OPEN INNOVATION: STRATEGIC DESIGN OF ONLINE CONTESTS

Online contests for open innovation – seekers posting innovation projects to which solvers submit solutions – have been developed into a new online commerce model. This study is one of the first to lift the veil of online contests. We identify that real world online contests are very different from what is assumed by previous studies. A real world online contest has uncertain number of solvers due to dynamic participation process. Feedback can encourage solvers to contribute more than the equilibrium effort. With a given award, if the seeker's feedback effort is high enough, the emerging number of solvers is a proxy measure of contest performance. More solvers can increase potential performance, however Electronic Commerce and Electronic Markets 2 Workshop of Information Systems and Economics, Phoenix 2009 attention based theories suggest that a seeker is optimal to have an appropriate number of solvers to fit her capability of exploiting knowledge of solvers. To predict the emerging number of solvers of a contest, we have developed a two