Management Accounting Section Midyear Meeting

The Oscar Curse in the Open Innovation Community: The Effects of Discretionary Recognition Reward on the User’s Subsequent Innovation Performance

• In Event: Performance Measures and Innovation (Mixed Methods)

Abstract

While a stream of management control literature has investigated the effect of confirmatory reward on creativity performance, the relationship between discretionary reward on creativity performance remains unexplored. Unlike the confirmatory reward that specifies the winning criteria ex ante, the discretionary reward is relatively unexpected and does not specify the criteria for winning it. This study examines the effects of discretionary recognition reward on the user’s subsequent creativity performance within an open innovation community of 3D-printable design context. Drawing on self-efficacy theory from psychology literature, we argue that the users perceive higher self-efficacy after being recognized which increases the subsequent creativity performances of the experienced users. However, such sudden increase in self-efficacy may lead to overconfidence of the inexperienced users which undermines their subsequent creativity performance. We find support for our predictions using a two-way fixed effects difference-in-differences model within a matched sample. Our study shows an unintended negative consequence of the discretionary reward on the inexperienced user’s creativity performance. This finding raises cautions about the boundary conditions of using a widely-adopted rewarding practice to motivate creativity performance.

Authors

• Erdem Dogukan Yilmaz, INSEAD

• Shanming Liu, ESSEC Business School