Lars Bo Jeppesen

Marginality and Problem-Solving Effectiveness in Broadcast Search

We examine who the winners are in science problem-solving contests characterized by open broadcast of problem information, self-selection of external solvers to discrete problems from the laboratories of large research and development intensive companies, and blind review of solution submissions. Analyzing a unique data set of 166 science challenges involving over 12,000 scientists revealed that technical and social marginality, being a source of different perspectives and heuristics, plays an important role in explaining individual success in problem solving. The provision of a winning solution was positively related to increasing distance between the solvers field of technical expertise and the focal field of the problem. Female solvers---known to be in the “outer circle” of the scientific establishment---performed significantly better than men in developing successful solutions. Our findings contribute to the emerging literature on open and distributed innovation by demonstrating the value of openness, at least narrowly defined by disclosing problems, in removing barriers to entry to nonobvious individuals. We also contribute to the knowledge-based theory of the firm by showing the effectiveness of a market mechanism to draw out knowledge from diverse external sources to solve internal problems.

Consumers as Co-developers: Learning and Innovation Outside the Firm

Abstract This study describes a process in which a firm relies on an external consumer community for innovation. While it has been recognized that users may sometimes innovate, little is known about what commercial firms can do to motivate and capture such innovations and their related benifits. We contribute to strategy literature by suggesting that learning and innovation efforts from which a firm may benifit need not necessarily be located within the organization, but may well reside in the consumer environment. We also contribute to the existing theory on ‘user-driven innovation’ by showing what firms purposively can do to generate consumer innovation efforts. An explorative case study shows that consumer innovation can be structured, motivated, and partly organized by a commercial firm that organizes the infrastructure for consumers’ interactive learning in a public online domain.

Unpaid Crowd Complementors: The Platform Network Effect Mirage

Platforms have evolved beyond just being organized as multi-sided markets with complementors selling to users. Complementors are often unpaid, working outside of a price system and driven by heterogeneous sources of motivation — which should affect how they respond to platform growth. Does reliance on network effects and strategies to attract large numbers of complementors remain advisable in such contexts? We test hypotheses related to these issues using data from 85 online multi-player game platforms with unpaid complementors. We find that complementor development responds to platform growth even without sales incentives, but that attracting complementors has a net zero effect on on-going development and fails to stimulate network effects. We discuss conditions under which a strategy of using unpaid crowd complementors remains advantageous.

Crowdfunding as 'Donations': Theory & Evidence

For a wide class of crowdfunding approaches, we argue that the reward structure (for funders) is closer to that of charitable donations to public goods than it is to traditional entrepreneurial finance. Many features of the design of crowdfunding platforms can therefore be understood as attempts to deal with attendant “free-rider” problems in motivating contributions. Reviewing institutional features of today’s crowdfunding, we clarify that there are often limits in the extent to which tangible rewards can be used to motivate contributions. Drawing on analogies with charitable donations, we theorize that intangible sources of motivation — (i) direct psychological rewards, (ii) reciprocity and (iii) social interactions — can play a role in entrepreneurial crowdfunding. In our detailed empirical analysis of a representative project we find abundant evidence consistent with this characterization and we proceed to discuss implications for platform design and entrepreneurial funding and unique and defining characteristics of crowdfunding.

Learning in Innovative Consumer Communities

In contrast to internal corporate ventures1, innovation and product development in the computer games industry depend upon Innovative Consumer Communities (ICC) that are located external to the firm. Computer game consumers take part in online communities where they communicate and exchange ideas and software that extend the game from its original shape. Hence, in this setting, strategy formation is not just about creating and placing a product in the market; it also demands skills to frame and generate a consumer community external to the firm that co-develops and extends product life. This paper aims to 1. show how consumers co-develop a commercial product “for free” 2. identify the most important dispositional features of this approach to product development and 3. show the importance of consumer-to-consumer (C-to-C) interaction and learning for product development and innovation within this setting.

Entrepreneurial Crowdfunding: Public Goods with Private Gifts & Non-Pecuniary Payoffs

For a wide class of crowdfunding approaches, we argue that the reward structure (for funders) is closer to that of charitable donations to public goods than it is to traditional entrepreneurial finance. Many features of the design of crowdfunding platforms can therefore be understood as attempts to deal with attendant “free-rider” problems in motivating contributions. Reviewing institutional features of today’s crowdfunding, we clarify that there are often limits in the extent to which tangible rewards can be used to motivate contributions. Drawing on analogies with charitable donations, we theorize that intangible sources of motivation — (i) direct psychological rewards, (ii) reciprocity and (iii) social interactions — can play a role in entrepreneurial crowdfunding. In our detailed empirical analysis of a representative project we find abundant evidence consistent with this characterization and we proceed to discuss implications for platform design and entrepreneurial funding and unique and defining characteristics of crowdfunding.

Entrepreneurial Crowdfunding without Private Claims

For a wide class of crowdfunding approaches, we argue that the reward structure (for funders) is closer to that of charitable donations to public goods than it is to traditional entrepreneurial finance. Many features of the design of crowdfunding platforms can therefore be understood as attempts to deal with attendant “free-rider” problems in motivating contributions. Reviewing institutional features of today’s crowdfunding, we clarify that there are often limits in the extent to which tangible rewards can be used to motivate contributions. Drawing on analogies with charitable donations, we theorize that intangible sources of motivation — (i) direct psychological rewards, (ii) reciprocity and (iii) social interactions — can play a role in entrepreneurial crowdfunding. In our detailed empirical analysis of a representative project we find abundant evidence consistent with this characterization and we proceed to discuss implications for platform design and entrepreneurial funding and unique and defining characteristics of crowdfunding.