This project investigates technology prizes and the means by which they induce innovation. Specifically, the project examines three aerospace prize competitions: (1) the Ansari X-Prize (rewarding "the first non-government organization to launch a reusable manned spacecraft into space twice within two weeks") (2) the Northrop Grumman Lunar Lander Challenge (NGLLC) (for "building and flying a rocket-powered vehicle that simulates the flight of a vehicle on the Moon"), and (3) the ongoing $30 million Google Lunar X-Prize (GLXP), which requires participants to land a robot on the surface of the Moon. This project studies three main aspects of those competitions: (1) how prize entrants respond to incentives, (2) how they organize R&D activities, and (3) how technology advancement takes place in this context.
Intellectual Merit: The project combines a two-stage research design, multiple data sources, and different data gathering methods, including questionnaires, interviews and direct observation. The first stage tests a model of prizes that links incentives with entrant characteristics, R&D organization, and technological outcomes. This model is tested and revised by studying the Ansari X-Prize and NGLLC competitions. The second stage applies the revised model to the ongoing GLXP and prize entrants, which has exceptional significance due to its real-time data access and possibility to explore real-time perceptions of prize entrants in a competitive context characterized by technological uncertainty.
Broader Impact: The project contributes to innovation theory. In addition, it draws significant implications for policies to advance technology, promote competitiveness, or achieve other societal goals by using prizes. Moreover, insights gained from this research can be also applied across fields like business, technology management, and engineering systems design. More broadly, this project contributes a better understanding on the potential of technology policies in times of economic crisis and the incentives that may promote engagement of different social groups, including underrepresented groups and students, for training within a competitive environment.
Inducement prizes–where cash rewards are given to motivate the attainment of targets—are used to stimulate individuals and groups to accomplish diverse goals. Recently, their popularity has grown, including in science, technology and innovation domains. However, there has been little assessment or evaluation of the performance of such prizes. This doctoral dissertation research investigates prizes and the means by which they induce innovation. The project uses an empirical, multiple case-study and data source methodology to investigate three cases of recent aerospace technology prizes: a main case study, the Google Lunar X Prize (GLXP) for robotic Moon exploration; and two pilot cases, the Ansari X Prize (AXP) for the first private reusable manned spacecraft and the Northrop Grumman Lunar Lander Challenge (NGLLC) for flights of reusable rocket-powered vehicles. The study contributes an original innovation model applied to prizes which focuses on the competition and on the articulation of internal and external factors that potentially explain the effect of prizes on innovation. The investigation highlights the value and limitations of prizes in a context in which more traditional mechanisms are also used to induce innovation. The findings are relevant to public policy, business strategy, and the study of innovation and technological change. A series of insights are offered for government officials, research and development (R&D) program managers, corporate executives, and entrepreneurs. The incentives offered by prizes attract entrants with diverse characteristics, including unconventional entrants—individuals and organizations generally not involved with the prize technologies. Entrants are attracted by non-monetary incentives (e.g. reputation, visibility, opportunity to accomplish other personal and organizational goals) and the potential market value of the prize technologies. Many more volunteers, collaborators, and partners also participate indirectly and support official entries as they also perceive opportunities to accomplish their goals. The monetary reward is not as important as other incentives, yet it is still important to promote the competition. Prizes can induce increasing R&D activities and re-direct industry projects to target diverse technological goals, yet the evolution of prize competitions is generally difficult to anticipate. The overall organization of prize R&D activities depends on entrant-level factors and can only be indirectly influenced by setting specific competition rules. The most remarkable characteristic of prize R&D activities is their interaction with fundraising efforts which may constrain the activities of entrants. Prizes can also selectively focus the advancement of technologies at different levels of maturity, yet the quality of the technological outputs is generally difficult to anticipate and depends on entrant-level factors as well. Prizes can also induce innovation over and above what would have occurred anyway, yet their overall effect depends significantly on the characteristics of the prize entrants and the evolution of the context of the competition. The ability of prizes to induce innovation is larger when there are larger prize incentives, more significant technology gaps implicit in the prize challenge, and open-ended challenge definitions. Moreover, prizes can induce technological breakthroughs but complementary incentives or support may be needed. The research shows that prizes are complex mechanisms and that their investigation requires analyzing entrant- and context-level factors generally not considered by the academic literature. Prizes complement and not replace patents and research support. The ability of entrants to retain intellectual property rights on their technologies enables the R&D process and hybrid prize schemes that include financial support for qualified entrants or commitment to purchase prize technologies are optional designs for these competitions. Prizes are only one of the forms of intervention to stimulate technological innovation, but are particularly appropriate to explore new methods and technologies that imply high-risk R&D or accelerate technological development to achieve higher performance standards. Prizes can selectively target certain technologies, R&D performers and geographic areas, and also leverage funding significantly due to their widespread, decentralized impact. They involve, however, higher programmatic risks than other more traditional mechanisms and their routine use, and/or challenge definitions that overlap, can weaken their incentive power. The products of this project are publicly available through the Scholarly Materials and Research repository at the Georgia Institute of Technology (http://smartech.gatech.edu/) in two stages. The first stage comprises datasets of the test cases (AXP and NGLLC). The second stage dataset of team cases engaged in the GLXP will be publicly available after the GLXP competition has ended as some data may contain sensitive information related to the competitive position of teams. The research was supported by a National Science Foundation Doctoral Dissertation Research in Science of Science and Innovation Policy award (No. 0965103) to Luciano Kay under the supervision of Philip Shapira at the School of Public Policy, Georgia Institute of Technology. Luciano Kay’s completed dissertation is available at http://smartech.gatech.edu/handle/1853/41193. Publications resulting from this research include L. Kay, The effect of inducement prizes on innovation: evidence from the Ansari X Prize and the Northrop Grumman Lunar Lander Challenge, R&D Management, 2011.
