Publications and other outputs
The following are outputs produced by this research program on innovation prizes. Please visit this website again for updates or like our Facebook page.
The effect of inducement prizes on innovation: evidence from the Ansari X Prize and the Northrop Grumman Lunar Lander Challenge (R&D Management)
Abstract:
Inducement prizes are increasingly popular because of their potential to induce technological innovations and attain related goals. Academic research, however, has barely investigated these prizes. This paper investigates the motivation of prize entrants, the characteristics of their research and development (R&D) activities, and the overall effect of prizes on innovation using case study research and documentary data sources. The Ansari X Prize and the Northrop Grumman Lunar Lander Challenge, both considered successful technology competitions in the aerospace sector, are investigated. The findings show that, first, incentives created by competitions, particularly those that are nonmonetary, attract unconventional entrants. The market value of the prize technologies motivate entrants as well but do not attract traditional industry players. Second, limited technology development lead times and no up-front funding characterize prize R&D activities, yet their differences with traditional industry practices are caused by participant-level factors. Most importantly, the introduction of novel R&D approaches is associated with the participation of unconventional entrants. Third, these prizes induced innovations over and above what would have occurred anyway, with the caveat that they were linked to significant technology incentives and fundamentally, ongoing R&D processes. These findings put forward lessons that inform the design of more effective prize competitions.
Link to full article (requires journal access): http://dx.doi.org/10.1111/j.1467-9310.2011.00653.x
Citation: Kay, Luciano (2011). “The effect of inducement prizes on innovation: evidence from the Ansari X Prize and the Northrop Grumman Lunar Lander Challenge.” R&D Management, 41, 4, 360-377.
Managing Innovation Prizes in Government
The use of prizes and awards is a visible element of the Obama Administration’s efforts to promote innovation in government. For example, the Office of Management and Budget (OMB) has sponsored a competition among federal employees to find cost savings and the White House has created the “challenge.gov” website where federal agencies can pose problems in hopes of getting solutions from the public. OMB issued guidance to encourage agencies to offer challenges and prizes, as well.
The use of prizes gained a legislative boost in December 2010 when Congress included a prizes component in legislation designed to increase American innovation and competition. This new legislation expands the authorization to use prizes to every agency head, and creates a framework and eases existing administrative constraints for conducting a prize competition for those outside government.
In this report, author Luciano Kay surveys the literature and offers several case studies of recent prizes awarded for technology innovations: the Ansari X Prize for re-usable space craft, the Northup Grumman Lunar Lander Challenge, and a Defense Department prize for autonomous road vehicles.
Citation: Kay, Luciano (2011). Managing Innovation Prizes in Government. The IBM Center for the Business of Government.
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