Opening the floodgates: How big companies can reap the benefits of internal crowdfunding

Abstract

Digital technologies enable employees at all levels to participate in distributed decision-making. We examine the design principles, benefits, and challenges of a new type of distributed decision-making: internal crowdfunding. We build on a 5-year case study of internal crowdfunding contests at Siemens to deepen our understanding of the design principles of internal crowdfunding and its potential for corporate innovation. Based on this data, we discuss the three design choices in internal crowdfunding (contributors, configuration, and control), find four key benefits (decentralization, cross-collaboration, institutionalization, and intrapreneurship), and identify three key challenges (dealing with rejected ideas, evaluation biases, and implementation and follow-on funding) and potential actions by managers to overcome them. The article contributes to both the emerging literature on internal crowdfunding and the literature on distributed decision-making.