Incentives & Governance

The Laboratory for Innovation Science at Harvard (LISH) is changing the way we look at incentives and governance in industry and academia through experimentation and analysis with a focus on behavioral economics.

Key Questions


What are the motives for creative workers engaged in innovation activities?


How do extrinsic, intrinsic, and pro-social motives interact in driving effort and performance for creative workers?


When are contests vs. community most effective?



What is the optimal balance between autonomy and managerial control for innovation activities?


These, and related questions, drive the research conducted by LISH and provide a clear pathway to achieve LISH’s mission. Research projects span a diverse array of areas of application, from the development of crowdsourcing best practices to exploring the science of science by examining the value of scientific citations. See below for more information on each of the individual projects in this research track.

Related Publications

Olivia Jung, Andrea Blasco, and Karim R. Lakhani. 2017. “Perceived Organizational Support For Learning and Contribution to Improvement by Frontline Staff.” Academy of Management Proceedings, 2017, 1. Publisher's VersionAbstract

Utilizing suggestions from clinicians and administrative staff is associated with process and quality improvement, organizational climate that promotes patient safety, and added capacity for learning. However, realizing improvement through innovative ideas from staff depends on their ability and decision to contribute. We hypothesized that staff perception of whether the organization promotes learning is positively associated with their likelihood to engage in problem solving and speaking up. We conducted our study in a cardiology unit in an academic hospital that hosted an ideation contest that solicited frontline staff to suggest ideas to resolve issues encountered at work. Our primary dependent variable was staff participation in ideation. The independent variables measuring perception of support for learning were collected using the validated 27-item Learning Organization Survey (LOS). To examine the relationships between these variables, we used analysis of variance, logistic regression, and predicted probabilities. We also interviewed 16 contest participants to explain our quantitative results. The study sample consisted of 30% of cardiology unit staff (n=354) that completed the LOS. In total, 72 staff submitted 138 ideas, addressing a range of issues including patient experience, cost of care, workflow, utilization, and access. Figuring out the cost of procedures in the catheterization laboratory and creating a smartphone application that aids patients to navigate through appointments and connect with providers were two of the ideas that won the most number of votes and funding to be implemented in the following year. Participation in ideation was positively associated with staff perception of supportive learning environment. For example, one standard deviation increase in perceived welcome for differences in opinions was associated with a 43% increase in the odds of participating in ideation (OR=1.43, p=0.04) and 55% increase in the odds of suggesting more than one idea (OR=1.55, p=0.09). Experimentation, a practice that supports learning, was negatively associated with ideation (OR=0.36, p=0.02), and leadership that reinforces learning was not associated with ideation. The perception that new ideas are not sufficiently considered or experimented could have motivated staff to participate, as the ideation contest enables experimentation and learning. Interviews with ideation participants revealed that the contest enabled systematic bottom-up contribution to quality improvement, promoted a sense of community, facilitated organizational exchange of ideas, and spread a problem-solving oriented mindset. Enabling frontline staff to feel that their ideas are welcome and that making mistakes is permissible may increase their likelihood to engage in problem solving and speaking up, contributing to organizational improvement.

Dietmar Harhoff and Karim R. Lakhani. 2016. Revolutionizing Innovation: Users, Communities, and Open Innovation. Cambridge, MA: MIT Press. Publisher's VersionAbstract

The last two decades have witnessed an extraordinary growth of new models of managing and organizing the innovation process, which emphasize users over producers. Large parts of the knowledge economy now routinely rely on users, communities, and open innovation approaches to solve important technological and organizational problems. This view of innovation, pioneered by the economist Eric von Hippel, counters the dominant paradigm, which casts the profit-seeking incentives of firms as the main driver of technical change. In a series of influential writings, von Hippel and colleagues found empirical evidence that flatly contradicted the producer-centered model of innovation. Since then, the study of user-driven innovation has continued and expanded, with further empirical exploration of a distributed model of innovation that includes communities and platforms in a variety of contexts and with the development of theory to explain the economic underpinnings of this still emerging paradigm. This volume provides a comprehensive and multidisciplinary view of the field of user and open innovation, reflecting advances in the field over the last several decades.

The contributors—including many colleagues of Eric von Hippel—offer both theoretical and empirical perspectives from such diverse fields as economics, the history of science and technology, law, management, and policy. The empirical contexts for their studies range from household goods to financial services. After discussing the fundamentals of user innovation, the contributors cover communities and innovation; legal aspects of user and community innovation; new roles for user innovators; user interactions with firms; and user innovation in practice, describing experiments, toolkits, and crowdsourcing and crowdfunding.

Andrea Blasco, Olivia S. Jung, Karim R. Lakhani, and Michael Menietti. 2016. Motivating Effort in Contributing to Public Goods Inside Organizations: Field Experimental Evidence. National Bureau of Economic Research. Publisher's VersionAbstract

We investigate the factors driving workers’ decisions to generate public goods inside an organization through a randomized solicitation of workplace improvement proposals in a medical center with 1200 employees. We find that pecuniary incentives, such as winning a prize, generate a threefold increase in participation compared to non-pecuniary incentives alone, such as prestige or recognition. Participation is also increased by a solicitation appealing to improving the workplace. However, emphasizing the patient mission of the organization led to countervailing effects on participation. Overall, these results are consistent with workers having multiple underlying motivations to contribute to public goods inside the organization consisting of a combination of pecuniary and altruistic incentives associated with the mission of the organization.

Kevin J. Boudreau, Karim R. Lakhani, and Michael Menietti. 2016. “Performance Responses to Competition Across Skill-Levels in Rank Order Tournaments: Field Evidence and Implications for Tournament Design.” The RAND Journal of Economics, 47, 1, Pp. 140-165. Publisher's VersionAbstract

Tournaments are widely used in the economy to organize production and innovation. We study individual data on 2775 contestants in 755 software algorithm development contests with random assignment. The performance response to added contestants varies nonmonotonically across contestants of different abilities, precisely conforming to theoretical predictions. Most participants respond negatively, whereas the highest-skilled contestants respond positively. In counterfactual simulations, we interpret a number of tournament design policies (number of competitors, prize allocation and structure, number of divisions, open entry) and assess their effectiveness in shaping optimal tournament outcomes for a designer.

Kevin J. Boudreau and Karim R. Lakhani. 2015. “'Open' Disclosure of Innovations, Incentives and Follow-on Reuse: Theory on Processes of Cumulative Innovation and a Field Experiment in Computational Biology.” Research Policy, 44, 1, Pp. 4-19. Publisher's VersionAbstract

Most of society's innovation systems – academic science, the patent system, open source, etc. – are “open” in the sense that they are designed to facilitate knowledge disclosure among innovators. An essential difference across innovation systems is whether disclosure is of intermediate progress and solutions or of completed innovations. We theorize and present experimental evidence linking intermediate versus final disclosure to an ‘incentives-versus-reuse’ tradeoff and to a transformation of the innovation search process. We find intermediate disclosure has the advantage of efficiently steering development towards improving existing solution approaches, but also has the effect of limiting experimentation and narrowing technological search. We discuss the comparative advantages of intermediate versus final disclosure policies in fostering innovation.

Kevin J. Boudreau and Lars B. Jeppesen. 2015. “Unpaid Crowd Complementors: The Platform Network Effect Mirage.” Strategic Management Journal, 36, 12, Pp. 1761-1777. Publisher's VersionAbstract

Platforms have evolved beyond just being organized as multi-sided markets with complementors selling to users. Complementors are often unpaid, working outside of a price system and driven by heterogeneous sources of motivation—which should affect how they respond to platform growth. Does reliance on network effects and strategies to attract large numbers of complementors remain advisable in such contexts? We test hypotheses related to these issues using data from 85 online multi-player game platforms with unpaid complementors. We find that complementor development responds to platform growth even without sales incentives, but that attracting complementors has a net zero effect on on-going development and fails to stimulate network effects. We discuss conditions under which a strategy of using unpaid crowd complementors remains advantageous.