The megatrend New Work analysed by the Zukunftsinstitut suggests that our working society is heading towards a creative economy where fulfilment and fun through work are essential for individuals (Zukunftsinstitut, 2018). The Zukunftsinstitut refer to questions raised by scholars (Borts & Stein, 1964; Muth, 1971; Steinnes & Fisher, 1974) and suggest that “People follow jobs” was the credo of the industrial society, the creative economy of the future changes it to: “Jobs follow people” and refer to work from scholars. Thus, according to the Zukunftsinstitut, personal fulfilment will become even more important and work will no longer be a burdensome duty for the individual, but an instrument for self-development. They state that successful companies have embraced idea management, providing an open platform and laboratory-like environment. According to the publishers of Zukunftsinstitut, 72% of 20 to 35-year-olds favour independent work and flat hierarchies. Against this backdrop, almost 40% of businesses had problems filling their open positions in 2015. (Zukunftsinstitut, 2018)
Following this, the upcoming sections highlight research on types of rewards favoured by individuals. Why do crowds engage and how do they choose to support ideas? Additionally, research by scholars that have identified what motivates crowds to work as well as research of the much-debated field of rewards and the concept of money on crowds will be brought up.
What types of funding and rewards are favoured by a crowd?
Amazon has created a job platform introducing the concept of micro jobbing, where the crowd works on small tasks for small pay. This is very similar to F/OSS (Free and Open-Source Software) crowd work, in which software developers contribute on average 14 hours per week (Lakhani & Wolf, 2003). According to this study by Lakhani and Wolf, there is no single reason for software developers to participate and contribute to an F/OSS project. They have observed that intrinsic and extrinsic motivations both play an important role. Autonomy in choosing which projects to contribute towards could be interpreted as an extrinsic motivational factor and a personal sense of creativity as an intrinsic motivational factor. The three significant influences for hours dedicated towards a project were enjoyment from a sense of creativity, a form of payment or autonomy and, lastly, a sense of belonging or obligation towards a community. (Lakhani & Wolf, 2003) A study by Stoll tries to compare the flow state and level of enjoyment between programmers of open source and commercial software. Evidence in their paper suggests that open-source projects provide more fun for developers. The two reasons, according to this research, are a project vision and the autonomy of developers to choose their contribution based on their skill level. (Luthiger Stoll, 2006) Gedda and scholars analyse funders’ and initiators’ preferences in crowdfunding. They suggest that a compromise between funders and initiators has proven to work, which is a funding model of “all or nothing” combined with a reward system known as “pre-order”. (Gedda et al., 2016) Cholakova and Clarysse suggest that a combination of non-financial rewards, for example, what is understood as call reward and pre-order, can be combined with financial rewards, as lending with interest and equity, without reducing the willingness of the funder to fund the non-financial objectives (Cholakova & Clarysse, 2015).
In summary, the researchers above state that both intrinsic and extrinsic motivation factors are important. Five influencing factors that positively influenced the outcome of internal enterprise crowdfunding were the perceived autonomy, the hours dedicated, the enjoyment received and a form of reward as well as a sense of social belonging.
Why do crowds engage in crowdfunding programs?
According to Bretschneider, People participate in crowdfunding for financial gains, for altruism, for fun, to receive rewards such as products, or because they have some sort of identification with the team, project or idea and wish to support innovative ideas (Bretschneider et al., 2014). The scholar Muller suggests the reasons for employees to engage in enterprise crowdfunding differ from normal crowdfunding in a way that employees can articulate unmet needs in new ways and are able to satisfy those needs through support and collaboration (Muller et al., 2013). While the scholar Brown was publishing his work, he referred to enterprise crowdfunding as still being a very new concept that would require more research (Brown, Boon, & Pitt, 2017). Scientific studies that document reasons for crowds to engage in enterprise crowdfunding are limited. But considering the research available for participation in crowd work, it can be interesting to draw some conclusions and utilize these for an enterprise crowd working environment. For example, Kleemann and Gosh have analysed crowd work conditions in open source and open content projects. They identified that when contributions were unpaid, extrinsic motivators were nevertheless often present. Subsequently, the desire to acquire new knowledge and to share expertise with others while also attracting potential career-related benefits or to reach common goals where highly apparent (Gosh, 2005; Kleemann et al., 2008). Research by Schroer and Hertel, show an unfavourable personal cost-benefit balance from individuals that have reported strong participation (2009). These participants were aware of the imbalance but had a high sense of willingness to contribute in any way. (Schroer & Hertel, 2009) The scholars Franke and Klausberger state that participants in a crowd work environment are more willing to contribute if they perceive their contribution is fair. They further highlight that participants who have an interest in obtaining tangible or non-tangible rewards have a desire to poses intellectual rights over their contributions and have the ability in making related decisions (Franke et al., 2013). While these findings are substantial in understanding what potentially crowds in an enterprise crowdfunding system desire, it does lead to further interesting research in how crowds make decisions and thus influence crowdfunding systems.
How do crowds decide to support ideas?
The scholars Reitzig and Sorenson provide findings from their study on bottom decisions on strategy, that employees tend to support ideas that are proposed by close colleagues. They highlight, that this holds true especially when employees are part of a smaller subdivision within a larger organisation. (Reitzig & Sorenson, 2013) This type of reaction by employees is also found by scholar Feldmann who suggests in his study that participants in an enterprise crowdfunding system could be disposed to heuristic and system-1 decision making (Feldmann et al., 2014). Heuristic and system-1 thinking are both considered effortless and automated instead of system-2 thinking that is focused and controlled. In a subsequent study by Feldmann and Gimpel, they highlighted that idea quality, idea novelty, its relevance or its feasibility played a minor role when employees took to support, back or fund projects (Feldmann & Gimpel, 2016). Unclear is if anonymising participants while funding and voting would have any impact on their type of behaviour in making decisions. Clear from these findings that system-1 thinking and even forms of nepotism might influence enterprise crowdfunding. If this holds true, then the benefits from an enterprise crowdfunding system to an organisation are not only limited but could falsely lead to undesired outcomes. Hence if it can be concluded that system-1 type thinking can reduce the quality in idea selection the objective of an enterprise crowdfunding system should be in developing a conceptual framework that supports system-2 thinking during an evaluation and funding phase. Although the scholar Gómez raised the following question in a different context which was more related to the process model of enterprise crowdfunding, the need for further research in understanding how employees could invest private resources would be interesting (Gómez et al., 2016). Continuing with this train of thought, it would be interesting to understand if introducing the money concept could lead participants to system-2 thinking and thus lead to more aware and controlled decision making. Preliminary insight in research found on introducing a money concept shows that there are clear positives and negatives overall, but none that necessarily have a direct influence on decision making. Because these findings are not related to decision making, these insights are shared in the chapter that highlights research around the concepts of money and its influence on crowds. Similar to Gomez, the scholar Simons has provided substantial research in enterprise crowdfunding systems highlights that there is a risk of heuristic decision making in internal crowdfunding systems. Simons suggest further research could explore to what extent heuristics are used by employees that receive corporate funds or money to evaluate and make decisions on backing ideas and projects (Simons et al., 2019). Also the scholar Schweinsfurth recommends in the course of designing internal crowdfunding further research to be useful to reduce the danger from hierarchical similarity bias (Schweisfurth et al., 2017). In conclusion, researchers have found evidence in heuristic decision making by participants in an internal enterprise crowdfunding system. But before evaluating if and how the concept of money would have an influence on the quality of decision making, it could be valuable to take a different angle and try to understand what motivates crowds to make decisions and to fund projects. For this, a thorough understanding of intrinsic and extrinsic motivational aspects will be beneficial and with this to evaluate if and how employees could invest their private money towards projects.
What type of motivation fuels crowds to work?
In an analysis derived from cognitive and social psychology, the scholar Kreps highlights that individuals seek justification for action when doing a task (1997). Employees will rationalize their efforts based on the level of enjoyment received from a task when there is no extrinsic incentive available. Therefore, if employees perceive an increased enjoyment from the task, then the efforts towards this task will also increase. However, if extrinsic incentives are apparent, then employees will interestingly focus their efforts to reflect these incentives and this can be positive or negative to an outcome. But as Kreps suggests the extrinsic incentives gradually increase the aversion towards the efforts. Thus, the effort without the extrinsic reward is not pursued. Therefore it is invaluable to understand that if economic incentives are put in place, these should complement intrinsic motivation especially when incentives are provided when an emphasis is an intrinsic motivation for any unpaid kind of work. (Kreps, 1997) Similarly the scholar Lazear indicates that extrinsic incentives can diminish intrinsic motivation of employees and reduce levels of efforts which lead to lower results for employers (1996). Although Lazear suggests that in certain cases extrinsic incentives can lead to significant increases in efforts by employees and result in higher employer profit, Lazear continues by outlining how intrinsic motivation is mostly superior to extrinsic motivation. (Lazear, 1996) In other words, scholars have researched and formulated the over-justification effect, which arises when an anticipated external reward (tangible, such as money) continuously reduce an intrinsic motivation for an individual in doing a task. The over-justification effect describes a situation when a secondary motivation replaces the primary motivation. The effect of tangible rewards for an action that was previously unrewarded provides a shift towards extrinsic motivation and would weaken intrinsic motivation (‘Overjustification Effect’, 2020). Important for an over-justification effect to occurs, is that tangible rewards need to be repeated until rewards become anticipated. An over-justification effect would arguably not happen easily in the case of enterprise crowdfunding system, because returns or rewards in the equity or lending type of crowdfunding forms and rewards for investments are not certain and not anticipated. But this insight does highlight the risk and importance when dealing with tangible rewards, that considerations on overall pay-out size and pay-out frequency must be carefully planned. Similar findings are highlighted by scholar Jirjahn who indicates, that in various types of performance pay similar patterns arise (regardless of individual or group-based performance pay or profit-sharing) (Jirjahn, 2016). An interesting finding by the scholar Hennessey suggests that an organisational culture focusing on purpose and with intrinsic motivation of employees at its core could deflect the negative effects of extrinsic rewards if they would appear (1993). Although his study examines children on how extrinsic motivation was influencing their creativity, his conclusions are, that if people are focused on intrinsic motivation and have learned to regard external incentives as inferior, these people are able to maintain high levels of intrinsic motivation. Moreover, sometimes these people could even show increased levels of creativity when extrinsic rewards were apparent. (Hennessey & Zbikowski, 1993) In a similar way the scholar Amabile highlights findings from her interviews with professional artists who perceive that contracted work (which his paid) can enable them to perform more exciting work (1993). Amabile suggests that professionals can be encouraged and creativity can be increased if they believe that the reward reflects the importance of their contribution (Amabile, 1993). Therefore, it is misleading to categorically state, that bonuses will always decrease the motivation of employees towards their work challenges and a quest for increased creativity. The findings from scholars as well as from Eisenberger and Cameron suggest, that when incentives are handled in a careful manner, they can promote intrinsic motivation and even lead to higher forms of creativity (Eisenberger & Cameron, 1996). Nonetheless, Hennessey and Amabile reflect on the predominance of evidence in the existing study, that indicated if rewards are provided for tasks in a routine setting, then these rewards will destroy both intrinsic motivation and creativity (Hennessey & Amabile, 1998). In general, a majority of scientific research strongly supports intrinsic motivation to outweigh extrinsic motivation, so more research is needed towards motivation and incentives to understand how rewards can be set in a crowd environment and a workplace that is changing towards a New Work culture.
What type of rewards could work for an internal crowdfunding system?
According to the work by Cameron and Pierce, individuals that are interested in a task and are reinforced for doing it will spend just as much time and effort as they would have without any kind of reinforcement or reward (1994). They argue that when the reinforcement is removed individuals would continue to dedicate as much time and effort to the task. The big difference Cameron and Pierce point out from the behavioural point of view is, that rewards that are in nature discriminating, will have a declining effect on intrinsic motivation and, thus, when removed individuals will not engage the same way as prior to the report. A discriminating reward is similar to a bonus that is closely linked to the performance of an individual rather than a bonus that contains information about the competence of an individual. (Cameron & Pierce, 1994)
In a study by Lepper, he pointed out that an over-justification effect needs to be understood in relation to the interest in the activity overall because introducing extrinsic rewards when interest in the activities is low might be essential for the participation and involvement of individuals (Lepper et al., 1973). Cameron argues that even when there is a low interest in the activity, tangible rewards provided specifically when outperforming others still lead to an increase of intrinsic motivation (Cameron, 2001). He refers back to his previous study indicating that rewards will diminish intrinsic motivation in only very special cases (Eisenberger & Cameron, 1996).
In an internal corporate crowdfunding system, participation is of free will and, thus, in the initial phases of an internal crowdfunding system, it can be assumed that participants will contribute and collaborate through intrinsic motivation as well as extrinsic motivation relating to social recognition and even career-advancing possibilities. Interesting though is the further analysis of an overall justification effect at the workplace.
Source: Created by Dr. Robert E. Kraut in 2012 based on Cameron, Banko, and Pierce 2001
In a workplace setting, a variety of rewards will have different impacts on individuals. As highlighted in Figure 3 and according to the cognitive evaluation theory by authors Deci and Ryan, rewards referred to as non-contingent rewards or benefits derived from an employment status without an impact on task performance, will also have no negative effect on intrinsic motivation. Rewards that are task-related, such as salaries, which are provided for doing a task, are considered controlling and, thus, may have a negative impact on intrinsic motivation. Even worse are rewards that are related to the performance of an individual, such as bonuses, that are considered controlling and, therefore, decrease intrinsic motivation. In certain cases, where rewards on an individual’s performance provide information about the competence in achievement will reduce the negative effect on intrinsic motivation. Even virtual money rewards, badges or awards should adequately meet the principles of self-determination theory for intrinsic motivation to provide competence, feel autonomy, and understand the relatedness. (Deci et al., 1999) While the cognitive evaluation theory and the self-determination theory brought forwards by scholars Deci and Ryan lay their focus on situations where rewards are provided while interest from individuals in activity is high. Cameron has analysed both low and high-interest task activity of individuals. (Cameron, 2001)
Rewards that can have a positive impact on intrinsic motivation based on Cameron, Banko, and Pierce 2001 and depicted by Kraut 2012:
- Tasks where crowds have a low interest to contribute and receive a reward
- Tasks where crowds have a high interest to contribute and receive tangible rewards that are expected when overachieving others
Rewards that have a neutral impact on intrinsic motivation based on Cameron, Banko, and Pierce 2001 and depicted by Kraut 2012:
- Tasks where crowds have a high interest to contribute but tangible rewards are unexpected
- Tasks where crowds have a high interest to contribute and receive tangible rewards that are expected for finishing a task (in contrast to doing a task)
- Tasks where crowds have a high interest to contribute and receive tangible rewards that are expected for surpassing a score
- Tasks where crowds have a high interest to contribute and receive tangible rewards that are expected but are not related to task at hand.
In a study by Kaufmann and his colleagues, they comprise data from the survey on participants of Amazon’s Mechanical Turk crowdsourcing platform (2011). In this study, they highlight that participants are more driven by intrinsic motivation than for the potential small monetary rewards provided by the task creator (Kaufmann et al., 2011).
In general, it is important to measure or understand the intrinsic level of individuals participating in an internal crowdfunding system and to use extrinsic rewards to enhance intrinsic motivation. At the same time, it could be assumed that participants will be rewarded and thus contributions regarded as fair. The scholars Deci and Cameron offer many different types of analysis on intrinsic and extrinsic motivation and reports, the scholar Amabile on the other hand places much more emphasis on intrinsic and extrinsic motivation within an organisational context. Amabile suggests that for employees today motivation should foster creativity and, thus, has a different point of view on how to use rewards as motivation. (Amabile, 1997)
Which motivation influences crowds to increase creativity?
A concise explanation and differentiation by the scholar Amabile on motivation is that intrinsic motivation is derived from an individual perception of a task being interesting, involving and challenging while extrinsic motivation is the external reason for the individual to perform a task. If the reasons have to do with positive skill experience or self-expression, then the individual is intrinsically motivated. If the reasons have to do with some external goal, or external calling, then this person is extrinsically motivated. According to Amabile the dominant psychological point of view is that extrinsic is opposite of intrinsic motivation (1993). It is indicated in Amabile’s study that if strong extrinsic motivators are introduced in return for engagement, then any intrinsic motivation for this task will decline. Amabile argues, however, that there are numerous examples where extrinsic incentives encourage creativity. For example, Amabile points to rewards and appreciation for creative ideas or when clearly defined overall project objectives are provided or even regular feedback on the progress on tasks, all these provide for higher intrinsic motivation. (Amabile, 1993, 1997) The scholars Deci and Ryan take a similar point of view in their cognitive evaluation theory, where they suggest that under very specific situations, rewards can have either no or even a positive impact on intrinsic motivation and creativity (Ryan & Deci, 2000). The term motivational synergy coined by Amabile describes that extrinsic motivators can be combined with intrinsic motivation to have a positive effect (1993). Extrinsic motivation that supports individual competence or a deeper involvement with a task would support intrinsic motivation and creativity. Informative and enabling extrinsic motivation can be conductive if initial levels of intrinsic motivation are high. (Amabile, 1993) Amabile continues in a later study by introducing the term of entrepreneurial creativity, which combines intrinsic and extrinsic motivators and suggests that this type of creativity is the creation of new and useful ideas for businesses in organisations or start-ups. Entrepreneurial creativity, as Amabile points out, is the need for a combination of intrinsic and extrinsic motivation what Amabile also refers to as motivational synergy. Entrepreneurial creativity, supports skill development, enabling achievement of a task and confirming competence, which are all linked to enabling extrinsic motivation. Amabile, therefore, concludes that forms of entrepreneurship are a particular form of innovation (Amabile, 1997). So, if Amabile suggests that entrepreneurial creativity is created through a motivational synergy, how can money influence individuals and be used as an extrinsic reward?
How does the concept of money influence crowds?
Caruso et al. have researched how a community would be affected in their behaviours when exposed to money (2013). Participants in open-source projects reminded by the concept of money tend to shift towards a capitalistic social system, favour free-market capitalism, believe that victims deserve their fate and that socially disadvantaged groups should be led by privileged groups. Reminders of money made participants favour a free market system in organ transplants which favour socially affluent people. Their study demonstrates how beliefs and values are changed by reminding participants about the concept of money. (Caruso et al., 2013) In a study by Vohs, reminders of money led participants to reduce their help provided to others as well as their own requests for help (2006). Participants that were reminded of money, seek more physical distance from others and, thus, work and play alone. The concept of money has enhanced individualism by allowing people to reduce their dependency and reliance on family and friends. A self-sufficient individual reduces their contribution to the commune. Although human motivation is positively influenced by money, there is a negative effect on human behaviour towards others. (Vohs et al., 2006) A similar conclusion can be derived from a study by Frank et al., where university students were analysed playing social dilemma games (1993). Economic students made more self-interested moves than students of other fields and economic students believed that other students would also make self-interested moves concluding that money fosters an egocentric behaviour. (Frank et al., 1993)
An assumption is employees would invest cautiously and diligently if they would use their private resources or money. However, numerous studies highlight issues in introducing the concept of money and extrinsic rewards. For example, the scholar Caruso points out that activating a money concept can draw people to existing social structures and thus people become more likely to accept social inequality (Caruso et al., 2013). According to the scholar Vohs, people’s helpfulness toward others is reduced when activating a monetary concept. Vohs, therefore, suggests that big changes in human behaviour occur with even the most subtle reminders of money. (Vohs et al., 2006) In reflection of these standpoints, the concept of money bears disadvantages. But considering Cholakova and Clarysse understanding of the concept of money is that a combination of non-financial rewards, such as a reward for participation or a pre-order reward could be combined with financial rewards without reducing the interest to support. (Cholakova & Clarysse, 2015) According to research by Jack Zigon in his book “If-Then rewards” (Zigon, 1994) the concept of money narrows and focuses the attention of people to the task on hand. The scholar Pink also suggests that all extrinsic motivators will narrow an individual’s focus towards a goal (2011). This added extrinsic motivation can be the reason for an individual’s effectiveness and can concentrate the mind towards task completion. At the same time, a narrowed focus mind reduces the ability for complex or conceptual tasks and offering a reward can hinder the divergent thinking abilities necessary to come up with innovative ideas. Pink argues that the problem with providing an extrinsic reward is that individuals focus more on efficiency and less on effectiveness. In other words, Pink states that some people will choose the quickest route towards a goal even if it means taking the low road. (Pink, 2011) The scholars Ryan and Deci argue in a similar form, that for creative tasks and heuristic things extrinsic motivation will not help, but intrinsic motivation would (2019). In contrast to narrow-focused tasks which can be improved through narrow supporting rewards which typically are of extrinsic nature. (Ryan & Deci, 2019) It will be important to look into motivational theories about participation in crowdfunding systems, but the evidence is limited to date. The conclusion to draw from this is that in situations where crowds need to focus on tasks or use convergent types of thinking, the introduction of money can be useful to narrow thinking. This means that in the stage of ideation where ideas are formed and transmitted towards the crowd, the concept of money, according to the scholar Pink, would decrease the quality of ideas formed (Pink, 2011). Once ideas are provided to the crowd for funding, however, this stage does not need diverging thinking, rather convergent thinking and, thus, the concept of money would help crowds to narrow their thinking and to become effective or efficient in selecting a task and supporting it. But what amount of monetary reward is considered useful or beneficial?
What do crowds consider as fair?
Schroer and Hertel indicate that contrary to expectations, strongly participating individuals reported an unfavourable personal cost-benefit balance (2009). All indications are that participants are aware of the imbalance but possess an immanent willingness to participate anyway (Schroer & Hertel, 2009). The study by Franke, entitled “Does This Sound Like a Fair Deal”, distinguishes two factors in fairness perceptions—namely, the fairness of the selection outcome (distributive fairness) and the fairness of the selection process (procedural fairness). Franke finds that consumers are more likely to accept to participate when they perceive the project as being fair for them and that it is linked to the business model of the company (2013). It is important whether the participant obtaining rewards (tangible or not) have their say in making the related decisions, and have intellectual rights over the ideas they submitted (Franke et al., 2013). From the research that Schroer and Hertel have published, it is apparent that participants in their crowdfunding system would see an unfavourable personal cost-benefit balance (2009). And if individuals find their contribution to be rewarded unfairly, it could be assumed that their intrinsic motivation will decline over time. When intrinsic motivation declines extrinsic rewards can help to boost the level of intrinsic motivation. (Schroer & Hertel, 2009) The question though is if organisations are able to predict when intrinsic motivation is fading and have a swift response for increasing intrinsic motivation by using extrinsic rewards.