Hierarchical similarity biases in idea evaluation: A study in enterprise crowdfunding

Tim Schweisfurth, Michael A. Zaggl, Claus P. Schöttl and Christina Raasch

No 2095, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: To be successful innovators, organizations must select the best ideas for implementation. Extant research shows that idea selection is distorted by a number of biases, but has failed to consider hierarchy, a key element of organizations. We examine how hierarchical distance between an idea's creator and its evaluator affects evaluation outcomes and thus advance three competing theoretical predictions based on homophily, competition, and status. To test our predictions, we use a unique dataset from an enterprise crowdfunding initiative at Siemens where 265 employees evaluated 77 ideas by allocating corporate funds, resulting in 20,405 evaluation dyads. We find that idea evaluations are more favorable if the idea creator is hierarchically similar to the evaluator, thus supporting the homophily perspective. Idea novelty amplifies this bias, inducing more social evaluations. Our findings are robust to various specifications and tests, and are absent in a subsample where idea creators remained anonymous. We contribute to the idea evaluation research and inform organizational idea selection process designs.

Keywords: idea evaluation; idea selection; crowdfunding; hierarchy; homophily; status; competition (search for similar items in EconPapers)
JEL-codes: D91 M19 O31 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-ent, nep-hrm and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:2095

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