Quantum Leaps: The Effect of Creative Endowment and Innovative Aversion on Gambling on Novelty

Abstract

Drawing from prospect theory and the literature on creativity, we examine how decision-makers’ distance from the internal development of novel projects may induce cognitive biases of creative endowment and innovative aversion that lead to differential responses to gamble on their innovative success. While prior research has considered the characteristics of organizational roles in shaping responses to novelty, we focus on the potential within-role variation among decision-makers and explore how their perceptions of ownership owing to distance influences their propensity to gamble. Using an in-depth case study of a network of organizations within the global telecommunications industry, we consider how proximate, internally distant, and externally distant decision-makers vary in their gambling propensity on a novel R&D project in quantum computing designed to strengthen cyber security. Combining qualitative data from a six-month field study and primary survey data, our results show that proximate decision-makers gamble significantly higher than internally distant decision-makers; whereas internally distant decision-makers gamble significantly lower than externally distant decision-makers, thereby suggesting a cognitive endowment and aversion effect. Furthermore, we found that proximate and internally distant decision-makers are influenced by different evaluation frames. The findings offer new theoretical insights regarding the cognitive mechanisms driving decision-makers’ proclivity or aversion towards novelty.