Parallel search, incentives and problem type
Subtitle: revisiting the competition and innovation link
By: Kevin J. Boudreau, Nicola Lacetera, and Karim R. Lakhani
Contributors: Lacetera, Nicola; Lakhani, Karim R.; Harvard Business School
Series: Working paper / Harvard Business School -- 09-041; Working paper (Harvard Business School) -- 09-041
Publisher: Harvard Business School
Published: 2008
Place of publication: Boston
Language: eng
Number of pages: 41
Description: This paper presents econometric evidence of two independent effects of adding more competitors on innovation: 1) a competition effect whereby increasing rivalry shapes, and often decreases, incentives to expend effort and invest in innovation; and 2) a parallel search effect whereby adding greater numbers of "searchers" benefits innovation by broadening the search for solutions. We further show the importance of these effects depends on the nature of the innovation problem being solved. The analysis uses data from TopCoder's software contest platform, on which elite software developers were assigned different problems to solve within assigned groups of direct competitors. Econometric relationships are identified by exploiting random assignment and a separate instrumental variables procedure.
Notes: "September 2008"--Publisher's web site.

Includes bibliographical references.