Should You Really Produce What Consumers Like Online? Empirical Evidence for Reciprocal Voting in Open Innovation Contests

Abstract

In open innovation, firms increasingly rely on online consumer votes to evaluate ideas for new products and services. Votes can represent cost‐effective external information about idea quality that can inform and facilitate a firm's task of evaluating and screening of ideas at the early stages of the innovation process. Challenging this perception, we proposed that consumer votes provided in open innovation contests can be socially biased by reciprocal voting. On the basis of theories related to cooperation and social influence, we argued that both gregarious consumers (those who solicit social ties) and consumers who initiate direct reciprocity (those who vote for others) signal a willingness to cooperate that stimulates reciprocal voting from peers. We empirically investigated consumer voting behavior using a unique dataset with information obtained from actual open innovation contests in which consumers could submit their own ideas and see and vote for the ideas of others. We found that both gregariousness and the initiation of direct reciprocity positively influence votes received. Such cooperation pays off for consumers because firms indeed use votes to inform internal idea evaluations. We also found, however, that the votes an idea receives during an innovation contest cannot significantly explain its later revealed quality. Reciprocity may be an effective form of cooperation among consumers, but it has potentially negative implications for firms' evaluations. Our results also indicated that beyond reciprocity, consumers and firms value different types of ideas, which further differentiates their evaluations. Thus, firms should not only be aware of social biases in votes but also account for the diverging idea preferences of customers.