The Anatomy of Idea Evaluation: Unpacking Biases in Innovation Management

Innovation relies on effective idea evaluation as much as idea generation. While innovative ideas must be feasible, usable, and novel, these criteria are subjective, and various factors influence their evaluations. In three papers, I explore how interactions between ideators, evaluators, and external factors lead to evaluation biases.

The Double-Edged Sword of Familiarity: Nurturing and Neglecting Novel Ideas in the World of Innovation

Innovation managers face a well-known but undesirable paradox: While idea evaluators identify and select innovative ideas, they tend to be biased against such highly novel ideas. Interestingly, when we applied Instrumental Variable estimation to data collected in a field experiment, we found that the bias against novel ideas increases with greater familiarity - contrary to findings in previous research. By applying construal-level theory, we offer new insights into innovation management. Specifically, we identify moderators that influence whether people will either grow fond of an idea through repeated exposure - the mere exposure effect - or start to dislike an idea when it becomes too familiar, a phenomenon often summed up as "familiarity breeds contempt".

Separating Lemons from Lemonade: Addressing Information Asymmetry in Innovation Contests

Assessing ideas put forth by others often leads to an information asymmetry between the individuals generating the ideas (ideators) and those evaluating them. Ideators can send quality signals to bridge this gap, but they might also exploit it by sending misleading signals - a practice known as window dressing. We explore how this can create a lemons problem in the market for ideas, where poor ideas can crowd out good ones. In this scenario, ideators with strong abilities can more easily send convincing yet potentially deceptive signals than those with weaker abilities, regardless of the actual quality of their ideas. Using game theory, we identify conditions that lead to two different outcomes: a pooling equilibrium, where it's hard to tell good from bad ideas, and a separating equilibrium, where the quality of ideas becomes clear. We then consider various screening methods that can discourage ideators from sending dishonest signals. We aim to design a tournament-style competition that minimizes bias arising from such deceptive tactics.

The grass is (not) always greener on the other side: Biased assessments of external ideas

Companies that open their R&D departments to external knowledge often outperform in innovation compared to firms that keep their research internal. However, when individual evaluators assess ideas, they generally favor internal ideas over external ones - a phenomenon known as the “Not-Invented-Here Syndrome.” This tendency has been explained through various studies citing social identity theory and ownership biases. Interestingly, some qualitative evidence supported by research suggests that the opposite may be true under specific conditions. Employees might attribute higher quality to external ideas than internal ones, a phenomenon we term “Homegrown-Aversion Syndrome.“ To further investigate these conflicting tendencies, we apply Construal Level Theory. Our goal is to identify new factors that determine which syndromes are more likely to occur and when none occur. We plan to test these hypotheses using data collected from vignette experiments.

David Pacuku started the PhD program at Kühne Logistics University in July 2022 under the supervision of Prof. Dr. Christina Raasch and Prof. Dr. Mirjam Meijer. His research focuses on innovation management, more specifically on the evaluation of innovations. Contributing to the “FabCity” project in Hamburg funded by the center for digitalization and technology research of the Bundeswehr, whose main goal is to promote a decentralized, digital, interlinked, and urban production, his analysis gives emphasis to a local, population-driven development and implementation of innovative solutions.