon Mechanical Turk [13, 38, 39, 46, 36, 43] and others as a problem-solving process [9, 37, 40] via a distributed online process [37], such as in the case of InnoCentive....
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...The selected examples are: Wikipedia (collaborative online encyclopedia), InnoCentive (an online platform where money is offered in exchange for the solution of problems), Threadless (an internet t-shirt company, whose designs are created and selected by users), Amazon Mechanical Turk (a platform where crowdsourcers can propose tasks that are offered in exchange for money), ModCloth (an internet clothing shop that allows its users to give opinions on and vote for clothing designs before their sale), YouTube (an internet video platform), Lánzanos (a Spanish website were people give money for participating in different projects, receiving rewards for their participation), Delicious (a social bookmarking system), Fiat Mio (an initiative begun by Fiat through which a car has been created following the suggestions of users), iStockphoto (an internet image sale platform) and Flickr (a platform that allows the uploading and tagging of photographs)....
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...In regards to the type of process addressed by crowdsourcing, there are authors who identify it as an outsourcing process, such as in the case of Amazon Mechanical Turk [13,38,39,46,36,43] and others as a problem solving process [9,37,40] via a distributed online process [37], such as in the case of InnoCentive....
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Posted Content•
TL;DR: In this paper, an analysis of prior research on how firms leverage external sources of innovation is presented, which suggests a four-phase model in which a linear process of obtaining, integrating, integrating and commercializing external innovations is combined with interaction between the firm and its collaborators.
Abstract: This article reviews research on open innovation that considers how and why firms commercialize external sources of innovations. It examines both the “outside-in” and “coupled” modes of Enkel et al. (2009). From an analysis of prior research on how firms leverage external sources of innovation, it suggests a four-phase model in which a linear process — (1) obtaining, (2) integrating and (3) commercializing external innovations — is combined with (4) interaction between the firm and its collaborators. This model is used to classify papers taken from the top 25 innovation journals identified by Linton and Thongpapan (2004), complemented by highly cited work beyond those journals. A review of 291 open innovation-related publications from these sources shows that the majority of these articles indeed address elements of this inbound open innovation process model. Specifically, it finds that researchers have front-loaded their examination of the leveraging process, with an emphasis on obtaining innovations from external sources. However, there is a relative dearth of research related to integrating and commercializing these innovations.Research on obtaining innovations includes searching, enabling, filtering, and acquiring — each category with its own specific set of mechanisms and conditions. Integrating innovations has been mostly studied from an absorptive capacity perspective, with less attention given to the impact of competencies and culture (including not-invented-here). Commercializing innovations puts the most emphasis on how external innovations create value rather than how firms capture value from those innovations. Finally, the interaction phase considers both feedback for the linear process and reciprocal innovation processes such as co-creation, network collaboration and community innovation.This review and synthesis suggests several gaps in prior research. One is a tendency to ignore the importance of business models, despite their central role in distinguishing open innovation from earlier research on inter-organizational collaboration in innovation. Another gap is a tendency in open innovation to use “innovation” in a way inconsistent with earlier definitions in innovation management. The article concludes with recommendations for future research that include examining the end-to-end innovation commercialization process, and studying the moderators and limits of leveraging external sources of innovation.
1,306 citations
Cites background from "The Value of Crowdsourcing: Can Use..."
...This identification might take place inside the firm (Jeppesen and Lakhani, 2010; Poetz and Schreier, 2012), by an external intermediary (Nambisan and Sawhney, 2007), or even by the community of external contributors (Ebner et al....
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...In some cases, the firm is explicitly present and collaborating in organizing or producing the innovation for its own financial benefit, as with cocreation (Prahalad and Ramaswamy, 2004) or crowdsourcing (Afuah and Tucci, 2012; Jeppesen and Lakhani, 2010; Poetz and Schreier, 2012)....
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TL;DR: A critical review of the business model literature can be found in this article with the goal of organizing the literature and achieving greater understanding of the larger picture in this increasingly important research area.
Abstract: Ever since the Internet boom of the mid-1990s, firms have been experimenting with new ways of doing business and achieving their goals, which has led to a branching of the scholarly literature on business models. Three interpretations of the meaning and function of “business models” have emerged from the management literature: (1) business models as attributes of real firms, (2) business models as cognitive/linguistic schemas, and (3) business models as formal conceptual representations of how a business functions. Relatedly, a provocative debate about the relationship between business models and strategy has fascinated many scholars. We offer a critical review of this now vast business model literature with the goal of organizing the literature and achieving greater understanding of the larger picture in this increasingly important research area. In addition to complementing and extending prior reviews, we also aim at a second and more important contribution: We aim at identifying the reasons behind the apparent lack of agreement in the interpretation of business models, and the relationship between business models and strategy. Whether strategy scholars consider business model research a new field may be due to the fact that the business model perspective may be challenging the assumptions of traditional theories of value creation and capture by focusing on value creation on the demand side and supply side, rather than focusing on value creation on the supply side only as these theories have done. We conclude by discussing how the business model perspective can contribute to research in different fields, offering future research directions.
802 citations
References
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TL;DR: In this paper, the authors argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities.
Abstract: In this paper, we argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities. We label this capability a firm's absorptive capacity and suggest that it is largely a function of the firm's level of prior related knowledge. The discussion focuses first on the cognitive basis for an individual's absorptive capacity including, in particular, prior related knowledge and diversity of background. We then characterize the factors that influence absorptive capacity at the organizational level, how an organization's absorptive capacity differs from that of its individual members, and the role of diversity of expertise within an organization. We argue that the development of absorptive capacity, and, in turn, innovative performance are history- or path-dependent and argue how lack of investment in an area of expertise early on may foreclose the future development of a technical capability in that area. We formulate a model of firm investment in research and development (R&D), in which R&D contributes to a firm's absorptive capacity, and test predictions relating a firm's investment in R&D to the knowledge underlying technical change within an industry. Discussion focuses on the implications of absorptive capacity for the analysis of other related innovative activities, including basic research, the adoption and diffusion of innovations, and decisions to participate in cooperative R&D ventures. **
31,623 citations
Book•
01 Jan 1980
TL;DR: History Conceptual Foundations Uses and Kinds of Inference The Logic of Content Analysis Designs Unitizing Sampling Recording Data Languages Constructs for Inference Analytical Techniques The Use of Computers Reliability Validity A Practical Guide
Abstract: History Conceptual Foundations Uses and Kinds of Inference The Logic of Content Analysis Designs Unitizing Sampling Recording Data Languages Constructs for Inference Analytical Techniques The Use of Computers Reliability Validity A Practical Guide
25,749 citations
Posted Content•
TL;DR: In this paper, the authors developed an evolutionary theory of the capabilities and behavior of business firms operating in a market environment, including both general discussion and the manipulation of specific simulation models consistent with that theory.
Abstract: This study develops an evolutionary theory of the capabilities and behavior of business firms operating in a market environment. It includes both general discussion and the manipulation of specific simulation models consistent with that theory. The analysis outlines the differences between an evolutionary theory of organizational and industrial change and a neoclassical microeconomic theory. The antecedents to the former are studies by economists like Schumpeter (1934) and Alchian (1950). It is contrasted with the orthodox theory in the following aspects: while the evolutionary theory views firms as motivated by profit, their actions are not assumed to be profit maximizing, as in orthodox theory; the evolutionary theory stresses the tendency of most profitable firms to drive other firms out of business, but, in contrast to orthodox theory, does not concentrate on the state of industry equilibrium; and evolutionary theory is related to behavioral theory: it views firms, at any given time, as having certain capabilities and decision rules, as well as engaging in various ‘search' operations, which determines their behavior; while orthodox theory views firm behavior as relying on the use of the usual calculus maximization techniques. The theory is then made operational by the use of simulation methods. These models use Markov processes and analyze selection equilibrium, responses to changing factor prices, economic growth with endogenous technical change, Schumpeterian competition, and Schumpeterian tradeoff between static Pareto-efficiency and innovation. The study's discussion of search behavior complicates the evolutionary theory. With search, the decision making process in a firm relies as much on past experience as on innovative alternatives to past behavior. This view combines Darwinian and Lamarkian views on evolution; firms are seen as both passive with regard to their environment, and actively seeking alternatives that affect their environment. The simulation techniques used to model Schumpeterian competition reveal that there are usually winners and losers in industries, and that the high productivity and profitability of winners confer advantages that make further success more likely, while decline breeds further decline. This process creates a tendency for concentration to develop even in an industry initially composed of many equal-sized firms. However, the experiments conducted reveal that the growth of concentration is not inevitable; for example, it tends to be smaller when firms focus their searches on imitating rather than innovating. At the same time, industries with rapid technological change tend to grow more concentrated than those with slower progress. The abstract model of Schumpeterian competition presented in the study also allows to see more clearly the public policy issues concerning the relationship between technical progress and market structure. The analysis addresses the pervasive question of whether industry concentration, with its associated monopoly profits and reduced social welfare, is a necessary cost if societies are to obtain the benefits of technological innovation. (AT)
22,566 citations
Book•
01 Jan 1995
TL;DR: This paper presents a meta-modelling framework for modeling uncertainty in the value of money and the net present value technique, and some examples show how this framework can be applied to product development economics.
Abstract: Chapter 1 Introduction Chapter 2 Development Processes and Organizations Chapter 3 Product Planning Chapter 4 Identifying Customer Needs Chapter 5 Product Specifications Appendix Concept -Scoring Matrix Example Chapter 6 Concept Generation Chapter 7 Concept Selection Appendix A Concept-Screening Matrix Example Appendix B Concept-Scoring Matrix Example Chapter 8 Concept Testing Appendix Estimating Market Sizes Chapter 9 Product Architecture Chapter 10 Industrial Design Chapter 11 Design for Manufacturing Appendix A Material Costs Appendix B Component Manufacturing Costs Appendix C Assembly Costs Appendix D Cost Structures Chapter 12 Prototyping Chapter 13 Robust Design Appendix Orthogonal Arrays Chapter 14 Patents and Intellectual Property Appendix A Trademarks Appendix B Advice to Individual Inventors Chapter 15 Product Development Economics Appendix A Time Value of Money and the Net Present Value Technique Appendix B Modeling Uncertain Cash Flow Using Net Present Value Analysis Chapter 16 Managing Projects Appendix Design Structure Matrix Example
6,707 citations
Book•
01 Jan 1988
TL;DR: The functional source of innovation general patterns economic explanation shifting and predicting the sources of innovation innovation as a distributed process is discussed in this paper, where users as innovators are considered as the innovators.
Abstract: Chapter 1: The functional source of innovation general patterns economic explanation shifting and predicting the sources of innovation innovation as a distributed process. Chapter 2: Users as innovators. Chapter 3: Variations in the functional source of innovation. Chapter 4: Why does the functional source of innovation vary? How do innovators benefit from innovations? Do benefit expectations differ? Chapter 5: The hypothesis in testable form methods five empirical studies discussion. Chapter 6: Shifting the functional source of innovation. Chapter 7: Root of the problem: market research constrained by user experience Lead users as a solution testing the method discussion. Chapter 8: Innovation cooperation between competing firms applications for innovation management.
5,805 citations