After Online Innovators Receive Performance-Contingent Material Rewards: A Study Based on an Open Innovation Platform

Abstract

In recent years, enterprises have increasingly recognized the pivotal role of external users in driving product innovation. Open innovation platforms (OIPs), which facilitate interactions between companies and external innovators, have emerged as critical conduits in this regard. However, OIP managers face the challenge of motivating innovators to sustain their contributions. While some OIPs have implemented material incentives, the impact of such rewards on users’ ongoing innovation efforts remains uncertain. This study utilized a large-scale dataset from an OIP to examine how performance-contingent material rewards influence the subsequent behaviors of online innovators. Employing a quasi-experimental design involving propensity score matching (PSM) and difference-in-differences (DID) analysis, we found that receiving performance-contingent material rewards led to a decrease in the quantity of subsequent ideas generated by innovators. However, these rewarded innovators produced ideas of higher quality. Interestingly, the novelty of ideas submitted by innovators declined following their receiving of rewards. Moreover, newly enlisted innovators exhibited a more positive response to these incentives. Our findings provide valuable insights for platform managers seeking to optimize incentive mechanisms. We suggest adopting diversified incentive approaches and refining incentive strategies to effectively motivate continuous innovation among users on OIPs.