Evaluation Shirking in Idea Management and Innovation

• Applicant: Professorin Dr. Christina Raasch
• Subject Area: Operations Management and Computer Science for Business Administration
• Term: since 2023
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 525065843

Under what conditions do decision-makers err about the value of innovative ideas; and to what extent can their incentives account for such errors? The proposed research program seeks answers to these questions by drawing on microeconomic theory and state-of-the-art quantitative empirical methods. Its goal is to make valuable contributions to our growing understanding of idea evaluation in innovation research. I refer to idea evaluation as the quality assessments that decision-makers, or evaluators, make with regard to ideas for product or process innovations. Effective idea evaluation is key for organizations’ innovation performance: Only if organizations succeed in identifying the most promising ideas can they allocate resources to projects efficiently. Extant innovation research has shown that evaluators often produce biased evaluations that fail to reflect the ‘true’ value of ideas. Most researchers have attributed such evaluation biases to evaluators’ bounded rationality: Evaluators have limited cognitive capacity, which leads them to infer idea quality from easily accessible cues (e.g. the characteristics of the idea creator) that do not capture idea quality. I propose an alternative explanation for faulty evaluations that is informed by microeconomic theory. My main argument is that evaluation errors are not only rooted in evaluators’ bounded rationality but also in their lack of incentives to evaluate ideas thoroughly. Evaluators’ incentives to evaluate ideas thoroughly, depend on the organizational structures in which they are embedded. If the incentives for idea evaluation are low or even absent, evaluators exert suboptimal levels of evaluation effort, are likely to use mental shortcuts, and produce imprecise or biased evaluations. My proposed research program comprises three distinct projects. In project 1, I examine the relative importance of idea creation and idea evaluation for organizations’ innovation performance and assess by what pathways idea evaluation affects performance. Project 1 is thus fundamental for the entire research stream on idea evaluation and nicely sets the stage for projects 2 and 3 that zoom in on idea evaluation and evaluation shirking. In project 2, I investigate how the number of co-evaluators affects incentives for evaluation shirking and investigate contingencies. In project 3, I examine whether employees’ incentives to shirk evaluation increases with their lateral distance to the managers requiring the evaluation. Perhaps more importantly, the goal is to identify contingency factors that may be able to mitigate the supposed negative effect of lateral distance. By putting evaluators’ incentives front and center, the proposed research seeks to pioneer a new stream in idea evaluation research. Its goal is to enhance our understanding of the impediments to the efficacious evaluation of innovative ideas, and more particularly the levers for overcoming them.

• DFG Programme: Research Grants