Team Collaboration in Innovation Contests

Abstract

In an innovation contest, an organizer elicits solutions to an innovation-related problem from a group of internal solvers (e.g., in-house employees) or from a group of external solvers (e.g., crowdsourcing-platform members). These solvers may develop individual solutions and make individual submissions, or if the organizer encourages it, they may collaborate as teams and make team submissions. The quality of an individual (resp., team) submission depends on the solver's (resp., team's) effort as well as the solver's (resp., team's) output shock. Motivated from different policies adopted by various crowdsourcing platforms in practice, we identify conditions under which the organizer and solvers can benefit from team submissions. By examining equilibrium outcomes of a game-theoretic model, we show that both the organizer and solvers may benefit from team submissions when the organizer seeks solutions to a shock-driven problem from external solvers (e.g., via a crowdsourcing platform). However, the organizer may not benefit from team submissions when he seeks solutions to an effort-driven problem from external solvers. These results provide a plausible explanation for why some platforms encourage team submissions, while others discourage them. Interestingly, we also show that when the organizer elicits solutions to an effort-driven problem from internal solvers, the organizer may benefit from team submissions but internal solvers may not. In this case, it may be advisable for the organizer to obligate solvers to make team submissions, if possible.