Distance Dilemma in Innovation Crowdsourcing: The Effects of Knowledge Distance on Solvers' Participation in Broadcasted R&D Problem Solving

Open innovation is exemplified in crowdsourcing platforms that allow firms to broadcast R&D problems to a wide range of potential solvers. Empirical evidence to date suggests that solvers from distant fields have higher... [ view full abstract ]

Open innovation is exemplified in crowdsourcing platforms that allow firms to broadcast R&D problems to a wide range of potential solvers. Empirical evidence to date suggests that solvers from distant fields have higher chances to make winning contributions in crowdsourcing contests. Knowledge distance, however, can also negatively affect solvers’ decision to participate in the first place. In particular, we propose three theoretical mechanisms for this negative effect of knowledge distance: (1) lower problem attention, (2) higher uncertainty about value capture, (3) adverse cost and benefit expectations. To investigate these mechanisms, we analyze solvers’ participation decisions in the context of nano science and technology related R&D problems. We measure knowledge distance between potential solvers and R&D problems by the means of topic modeling with over 900.000 scientific papers and actual requests for proposals (RfPs). We invite solvers to inspect randomly assigned RfPs of high and low knowledge distance and measure their willingness to submit a solution conditional on contractual terms and conditions in a subsequent discrete choice experiment. Our findings reveal that scientists indeed pay lower attention towards more distant problems. To be compensated for adverse costs and benefits, distant solvers demand higher award money and the right to also license their invention to third parties. However, solvers in proximity to the problem domain have higher demand for terms and conditions that reduce uncertainty about value capture to better protect their “home” knowledge base. Overall, we shed light on managing an important trade-off in innovation crowdsourcing: while more distant solvers could make valuable contributions, they are more difficult to attract.