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Does the offer of financial reward drive engagement and creativity in crowdsourcing initiatives?

Customers can prove a rich source of ideas for companies wishing to develop new products. Monetary rewards are frequently used to stimulate their creativity. This study asks whether monetary rewards are useful and what level of reward, if any, is required to harness the creative potential of customers.

Author(s): Dr Oguz A. Acar - Cass Business School;

Crowdsourcing is becoming a popular way for companies to obtain information and work from a large group of people via websites, apps or social media. It enables them to tap into a vast array of skills and expertise which is larger and more diversified than any single organisation would have on its own. With the growing importance and prominence of innovation and consumer engagement, many firms are seeking ways to encourage consumers to generate new product ideas for them. Crowdsourcing initiatives offer one way of accomplishing this, as a means of both tapping into consumer creativity and for forging stronger connections with their customers.

To motivate consumer participation in such initiatives, some firms offer financial rewards for the best creative ideas. These can range from the modest to the extremely generous; for example, Frito Lay once offered $1 million to the originator of a winning product idea.

Yet how effective are these rewards, and how large should they be to prove worthwhile? Existing research has not provided a clear answer. As such, it remains a matter of debate whether firms should offer monetary rewards in their crowdsourcing initiatives and what the optimum size of such rewards, if any, should be.

Drawing on an experiment in which participants came up with new product ideas, this paper aims to help settle the debate about whether money can buy effective participation and creativity in crowdsourcing platforms.

302 adults were recruited from an online crowdsourcing platform and offered a small payment in exchange for their completion of a general survey. On completion they were alerted to an idea generation contest that they might like to participate in. This involved them submitting their suggestions of a new flavour for a potato snack. Participants were randomly allocated one of three invitations to this contest, offering no reward, a low reward, and a high reward. The number who assented to participate, the number of ideas they generated, and the novelty and appropriateness of their ideas was analysed.

The results suggest that monetary rewards (compared to no monetary rewards at all) can be effective in stimulating greater participation in crowdsourcing initiatives, and in motivating customers to create more useful and appropriate ideas, provided the rewards are large enough. However, in terms of stimulating novelty and motivating consumers to generate multiple ideas, even sizeable rewards appear to have little effect, and small rewards may even be detrimental.

The results of the experiment also suggest that the offer of monetary rewards does not contribute to the number of new product ideas generated by a single consumer or the novelty of their ideas. In fact, if the reward is small then it may even have a negative effect. Specifically, when the reward was small, fewer ideas and less novelty was seen even compared to when no reward was offered.

One potential explanation for this is that offering financial reward might affect the motivation of participants. Psychology research distinguishes between two types of motivation –intrinsic and extrinsic. Those that are intrinsically motivated view the creative process itself as the predominant incentive for participation, and they tend to exhibit greater effort and produce more novel ideas than those said to be extrinsically motivated, for whom the reward is key. With the offer of a reward, the motivation may shift from intrinsic to the extrinsic. As a result, the rewards themselves render themselves ineffective and perhaps even detrimental, by reducing the number and quality of ideas produced.

When the level of reward provided is not sufficient to allow extrinsic motivation to outweigh intrinsic motivation to the extent that participants sustain their focus and creativity, the quality of ideas suffers. When the rewards are sufficiently high, the decline in intrinsic motivation can be offset by the extrinsic, provided the rewards are contingent on creativity.

The results suggest that when the main purpose of a crowdsourcing initiative is to obtain novel ideas, firms may not need to offer a reward at all. The risk of this however is that such a strategy may result in fewer people participating and less appropriate ideas arising. When these two factors are important, firms should offer sufficiently high rewards to stimulate participation. Whatever the objective of the crowdsourcing initiative, firms should avoid offering low level of rewards.

These findings have important implications for both the fields of marketing and psychology. They help provide a better understanding of the dynamics of crowdsourcing and extend the limited literature on what motivates consumer engagement and creativity in crowdsourcing initiatives.

It also contributes to the psychology literature on the link between reward and creativity, specifically by showing that the effect of rewards on creativity varies depending on the size of the rewards, and that rewards can affect the components of creativity (i.e. novelty and appropriateness) in different ways.

As a whole, these findings contribute to a better understanding of the motivational mechanisms of consumer creativity in new product idea creation.

The paper Harnessing the Creative Potential of Consumers: Money, Participation and Creativity in Idea Crowdsourcing can be downloaded via the link below. It has been published by Springer.

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