When does crowdsourcing benefit firm stock market performance?

Abstract

Crowdsourcing is a particular form of open innovation (OI) that aims to boost idea-generation in innovation processes. The underlying rationale is that the collective intelligence of a large number of contributors outside the firm's boundaries increases the likelihood of achieving 'extreme outcomes', i.e., high quality ideas with exceptional business potential. Due to the idiosyncrasies that differentiate crowdsourcing from other forms of OI, the findings from prior research on the performance implications of OI cannot be directly extended to crowdsourcing. Similarly, the findings on the effect of internal R&D on firm performance cannot be directly applied to crowdsourcing due to the greater uncertainty in dealing with a crowd of unknown individuals outside the organization whose ideas have to be evaluated and ultimately processed internally. Thus, while crowdsourcing research has recently burgeoned, it is ambiguous as to whether and when crowdsourcing is beneficial for firms. In fact, the overall effect of crowdsourcing on a firm's future profits has not been thoroughly investigated. To fill this gap, we conducted an event study analyzing stock market reactions to crowdsourcing announcements, a forward-looking market-based measure able to isolate the effect of crowdsourcing on a firm's future profits, which we refer to as firm stock market performance. Drawing on the resource-based view, we argue that an external crowd can become a valuable resource if the firm is able to extract value from it. Our findings show that two key contingency factors, i.e., brand value and investment opportunities, determine the boundary conditions that enable firms to extract value from the crowd, resulting in a positive stock market reaction to the announcement of a crowdsourcing campaign. In addition to advancing scholarly knowledge on crowdsourcing, our results provide practitioners with relevant indications for profitable crowdsourcing campaigns.

The influence of open innovation on firm performance

“…One of the main trends in the literature on the impact of the OI approach on firm performance concerns the study of the possible strategies that companies can implement in order to make the most use of the OI paradigm. [53][54][55][56] The relationships between inbound and outbound OI strategies and the innovative and economic performance of the Turkish food and beverage industry are analysed by Seyfettinoglu. 57 The author affirms that OI strategytogether with the innovation that arises from idea generation -is one of the factors with the greatest positive impact on the level of innovativeness.…”

Visitor-Sensing: Involving the Crowd in Cultural Heritage Organizations

“…Conversely, the open approach called into action by Chesbrough closely resembles a bazaar where everyone can enter the group and contribute to the overall need of goods exchange, and the inclusion of numerous independent and self-motivated individuals is critical for vale creation. This may happen in a number of different organizational contexts, even in the presence of tight hierarchical internal structures [24,27,39,40], which, we argue, also include cultural organizations, where visitors may enter the cultural "bazaar" and contribute to its operations and even success, if invited to do so.…”

“…Crowdsourcing consists of campaigns aimed at collecting new ideas from dispersed individuals in exchange for a bounty to support the processes of innovation development and problem solving, with positive effects on performance [21,[23][24][25][26]. In addition, crowds are increasingly being involved toward non-profit goals in socially oriented crowdsourcing campaigns aimed at sustaining innovations and solutions for social causes [27], or in citizen science activities [28][29][30].…”

SDGs and Innovation in the Business Context Literature Review

“…From the analysis of literature, it emerges that innovation could be configured not only as an objective to be pursued, but also as a prerequisite for implementing the changes (in all areas) necessary for the pursuit of SDGs. Consistent with the need of adopting cooperative strategies at all levels (as hoped for by SDG 17), contrary to the neoliberal model of competitiveness that restrains the adoption of the SDGs [39], some works have focused their interest on open innovation like one of the most important forms of collaboration in the industrial context, starting from the idea-generation phase [97,98] (also with the help and participation of citizens [99,100]) and from the start-up phase [101], up to the development [102][103][104] and patenting process [105][106][107][108][109] and trying to measure it [109,110]. Other innovative forms of collaboration and knowledge sharing that can aid in the achievement of sustainability are represented by open-source intelligence tools [111].…”