Abstract

http://ssrn.com/abstract=1928433
 
 

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The Effect of Inducement Prizes on Innovation: Evidence from the Ansari X Prize and the Northrop Grumman Lunar Lander Challenge


Luciano Kay


affiliation not provided to SSRN

September 2011

R&D Management, Vol. 41, Issue 4, pp. 360-377, September 2011

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.

Accepted Paper Series


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Date posted: September 16, 2011  

Suggested Citation

Kay, Luciano, The Effect of Inducement Prizes on Innovation: Evidence from the Ansari X Prize and the Northrop Grumman Lunar Lander Challenge (September 2011). R&D Management, Vol. 41, Issue 4, pp. 360-377, September 2011. Available at SSRN: http://ssrn.com/abstract=1928433 or http://dx.doi.org/10.1111/j.1467-9310.2011.00653.x

Contact Information

Luciano Kay (Contact Author)
affiliation not provided to SSRN
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