Technovation 34 (2014) 65–76

Contents lists available at ScienceDirect

Technovation
journal homepage: www.elsevier.com/locate/technovation

A literature review on markets for ideas: Emerging characteristics and

unanswered questions
A. Natalicchio n, A. Messeni Petruzzelli, A.C. Garavelli
Department of Mechanics, Mathematics, and Management, Viale Japigia 182/B, Politecnico di Bari, 70126 Bari, Italy

art ic l e i nf o a b s t r a c t

Available online 6 December 2013 Markets for ideas (MFIs) are virtual marketplaces connecting individuals and organizations selling their
Keywords: ideas (namely knowledge owners) to companies in search for specific innovative solutions (namely
Market for ideas knowledge seekers). This phenomenon finds its root in the open innovation paradigm and empirical data
Open innovation clearly demonstrate how its economic importance is constantly growing, as well as the interest paid by
Innovation contests academics. Nevertheless, despite their increasing relevance, it remains unclear which are the main
External knowledge dynamics and characteristics of these markets. Therefore, the present paper aims at providing an
overview of this specific topic by reviewing and discussing the main findings available in the scientific
literature. The analysis of the literature is structured around three main market dimensions – ideas,
knowledge owners, and knowledge seekers. In addition, actual examples of MFIs are reported in order to
strengthen literature's results. The contribution of this review is threefold. First, it provides an insight
into the literature on MFIs, by collecting and describing the main features of ideas, knowledge owners,
and knowledge seekers. Second, it presents propositions inferred by the characteristics emerging from
the review. Finally, it spots literature gaps and traces new research directions. Hence, the study sheds
new light on the main characteristics of MFIs, pointing out several research questions that need to be
further addressed by scholars.
& 2013 Elsevier Ltd. All rights reserved.

1. Introduction The relevance assumed by MFIs in the actual economic sce-

Organizations often face R&D problems that they can solve by
acquiring the necessary competences and capabilities from exter-
nal sources of knowledge (Chen et al., 2011; Tapscott and Williams,
2006). This trend has assumed an increasing relevance in last few
years (Bianchi et al., 2011) and finds its root in the open innovation
paradigm introduced by Chesbrough (2003), who discussed the
importance for firms of employing in their innovative processes
knowledge generated both inside and outside their organizational
boundaries. Open innovation is receiving remarkable attention by
scholars (see Dahlander and Gann, 2010; Huizingh, 2011;
Lichtenthaler, 2011) and a number of different approaches have
been proposed and discussed in the literature to sustain this
strategy (e.g., Alexy et al., 2013; Bianchi et al., 2011; Mortara and
Minshall, 2011; Wang et al., 2012). Specifically, particular attention
has been paid to the growing phenomenon of markets for ideas
(MFIs) (Arora and Gambardella, 2010; Lichtenthaler, 2011), defined
as virtual marketplaces where individuals and organizations may
sell their ideas, inventions, and competencies to a number of
different companies searching for innovative solutions.
n
Corresponding author. Tel./fax: þ 39 0805962847.
E-mail address: a.natalicchio@poliba.it (A. Natalicchio).
nario, as witnessed by both academics and practitioners, makes
this phenomenon as particularly interesting to be investigated,
due to its propensity to deeply modify organizations' innovative
behavior. In fact, the use of these markets is consistent with the
increasing tendency to decompose the whole innovation process
into distinct phases (Dahlander and Gann, 2010; Gassmann and
Enkel, 2004) Hence, MFIs are also significantly reshaping the
methods and approaches to innovate, exploiting the benefits in
opening organizations' innovation processes originated by globa-
lization and digitization processes (Dahlander and Piezunka, in
press), and tracing new open innovation patterns (Linton, 2012).
Nevertheless, even though the number of studies focusing on
MFIs is growing (Fosfuri and Giarratana, 2010), a satisfying con-
ceptualization of the topic is still missing, as well as a systematized
discussion of MFIs' main dynamics and characteristics, which may
instead increase the appreciation of the costs and benefits going
along with the participation in these markets and support scholars
in identifying novel research directions. Thus, the present study
aims at reviewing the existing literature on MFIs, in the attempt to
deepen our understanding of this emerging topic. Specifically, the
contribution of this study is threefold: (i) we critically review
the extant literature in order to provide an integrative framework
to discuss previous studies, (ii) we discuss the key scienti-
fic contributions emerging from the literature in order to infer

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66 A. Natalicchio et al. / Technovation 34 (2014) 65–76
propositions, and (iii) we spot gaps in the literature and trace
directions for future research.
The remainder of the paper is structured as follows. Section 2
introduces the concept of MFIs and proposes the conceptual
framework for the analysis. Then, in Section 3 we examine the
key scientific contributions emerged from the literature review,
according to the proposed framework, thus identifying the main
dynamics and features of MFIs. Next, in Section 4, we discuss the
emerging characteristics of these markets in order to develop
propositions regarding those managerial approaches that may
make MFIs more efficient and more effective for both owners
and seekers, representing the supply and the demand side,
respectively. Finally, in Section 5, we conclude the study by
highlighting the main gaps emerged during the literature analysis
and suggesting directions for future research.
2. Markets for ideas
Organizations are increasing their awareness about the impor-
tance of exploring and acquiring knowledge from external sources
to sustain and increase innovativeness and competitiveness
(Barney, 1991; Grant, 1996), as a result of the significant social
and economic changes in working patterns and knowledge circu-
lation (Dahlander and Gann, 2010). This is the basic idea under-
lying the open innovation paradigm proposed by Chesbrough
(2003), which assumes that firms “can and should use external
ideas as well as internal ones, and internal and external paths to
market” to make the most out of their technologies (Chesbrough,
2003, p. 24). This model is based on the recognition that innova-
tion partly depends on firm-specific knowledge resources, while
strongly depends on determinants that are external to the firms,
because these are often specialized in one field of knowledge and
rarely have all the required resources internally (Christensen et al.,
2005; Vanhaverbeke, 2006). In fact, to innovate, firms need to
span multiple and heterogeneous technological domains, geo-
graphic locations, epistemic communities, and legal regimes (e.g.,
Dahlander and Frederiksen, 2012; Phene et al., 2006). By opening
towards external sources, organizations may span their bound-
aries to explore new knowledge (Andersen et al., 2013), thus
enhancing their innovative capability and increasing the likelihood
of developing breakthrough innovations (Wu and Shanley, 2009),
which in turn favor business growth and new business develop-
ment (Burgelman, 1983). Exploration, in fact, expands the search
scope of an organization (Katila and Ahuja, 2002), hence providing
new pieces of knowledge to be recombined (Fleming, 2001).
Furthermore, exploration increases the heterogeneity of organiza-
tions' knowledge base, hence making them more able to create
influential and radical innovations (Rosenkopf and Nerkar, 2001).
Finally, exploration supports organizations in avoiding compe-
tency traps and core rigidities by refreshing knowledge opportu-
nities (Ahuja and Lampert, 2001; Levinthal and March, 1993).
Scholars have discussed and analyzed a number of different
approaches firms may adopt to open their innovation process and
explore new and external sources of knowledge (Chesbrough,
2006b), such as the formation of alliances (e.g., Chesbrough,
2006b), the involvement of lead users in product development
(e.g., Franke and Shah, 2003; von Hippel, 2005), and the definition
of mergers and acquisition agreements to source external knowl-
edge (e.g., Cassiman and Colombo, 2006). Among these various
strategic approaches, participation in MFIs is recently attracting
the attention of both researchers and practitioners as a key option
in fostering and sustaining firms' openness (Afuah and Tucci,
2012). In fact, MFIs act as virtual marketplaces, facilitating the
listing, searching, and exchange of knowledge assets of potential
economic value, such as patents and business plans, among
individuals and organizations (Bakos, 1998; Enkel et al., 2009;
Verona et al., 2006), hence allowing firms to perform both the
outside-in and the inside-out process, generally recognized as
fundamental aspects of an open innovation strategy (Chesbrough,
2006a; Enkel et al., 2009; Gassmann and Enkel, 2004; Hung and
Chou, 2013). As pointed out by Tapscott and Williams (2006), MFIs
put capabilities, knowledge, scientific expertise, and inventions
around the planet into connection with innovating companies. The
intangible nature of the exchanged goods, as well as the specific
logics and dynamics, make these markets deeply different from
past practices (Dushnitsky and Klueter, 2011), hence calling for ad
hoc investigations into their main constituents.
Since the pioneering study of Arora et al. (2001), MFIs have
been considered an effective channel for knowledge exchange and
acquisition, where organizations may find the best solutions fitting
their needs and expectations. In last decades, MFIs sensitively
grew. Arora et al. (2001), by focusing on technological innovation,
revealed that in the mid-1990s the size of global MFIs was $35–50
billion. More recently, Athreye and Cantwell (2007), analyzing the
international trends in royalty and licensing revenues between
1950 and 2003, reported a global value of $55–60 billion in the
mid-1990s and more than $75 billion in 2000. Additionally, the
current trend is showing a significant shift towards online market-
places that allow the reduction of both search and transaction
costs (Dushnitsky and Klueter, 2011), as well as to broaden the
demand and supply of knowledge. Moreover, MFIs often operate
by following the rules characterizing R&D contests (Morgan and
Wang, 2010; Tapscott and Williams, 2006; Terwiesch and Xu,
2008), which represent competitions where individuals submit
their projects to a firm that calls for the contest (Che and Gale,
2003; Mortara et al., 2013; Taylor, 1995; Terwiesch and Xu, 2008).
Consistently with this trend, the increasing importance of MFIs is
demonstrated even by a memorandum of the Executive Office of
the President of the United States of America – Barack Obama –
which encourages national agencies to utilize contests as tools to
spur innovation, thus highlighting the benefits of these practices
(Zients, 2010).
Using contests to find innovative solutions for specific pro-
blems outside the organizational boundaries has been revealed as
a successful practice also by several historical cases reported in the
literature (e.g., Che and Gale, 2003; Taylor, 1995). Clear examples
are represented by the contest, promoted in 1418 by the Opera del
Duomo of Florence and won by Filippo Brunelleschi, to build the
dome of the Santa Maria del Fiore's cathedral (Boudreau et al.,
2011; King, 2001), the 1714 contest by the British Parliament to
design a method to determine the longitude at sea (Che and Gale,
2003; Jeppesen and Lakhani, 2010), and the contest by the
U.S. Defense Advanced Research Project Agency for autonomous
robotic vehicles (Terwiesch and Ulrich, 2009). Despite the differ-
ences between these contests and the dynamics of current MFIs, as
their one-time nature and the involvement of a single organization
aiming at retrieving ideas, all these cases clearly show the
relevance of designing ad hoc contests, regulated by market
mechanisms, to favor the match between innovation demand
and supply, thus sustaining the translation of valuable ideas into
novel products or processes.
Lichtenthaler and Ernst (2008b) discussed the emergence of
MFIs, explaining their rise as the consequence of the increasing
number of organizations searching for knowledge externally and
licensing their knowledge to gain revenues, as well as of the
diffusion of web-based marketplaces. Furthermore, MFIs can be
considered as innovation intermediaries, that is, service providers
in innovation markets created to support the match between
innovation needs and solutions, providing a valuable price struc-
ture for sellers and complementary services for buyers (Howells,
2006; Huston and Sakkab, 2006; Lichtenthaler and Ernst, 2008a,
 A. Natalicchio et al. / Technovation 34 (2014) 65–76
2008b). Finally, different types of MFI have been distinguished
(Chesbrough, 2006a; Garavelli et al., 2013), such as those devoted
to sustain organizations in searching for and acquiring solutions
for specific problems, as in the case of InnoCentive and Atizo, or
those also engaged in accompanying individuals and organizations
in selling their competencies, ideas, and technologies, as in the
case of yet2.com and Innoget.
MFIs may be thus well considered as a novel pattern within the
open innovation paradigm (Linton, 2012), which is changing the
strategies firms adopt to both innovate by sourcing external
knowledge assets and appropriate the value of internally gener-
ated knowledge. The present paper offers a detailed review of this
emerging topic, discussing the existing literature according to a
proposed framework of analysis that organizes the studies
around the three main pillars of the markets, as ideas, knowledge
owners, and knowledge seekers. In this framework, we differenti-
ate between supply and demand of ideas, thus highlighting the
distinctive characteristics of owners and seekers, respectively, and
the importance MFIs assume in sustaining their open innovation
strategies. Furthermore, by separately analyzing ideas, owners,
and seekers, we can focus on the specific features of each of these
pillars, in order to spot evolving patterns, practices, and issues
specifically fostered by MFIs. Finally, by distinctly discussing ideas,
owners, and seekers, we also emphasize the peculiar effects
deriving from the digitization of MFIs, detecting how this gen-
erates specific emerging characteristics relative to the three main
pillars of these types of market.
In order to perform a rigorous review of the extant literature on
MFIs, we defined a process to retrieve relevant documents
(Tranfield et al., 2003), which is reported in Appendix.
3. Emerging characteristics of MFIs
In the following section, we discuss the retrieved literature on
MFIs by adopting the proposed framework of analysis, which
distinguishes theoretical and empirical evidences related to ideas,
knowledge owners, and knowledge seekers. Consistently with the
aims of this study, in the following review we provide a clear
picture of the different factors that characterize ideas, knowledge
owners, and knowledge seekers, by analyzing a number of related
sub-topics. Specifically, for each market pillar, we base the review
of the extant literature on the most relevant characteristics and
dynamics spotted, in order to systematize and group the related
findings.
Therefore, ideas are investigated by presenting their different
types, characteristics, and analyzing the relevance of intellectual
property rights. The role of knowledge owners and knowledge
seekers is instead discussed by describing types, participation
issues and motivations. In addition, for knowledge owners, evi-
dences related to their number, competencies diversity, and
cooperative behaviors are examined, while, for knowledge seekers,
the definition of rewarding systems is discussed. Findings allow to
outline the main dynamics and characteristics of MFIs, derive
proposition about their efficiency and effectiveness, and spotlight
avenues for future research, as identified in the concluding section.
3.1. Ideas
3.1.1. Types
Nambisan and Sawhney (2007) defined the goods exchanged in
the markets as ranging on a continuum from raw ideas, such as
undeveloped ideas, patented or patent-pending inventions, to
market-ready products, such as ready-to-be-sold products. Speci-
fically, raw ideas are less costly than market-ready products,
while the risk of investment is higher for raw ideas rather than
67
for market-ready products. Market-ready ideas are, instead, well-
defined ideas applied to a specific market, set in an intermediate
position, and characterized by medium investment risk and
acquisition costs. According to this view, it clearly emerges how
sourcing cost and risk vary with the market-readiness of an idea.
The identification of a continuum between raw ideas and market-
ready products is also identified by Arora et al. (2001), who stated
that technology can take the form of pure intellectual property, be
embedded into products, or assume the form of technical service.
Despite the different types and nature of ideas, Gans and Stern
(2010) discussed how their value strongly depends on the specific
organization exploiting them. In fact, organizations need a certain
degree of absorptive capacity (Cohen and Levinthal, 1990) in order
to recognize the value of these external knowledge resources, as
well as to translate them into viable products or processes, thus
making the involvement in MFIs as a successful strategy.
3.1.2. Characteristics
Gans and Stern (2010) identified three main characteristics of
ideas that need to be taken into account when designing a MFI:
complementarity, user reproducibility, and value rivalry. Specifi-
cally, complementarity regards the fact that ideas have higher
value when combined with other complementary assets and ideas
(Bresnahan and Trajtenberg, 1995; Teece, 1986), being thus char-
acterized by a certain degree of interdependence in specific
contexts. Differently, user reproducibility is related to the easiness
by which ideas can be replicated and it may be measured by the
costs of reproducibility. In particular, high costs, going along with
the tacit or context-specific nature of knowledge, may limit not
only their reproducibility and expropriation (Arora et al., 2001;
Nonaka, 1991), but also their successful exploitation, by increasing
the difficulties seekers may encounter in correctly reproducing
and applying it (Dushnitsky and Klueter, 2011). Finally, the
economic exploitation of ideas is subject to value rivalry, since
users tend to pay less according to ideas' diffusion (Gans and Stern,
2010).
3.1.3. Intellectual property rights
Intellectual property protection is a further crucial issue for
MFIs, contributing to explaining their success or failure (Håkanson
et al., 2011). In fact, recalling the Arrow information paradox
(1962), knowledge owners tend to protect their ideas, hence
reducing available information and risk of replication, while
knowledge seekers need the highest amount of information and
insights to fully appreciate the value of the proposed ideas. Thus, a
tension emerges between the necessities of owners to retain
knowledge about their innovative solutions and the needs of
seekers to understand the supplied solutions, thus implying
asymmetric information between buyer and seller (Silveira and
Wright, 2010). Another balance characterizing MFIs refers to the
public disclosure of ideas, which, on the one hand, may increase
the scope of recombination and the average quality of ideas, while,
on the other hand, may reduce the protection of each idea, hence
augmenting the risk of misappropriation (Dushnitsky and Klueter,
2011), namely the unauthorized appropriation or use of owners'
ideas. With this regard, two different approaches emerge from the
analysis of actual MFIs. For example, in Atizo, ideas are public and
users can read and vote on them to provide suggestions to the
seekers. In this case, monetary rewards are rather low, and thus,
the potential costs associated with the replication of the ideas are
generally lower than the benefits of building on others' knowl-
edge. Instead, in InnoCentive the situation is the opposite. In fact,
monetary prizes are quite high and ideas are not disclosed to the
other participants, hence suggesting the importance of intellectual
property policies to assure the effectiveness of the market.
68 A. Natalicchio et al. / Technovation 34 (2014) 65–76
3.2. Knowledge owners
3.2.1. Types
Knowledge owners are usually identified as entrepreneurs and
inventors keen to sell their expertise and knowledge. Neverthe-
less, as noted in the literature (Arora and Gambardella, 2010;
Tapscott and Williams, 2006), other organizations, such as com-
panies and research laboratories, may operate as knowledge
owners when they sell or license their own ideas or patents. Also,
long-lived small and innovative firms may act as the supply side of
MFIs. This is the case of the “serial innovators” discussed by Hicks
and Hegde (2005), as organizations generally engaged in devel-
oping and selling innovations having specific characteristics, such
as (i) high quality, (ii) general purpose, (ii) broad-based, (iv) quite
basic, and (v) based on emerging technologies. Licensing knowl-
edge through MFIs may support organizations in increasing their
revenues (Arora and Fosfuri, 2003) and simplifying the manage-
ment of their intellectual property portfolio (Tapscott and
Williams, 2006). In fact, organizations willing to sell or license
their intellectual property may benefit from the intermediary role
played by MFIs in identifying market applications (Nambisan and
Sawhney, 2007) and managing transactions (Lichtenthaler and
Ernst, 2008b). Knowledge owners may also include innovative
start-ups and spin-offs that focus on developing and licensing
ideas and technologies, without being interested in their manu-
facturing and commercialization (Arora et al., 2001; Conceiçao
et al., 2012; Gans and Stern, 2003).
3.2.2. Participation issues
Lichtenthaler and Ernst (2008a) observed that companies are
reluctant to use web-based marketplaces to license their knowl-
edge, mainly for the passiveness of this strategic approach. In fact,
in several cases, MFIs only provide the virtual infrastructure to
allow the transactions, without offering any other service. How-
ever, the authors also noticed that MFIs undertaking a more
proactive approach in matching demand and supply can be very
helpful for organizations willing to sell or buy knowledge.
Dushnitsky and Klueter (2011) identified two main issues that
can limit the involvement of knowledge owners, and hence, be
detrimental for the effectiveness of MFIs – adverse selection
problem and expropriation problem. Adverse selection problem,
also discussed by Silveira and Wright (2010), occurs due to the
asymmetry of information between owner and seeker, which may
however be reduced by the codification of the knowledge
exchanged (Kani and Motohashi, 2012). In fact, a knowledge
owner may overestimate the real value of its idea, thus damaging
the credibility of the market. Differently, the expropriation pro-
blem requires a trade-off between the communication of the real
value of the idea and the need of confidentiality to limit its
imitability (Morgan and Wang, 2010), which is one of the key
problems of MFIs and may, in turn, significantly reduce owners'
involvement by negative word-of-mouth (Gebauer et al., 2013).
Dushnitsky and Klueter (2011) revealed that MFIs often employ
contingent payment requirements for knowledge owners and
disclosure screens, hence coping with adverse selection and
expropriation, respectively. A further aspect that may negatively
influence the participation of knowledge owners is represented
by the “not-sold-here” (NSH) syndrome (Chesbrough, 2003;
Lichtenthaler, 2011). In particular, the NSH syndrome refers to
the negative attitude of employees against the external com-
mercialization of knowledge assets. Organizations tend to con-
trast NSH with monetary compensations to those employees
able to identify licensing opportunities (Lichtenthaler et al.,
2011).
3.2.3. Participation motivations
Understanding the motivations that lead knowledge owners to
participate in MFIs is fundamental to design a successful market-
place and an appropriate incentive system (Ebner et al., 2009;
Adamczyk et al., 2012; Lampel et al., 2012). Boudreau et al. (2011)
reported that the managers of TopCoder, a competitive community
for software development and digital creation, observed small
changes in the overall number of participants in case a cash prize
is offered or not. Nevertheless, Lakhani and Jeppesen (2007) and
Leimeister et al. (2009) noticed that the participation of knowl-
edge owners may grow by offering both direct compensation, in
terms of prizes and career options, and social rewards, as personal
enjoyment and appreciation by organizers and peers. In turn,
Boudreau and Lakhani (2009), by analyzing the differences occur-
ring between competitive knowledge markets and collaborative
communities, found that owners' motivations to participate in
MFIs are mainly extrinsic, such as financial, competency-oriented,
and reputational, rather than intrinsic, such as related to enjoy-
ment, status, and identity. Nevertheless, Frey et al. (2011) revealed
that extrinsic desire for monetary rewards is positively related to
the number of non-substantial contributions provided by owners,
while intrinsic enjoyment increases the number of contributors
proposing relevant innovative solutions. The positive relationship
between intrinsic motivations and the submission of valuable
solutions is also witnessed by Füller et al. (2011), who discussed
the importance of favoring a sense of community and socialization
among owners for enhancing their creativity.
3.2.4. Number, diversity, and cooperation
The number of knowledge owners participating in a contest
within MFIs may be a further issue that knowledge seekers need
to cope with. According to some authors, the number of partici-
pants in research contests exerts a negative moderating effect on
the investment sustained by each contestant in developing her
solution (Taylor, 1995; Che and Gale, 2003), and consequently,
on the quality of the winning solution (Che and Gale, 2003).
In fact, contestants tend to invest less resources as the number
of competing solutions increases and the likelihood to win
diminishes. Nevertheless, this hypothesis is refused by Terwiesch
and Xu (2008), who demonstrated that the benefits of diversity
among solvers may at least balance the reduction of the invest-
ment effort, in terms of gains from the solution selected. Consis-
tently, Boudreau et al. (2011) found a balance between the
“parallel paths effect,” namely the increase of probabilities of
obtaining extreme-value innovations due to the increased number
of independent search paths, and the “incentive effect,” namely
the reduction of effort by competitors due to the increased
competition and the incidental reduction of expected payoffs.
Specifically, the analysis revealed that having a large number of
participants in a research contest increases the likelihood of
obtaining extreme-value solutions, while reducing their average
value. Nevertheless, given that seekers usually prefer few high-
value innovations than many average-value ones (Terwiesch and
Ulrich, 2009), opening MFIs to as many knowledge owners as
possible may enhance their attractiveness. Furthermore, open
MFIs benefit from a wide range of ideas, coming from different
and heterogeneous knowledge domains (Pisano and Verganti,
2008), which has been proved to positively influence the creation
of radical innovations (Nerkar and Roberts, 2004; Phene et al.,
2006). Conversely, other markets, namely closed MFIs, limit the
participation only to knowledge owners having specific industry
experiences or backgrounds. This approach allows reduction of the
idea selection costs for the seekers, although it requires that they
are able to carefully identify the most fitting knowledge domain
and related owners (Pisano and Verganti, 2008).
 A. Natalicchio et al. / Technovation 34 (2014) 65–76
Boudreau et al. (2011) found that the uncertainty about the best
approach to solve the problems proposed by the seekers may
impact the choice to involve a large and various pool of knowledge
owners. In fact, according to their findings, the more uncertain the
problem, the stronger the “parallel path effect” and the weaker the
“incentive effect.” Thus, when dealing with highly uncertain
problems, seekers need a broader pool of knowledge owners as
possible, since it is more likely that knowledge owners with
diversified expertise provide better solutions for uncertain pro-
blems, as a result of their capability to create links among different
knowledge domains, which in turn increases the understanding of
the specific problem. In their analysis, Lakhani and Jeppesen
(2007) also noticed that more specialized and distant researchers,
that is, having a deep knowledge in a domain that is different from
that of the specific problem, have higher opportunities of winning
the contest. In fact, it emerges that the probability of being a
successful solver increases if the owner is not an expert in the
problem's field. Specifically, distant researchers are not rationally
bounded in the problem's field, and hence, can introduce success-
ful solutions that are novel in the field of the problem, but well
known for them (Frey et al., 2011). In fact, often successful solvers
may be unexpected individuals, because marginality, both techni-
cal (i.e., distance from the field of the problem) and social (i.e.,
distance from the scientific community), is positively related to
problem resolution (Jeppesen and Lakhani, 2010). A similar result
is provided by Morgan and Wang (2010), who pointed out that
often the best ideas are suggested by owners with expertize in a
knowledge field different from the seeker's one. Following the
study by Konrad and Kovenock (2010), it emerges that contest
participants vary their competencies over time, as a result of
learning and dedicating effort in developing solutions. Specifically,
knowledge owners can increase (or decrease) their skills and
capabilities and even acquire new ones (or lose them).
Finally, Bullinger et al. (2010) showed that the innovativeness of
the ideas submitted has a U-shaped relationship with the cooperative
orientation of knowledge owners. Thereby, owners with very high or
very low cooperative orientation are more likely to provide ideas with
a higher degree of innovativeness. The study of Hutter et al. (2011)
partially agreed, pointing out that owners having both competitive
and cooperative behaviors are more likely to win innovation contests.
The importance of cooperation finds its roots in its brokerage role,
since collaboration may favor the recombination of diverse experi-
ence, areas of expertise, and perspectives (Parjanen et al., 2012).
3.3. Knowledge seekers
3.3.1. Types
Firms and venture capitalists have been identified by the
literature as the main actors operating as knowledge seekers
(Nambisan and Sawhney, 2007). Nevertheless, a fundamental role
is also played by government institutions, which are often the
most common sponsor of high-tech contests (Lampel et al., 2012;
Taylor, 1995; Zients, 2010). Referring to venture capitalists,
Nambisan and Sawhney (2007) investigated the role of innovation
capitalists, such as organizations that search for valuable ideas
from inventors in order to further develop and sell them to other
firms (see also Nambisan et al., 2012). The advantage of buying
from innovation capitalists is the reduced risk and uncertainty of
the idea, which is however balanced by a higher acquisition cost,
as well as the opportunity to reinforce market power by avoiding
the entrance of start-ups commercializing disruptive solutions
(Gans and Stern, 2003). Additionally, collaborating with innovation
capitalists may increase the effectiveness of using MFIs, since
innovation capitalists may offer an alternative perspective, useful
to spot valuable ideas that organizations may otherwise miss
(Chesbrough, 2012). Knowledge seekers may be more or less
69
directly engaged in the management of MFIs, hence distinguishing
these into internal or external markets (Huston and Sakkab, 2006;
Adamczyk et al., 2012). Specifically, internal MFIs can be defined as
markets created and managed by a specific knowledge seeker. This
is the case of Connect&Develop, a platform owned by Procter and
Gamble (P&G), by which the company benefits from the possibility
of brand leveraging and establishing direct worldwide contacts
with inventors (Huston and Sakkab, 2006). Instead, external MFIs,
such as InnoCentive, Yet2.com, and NineSigma, are generally
managed by intermediaries and tend to provide access to a wider
pool of knowledge and competencies than internal ones.
3.3.2. Participation issues
Arora and Gambardella (2010) discussed three main issues that
may influence the participation of knowledge seekers in MFIs: the
not-invented here (NIH) syndrome, the absorptive capacity, and
the role of internal R&D. The NIH syndrome refers to the seekers'
unwillingness in acquiring and using external knowledge (Arora and
Gambardella, 2010). The NIH syndrome can be seen as a cultural
opposition towards knowledge coming from external sources, which
then may constraint firms' capability to undertake open strategies. As
previously mentioned, absorptive capacity is fundamental for com-
panies to recognize and utilize external knowledge (Cohen and
Levinthal, 1990) and hence to make an effective use of MFIs. Finally,
Arora and Gambardella (2010) stressed the tight interdependence
occurring between internal R&D and demand for external knowledge
(see also Ceccagnoli et al., 2010), which generally act as complemen-
tary activities (Cassiman and Veugelers, 2006). A similar conclusion is
drawn by both Lichtenthaler and Ernst (2008b) and Tapscott and
Williams (2006), who suggested that firms have to focus their internal
R&D on core capabilities in order to increase innovative capacity,
while using MFIs for complementary capabilities. For instance, a clear
example is represented by P&G, which has exploited the external
knowledge acquired from a small Italian bakery firm to impress
images on a novel type of Pringles chips, which is not a core
competence for the company, hence solving a specific problem in a
short time and in a cheap manner (Huston and Sakkab, 2006;
Tapscott and Williams, 2006).
3.3.3. Participation motivations
Terwiesch and Xu (2008) identified four main advantages for
knowledge seekers that may explain their involvement in MFIs:
(i) increasing competition among knowledge owners to solve
problems; (ii) opportunity to pay for the ideas only if accepted;
(iii) access to a great number of heterogeneous knowledge own-
ers; and (iv) search cost savings and increased innovative cap-
ability. Afuah and Tucci (2012) suggested that knowledge seekers
take the decision of searching for knowledge in MFIs by evaluating
some characteristics regarding the specific R&D problem, the
knowledge required for the solution, the specific pool of knowl-
edge owners, and the kind of ideas they are looking for. Further-
more, the way of proposing problems within the markets may
significantly influence the benefits knowledge seekers may gain,
since a correct formulation of the problem is very important to
fully exploit the problem-solving capabilities of knowledge owners
(Lichtenthaler and Ernst, 2008a; Sieg et al., 2010). In turn, this
depends on the specificity of the problem and the degree of
required elaboration, which influence the creativity of owners and the
quality of the solutions developed for the submitted problem,
respectively (Piller and Walcher, 2006). Therefore, also selecting the
problems to be submitted to knowledge owners is a challenge seekers
have to face (Sieg et al., 2010). Accordingly, MFIs, such as Innova-
tion Exchange, often provide services supporting organizations in
the problem definition stage and in the evaluation of the different
solutions.
70 A. Natalicchio et al. / Technovation 34 (2014) 65–76
3.3.4. Rewarding systems
The rewarding system of MFIs is a further fundamental issue,
which has however received only scant attention by the literature.
Che and Gale (2003) suggested that in research contests, the
reward can be defined through a fixed-prize tournament or a
first-price auction, where, in the latter, knowledge seekers require
less information about costs and investments sustained by the
owners. According to the mathematical model developed by
Fullerton et al. (2002), first-price auctioning in R&D contests
increases the surplus for the sponsor of the contest and reduces
its prize expenditure. Nevertheless, Schöttner (2008) found a
different result, by showing that seekers generally prefer fixed-
prize tournaments rather than first-price auctions, since tourna-
ments reduce the risks of asymmetric information. Finally, Fu
et al. (2012) studied the optimal design of R&D contests, reveal-
ing that knowledge seekers may provide both prizes and sub-
sidies to the actors competing in the contests for enhancing the
efficiency of the market. Furthermore, the authors showed that
subsidies are generally preferred when the innovation process
presents a higher degree of difficulty, such as the case of HIV
vaccine or effective cancer treatments.
4. Discussion
In the previous section, we reviewed the literature on MFIs by
focusing on ideas, knowledge owners, and knowledge seekers.
Here, we discuss the main dynamics and emerging characteristics
of MFIs, in order to develop key propositions, grounded in the
theory, about the managerial approaches that may make MFIs
more efficient and more effective for both owners and seekers.
Consistently with the framework used in the previous section, the
proposition are presented for the three pillars of MFIs.
4.1. Ideas
MFIs are characterized by asymmetry of information between
knowledge owners and knowledge seekers (Dushnitsky and
Klueter, 2011; Silveira and Wright, 2010). In fact, often knowledge
seekers are not completely aware of ideas' details and full
potential (Dushnitsky and Klueter, 2011) and it is necessary that
owners fully disclose their ideas to seekers, in order to allow an
accurate assessment of the value that ideas may provide for the
buyer. However, disclosure may put owners at risk of misappro-
priation of their ideas by seekers (Anton and Yao, 2002; Arrow,
1962). This refers to the Arrow information paradox (1962), which
is a critical issue in MFIs. Obviously, some protection mechanisms
may be implemented to limit the risk of ideas misappropriation by
knowledge seekers, such as patenting (e.g., Nambisan and
Sawhney, 2007). However, these mechanisms are not always
effective, in fact different typologies of ideas require different
mechanisms of protection due to their specific characteristics, such
as the level of development and the technological content (Thurow,
1997). In particular, it is more difficult to effectively protect an idea in
its early stage of development, since it may be too vague or generic to
be appropriated. While, more developed ideas, such as patented
technologies, are more difficult to imitate, and thus, they can be more
safely disclosed (Dushnitsky and Klueter, 2011). Moreover, this is a
particularly critical issue for the effectiveness of MFIs, since in these
markets ideas may range from raw ideas to market-ready products
(Nambisan and Sawhney, 2007). Accordingly, we can pose the
following propositions:
Proposition 1. The rawer an idea, the more it needs to be formalized
and documented, in order to be protected from misappropriation
through mechanisms such as non-disclosure agreements and
patenting.
4.2. Knowledge owners
MFIs are markets, where knowledge owners and knowledge
seekers represent, respectively, the offer and the demand sides
(Chesbrough, 2006a). Accordingly, recent studies (e.g., Chesbrough,
2006a) suggested that the number of owners involved in a MFI affects
the value seekers may gain from the participation to the market. Thus,
overcoming those barriers limiting the involvement of knowledge
owners in MFIs, as adverse selection, expropriation, and NSH
syndrome (Chesbrough, 2003; Dushnitsky and Klueter, 2011;
Lichtenthaler, 2011; Morgan and Wang, 2010; Silveira and Wright,
2010), may result in a growth of the offer side which, in turn,
enhances the interest of knowledge seekers toward the market. To
foster the participation of owners, it is possible to leverage their
intrinsic and extrinsic motivations (Frey et al., 2011; Leimeister et al.,
2009; Zheng et al., 2011). For instance, offering a worth monetary
reward or other forms of revenues positively acts on owners' extrinsic
motivations to participate (Leimeister et al., 2009; Lichtenthaler, 2011;
Tapscott and Williams, 2006), while innovation requests that generate
enjoyment for the owner foster intrinsic motivations (Frey et al., 2011;
Zheng et al., 2011). Thus, we can state that
Proposition 2a. Leveraging owners' extrinsic motivations, as offer-
ing fair monetary rewards and career incentives, allows to lower
barriers to participation.
Proposition 2b. Leveraging owners' intrinsic motivations, as pro-
posing challenging innovation requests and exploiting seekers'
brands, allows both to lower barriers to participations and increase
the average quality of ideas retrieved.
Scholars have discussed distinct tendencies regarding the com-
position of the pool of knowledge owners in MFIs. Researchers
agree on the negative impact of an high number of owners, active
on an innovation request, on their average effort (Boudreau et al.,
2011; Che and Gale, 2003; Taylor, 1995; Terwiesch and Xu, 2008).
However, this effect is counterbalanced by the higher number of
owners' parallel paths in solution developing, that may eventually
result in developing an extremely valuable solution for the seeker
(Boudreau et al., 2011; Terwiesch and Xu, 2008). Moreover, most
valuable ideas are often provided by owners having thorough
knowledge in a field distant respect to that of the specific
innovation request (e.g., Jeppesen and Lakhani, 2010; Morgan
and Wang, 2010), since they do not incur in the risk of being
rationally bounded in the request's domain (Levinthal and March,
1993). Finally, the degree of cooperation between owners has a
positive impact on the value of the ideas developed. In fact,
cooperation promotes cross-learning and exchange of feedback
among knowledge owners, with the result of improving the
quality of their ideas (e.g., Bullinger et al., 2010; Hutter et al.,
2011). Following the above reasoning, it emerges that both the
number and the characteristics of knowledge owners involved, as
their background and their propensity to cooperate, impact on the
probability of obtaining valuable ideas from an innovation request,
thus leading to the following proposition:
Proposition 3. The number of owners, their distance from the
specific problem field, and their degree of cooperation positively
influence the development of high valuable ideas.
4.3. Knowledge seekers
Knowledge seekers have to be able to evaluate the ideas
retrieved, in order to select those to be acquired (Arora and
 A. Natalicchio et al. / Technovation 34 (2014) 65–76 71

Table 1
Summary of the main findings and research gaps.

Unit of Emerging characteristics Research gaps

analysis

Ideas Ideas range on a continuum between raw ideas and market-ready products.
Ideas are characterized by complementarity, user reproducibility, and value
rivalry.
There is a tension between the necessity of owners to protect their ideas and
the need of seekers to evaluate them.
Lack of in-depth research on the right equilibrium in ideas' disclosure
under different situations.
Lack of knowledge about the influence of different MFIs' characteristics on
the quality of the proposed ideas and the time to develop them.

Knowledge Knowledge owners are usually entrepreneurs, inventors, organizations, and Lack of research on the factors favoring the participation of knowledge
owners research laboratories. owners.
Issues like adverse selection, expropriations, and NSH syndrome may be Lack of research on specific situations when collaboration among owners
detrimental for the participation of owners. may be beneficial for the effectiveness of MFIs.
Although with different effects on the proposed ideas, both intrinsic and
extrinsic motivations are relevant for owners' participation.
The effort devoted by owners and the number of parallel paths to develop an
idea vary according to the number of owners submitting the ideas.
Highly valuable ideas may come from unexpected and distant owners.
Cooperation among owners has a positive effect on the innovativeness of the
proposed ideas.

Knowledge Knowledge seekers are usually firms, venture capitalists, and government Lack of understanding of the specific circumstances that make
seekers institutions. participating in MFIs as a valuable approach to retrieve knowledge.
Absorptive capacity, the role of internal R&D, and the NIH syndrome may Lack of knowledge about advantages and disadvantages of different
influence the participation of knowledge seekers. typologies of MFIs.
The way of proposing innovation requests within the markets may
significantly influence the benefits knowledge seekers may gain.
Rewarding system is a critical issue that may impact on MFIs' effectiveness.

Gambardella, 2010). Therefore, seekers need high levels of absorp-
tive capacity to recognize the value that external knowledge may
assume for their organizations (Cohen and Levinthal, 1990; Zahra
and George, 2002). Furthermore, absorptive capacity is also
needed to exploit the external knowledge retrieved (Cohen and
Levinthal, 1990; del Carmen Haro-Dominguez et al., 2007; Zahra
and George, 2002). Thereby, developing absorptive capacity may
be useful for seekers to enhance the efficiency and the effective-
ness of participating to MFIs as a strategic approach to pursue the
open innovation paradigm. In particular, higher levels of absorp-
tive capacity allow to better assess and exploit knowledge distant
respect to seeker's knowledge base (Albino et al., 2007; Gilsing
et al., 2008). Actually, organizations can develop absorptive
capacity by performing some activities (Fabrizio, 2009), such as
investing in R&D, carrying out internal basic research activities,
and collaborating with external scientists (e.g., Cockburn and
Henderson, 1998; Cohen and Levinthal, 1989). Moreover, these
activities, in turn, contribute to enhance the seeker's knowledge
assimilation mechanisms (Lane and Lubatkin, 1998; Mangematin
and Nesta, 1999) and expand her knowledge base both in terms of
breadth and depth (Katila and Ahuja, 2002; Zhang et al., 2007).
From the previous discussion, we can assert that
Proposition 4. Developing high levels of absorptive capacity, in order
to effectively retrieve and exploit valuable ideas from MFIs, is more
crucial, the more distant are ideas respect to seeker's knowledge base.
Knowledge seekers need to select carefully which typologies of
internal problem they want to solve by retrieving ideas from
external sources (Afuah and Tucci, 2012; Sieg et al., 2010). In fact,
the selection of a problem may impact on the chance of obtaining
valuable ideas from knowledge owners (Sieg et al., 2010). For
instance, proposing in MFIs a not sharply defined or a very
complex and not modular problem may result in a failure for the
seeker (Afuah and Tucci, 2012). Moreover, also the formulation of
problems may impact on the quality of the ideas developed by
owners, since it is critical to avoid jargon and useless details for
encouraging creative thinking and supporting the development of
valuable ideas (Piller and Walcher, 2006; Sieg et al., 2010). In addition,
seekers have also to define the rewarding scheme for the ideas they
decide to acquire. As previously discussed, seekers can choose among
many different rewarding options (e.g., Che and Gale, 2003; Fu et al.,
2012), and the formalization of the rewarding structure may be
critical for the success of MFIs (Ebner et al., 2009; Adamczyk et al.,
2012), since it is tightly linked with owners' extrinsic motivations
(Frey et al., 2011). These arguments suggest the last proposition
Proposition 5. Knowledge seekers have to propose sharply defined
and modular problems, formulate them by avoiding jargon and exces-
sive details, and determine the rewards to offer to knowledge owners in
order to gain the highest benefits from the participation in MFIs.
5. Conclusions and future research
In this review, we have analyzed the main characteristics and
dynamics underlying the functioning of MFIs, by following a
framework that distinguishes among the three main pillars of these
markets – ideas, knowledge owners, and knowledge seekers. We
have analyzed scientific articles and books discussing issues related
to MFIs, which have been mostly published in the last decade, hence
demonstrating the novelty and the increasing importance of this
topic for the scientific literature. This review of the key literature has
been presented to provide a better understanding of MFIs, derive
propositions focusing on the issues that impact on their efficiency
and effectiveness, and provide insights for their further exploration.
Table 1 summarizes the main findings and research gaps identified in
this review. In the following, for each pillar, a number of directions
for future research is drawn.
5.1. Ideas
Following the direction traced by Gans and Stern (2010), the
main features of ideas and their peculiar issues, as the Arrow
information paradox (1962) discussed in several studies
(Chesbrough, 2006a; Dushnitsky and Klueter, 2011), can be a subject
of further analysis. Indeed, being easily reproducible (Gans and Stern,
72 A. Natalicchio et al. / Technovation 34 (2014) 65–76
2010), ideas suffer from misappropriation, which may be detrimental
for the effectiveness of MFIs as well as for their reliability (Dushnitsky
and Klueter, 2011). Hence, the degree of ideas' disclosure needs to be
discussed deeper and analyzed to find the right equilibrium for
different situations. In fact, a better comprehension may support
MFIs in tailoring their services to the needs of both owners and
seekers, thus increasing MFIs' effectiveness and efficiency.
Scholars pointed out that being effective in promoting the
exchange of knowledge is not straightforward for MFIs (Chesbrough,
2006a; Lichtenthaler and Ernst, 2008a). Nevertheless, so far, studies
investigating how different factors impact on the quality of ideas
exchanged and on the time necessary to retrieve them, which
represent paramount performance indicators for MFIs (Afuah and
Tucci, 2012), are missing. In particular, scholars should provide a
more thorough comprehension of the complex interplay between
market characteristics, such as heterogeneity of knowledge owners'
competencies (e.g., Jeppesen and Lakhani, 2010), rewards offered by
knowledge seekers (e.g., Frey et al., 2011), number of submitted
solutions (e.g., Boudreau et al., 2011; Terwiesch and Xu, 2008), and
MFIs' performance. Findings may contribute to the designing of more
valuable MFIs, hence resulting in an improved usefulness for both
knowledge seekers and knowledge owners.
5.2. Knowledge owners
A number of studies investigated the role of knowledge owners'
motivations on their participation in MFIs (e.g., Boudreau et al., 2011;
Frey et al., 2011), dealing with the effects of both intrinsic and
extrinsic motivations. These studies reveal that monetary rewards
are not the only relevant driver to explain knowledge owners'
involvement in MFIs (Boudreau et al., 2011; Frey et al., 2011;
Lakhani and Jeppesen, 2007). Therefore, other factors should be more
thoroughly investigated, in order to improve the understanding of the
main motivational drivers favoring the participation of the knowledge
owners, such as enjoyment for challenging tasks, willingness to make
an impact, and opportunity to learn. Moreover, academic studies have
shown that owners' motivation may influence also the quality of the
ideas developed (e.g., Frey et al., 2011). Consequently, studies focusing
on the interplay between different typologies of motivation and on
how these in turn influence MFIs' performance may be of relevant
theoretical and practical interest.
The effects of collaboration among knowledge owners within
MFIs is a phenomenon we believe calls for further investigation. In
this review, we highlighted that knowledge owners mainly com-
pete within MFIs, although, in some cases, they may also move
towards more collaborative approaches (Bullinger et al., 2010;
Hutter et al., 2011). In particular, the analysis of the literature
showed that collaborative owners tend to support the develop-
ment of higher-quality and more innovative ideas (Bullinger et al.,
2010; Hutter et al., 2011). Nevertheless, since not all the types of
MFIs promote collaborative behaviors among owners, it could be
interesting to better comprehend the specific situations where
collaboration produces a substantial positive impact on the overall
market performance that overcomes the costs that it bears. For
example, further studies may aim at understanding the impact of
collaboration on the quality of ideas developed to satisfy complex
and simple innovation requests. Additionally, the outcome of
collaboration may change according to the background of the
owners that, actually, decide to collaborate. For instance, indivi-
duals owning complementary knowledge may provide ideas of
higher quality when collaborating (Palomeras and Melero, 2010),
but they may also incur in communication and technical difficul-
ties (Nonaka, 1991). This is another issue that deserves to be
explored to increase the benefits MFIs may provide to owners and
seekers.
5.3. Knowledge seekers
Participating in MFIs is a strategic approach organizations may
follow to acquire knowledge from the external environment,
hence adopting the open innovation paradigm (Chesbrough,
2006a). Scholars may shed new light on the advantages and
disadvantages of this approach, as well as focus on the evaluation
of benefits and costs sustained by organizations when searching
for ideas within MFIs, hence allowing seekers to carefully choose
between developing knowledge internally or buying it from MFIs.
In particular, knowledge seekers face a number of managerial
challenges when using MFIs (Piller and Walcher, 2006; Sieg et al.,
2010), which may, under some specific circumstances, make this
approach less beneficial for seekers than relying upon internal
R&D strategies or other open innovation solutions. Therefore,
understanding these situations in a thorough way may provide
interesting managerial implications for organizations following an
open innovation approach.
Our review has highlighted that seekers may choose to take
part in different types of MFIs (Chesbrough, 2006a; Huston and
Sakkab, 2006; Tapscott and Williams, 2006). For instance, we
showed that there are open MFIs, where every owner can
participate, and closed ones, where owners can participate only
if they respect certain requisites. Thus, it would be interesting to
understand the advantages and disadvantages of both the typol-
ogies of market, hence permitting seekers to choose the fittest
MFIs for their needs. Moreover, we noticed that MFIs may be
distinguished into internal and external (Huston and Sakkab,
2006; Adamczyk et al., 2012), according to their governance
model. Specifically, purely internal MFIs are managed by a single
seeker, such as a multinational company, which promotes the
market and may leverage its branding position and its popularity
among customers to attract knowledge owners (Sawhney et al.,
2005; Bayus, 2013). Instead, external MFIs are markets managed
by a third party or an intermediary, where the proliferation in
terms of knowledge owners may affect the increasing number of
knowledge seekers, and vice versa (Terwiesch and Xu, 2008).
Scholars may thus compare the performance of these different
types of market in terms of rate of solved problems, hence
allowing seekers to understand when internal MFIs should be
preferred to external ones, or vice versa. Going further, knowledge
seekers can move from open and managed-by-third-party MFIs to
closed and proprietary ones, where they involve their employees
in providing suggestions to solve internal problems. Of course,
every typology of MFI has its own strengths and weaknesses.
Which strategic decisions lead a seeker to operate between
different MFIs is still unclear. Therefore, further investigations
are necessary for answering the following research questions:
which capabilities do seekers need to successfully use different
MFIs? How may seekers build these capabilities?
In conclusion, the present research contributes to shedding
new light on a novel and emerging topic in the innovation
management literature, as participating in MFIs to acquire or sell
knowledge assets. Specifically, we review existing literature on the
three pillars of MFIs – ideas, knowledge owners, and knowledge
seekers – in an attempt to provide an overview of their main
dynamics and emerging characteristics, infer theory-based propo-
sitions increasing our understanding of MFIs, and open the doors
to further investigations in this specific field.
Appendix
The review of the literature was undertaken by following a
clearly defined documents retrieval process (Tranfield et al., 2003).
The research team included three academic researchers, who
 A. Natalicchio et al. / Technovation 34 (2014) 65–76 73

Table A1
Summary of the 43 articles analyzed.

Study Perspective Methodology Sample Key results Focus

Adamczyk Research Theoretical N.A. Presentation of the innovation contests' characteristics, Owners,
et al. (2012) tournaments/ approach based on the academic management and economic seekers
Innovation literature
contests
Afuah and Technology Theoretical N.A. Identification of the main features that lead organizations Seekers
Tucci strategy approach to submit their innovation requests to a pool of knowledge
(2012) owners
Arora et al. Market analysis Theoretical N.A. Managerial implications of the presence of markets for Ideas,
(2001) approach ideas for firms' strategy owners
Arora and Technology Mathematical N.A. Relationship between the presence of markets for ideas Owners
Fosfuri strategy approach and firms' licensing strategies
(2003)
Arora and Market analysis Theoretical N.A. Review about supply and demand in markets for ideas, Owners,
Gambar- approach conditions that favor the formation and growth of these seekers
della (2010) markets, and relationship with industry structure
Boudreau and Technology Case studies Nine cases about the use of collaborative Similarities and differences between competitive markets Owners
Lakhani strategy communities and competitive markets to and collaborative communities
(2009) interact with external innovators
Boudreau Research Empirical data 645 Contests in TopCoder Influence of competition and requests' uncertainty on the Owners
et al. (2011) tournaments/ outcome of innovation contests
innovation
contests
Bullinger Research Empirical data One innovation contest, run at one of the Relationship between the degree of cooperative Owners
et al. (2010) tournaments/ largest German universities, and a follow-up orientation of knowledge owners and the innovativeness's
innovation survey with 943 answers from owners degree of their ideas
contests
Ceccagnoli Market analysis Empirical data Firms having at least one product approved by Impact of firms' characteristics, as ownership of Seekers
et al. (2010) US Food and Drug Administration between complementary assets and R&D productivity, on their
1995 and 2004 propensity to source knowledge from other firms
Che and Gale Research Mathematical N.A. Policies to efficiently design research contests Owners
(2003) tournaments/ approach
innovation
contests
Chesbrough Technology Case study The case of the General Electric's Discussion of an innovation contest highlighting its setting Seekers
(2012) strategy ecomagination challenge up, the managerial challenges for the seeker, and the
strategy to manage the received ideas
Conceiçao Technology Empirical data 80 European research based spin-off firms Key factors that drive firms to commercialize their Owners
et al. (2012) strategy knowledge assets in the market for ideas
Dushnitsky Market analysis Empirical data 30 MFIs Study of disclosure screen and contingent payment screen Ideas,
and Klueter as mechanisms to avoid adverse selection and owners
(2011) expropriation in MFIs
Ebner et al. Research Case study and The case of the SAPiens competition and a Framework to design idea competition for virtual Owners
(2009) tournaments/ empirical data survey with 73 answers from owners communities
innovation
contests
Frey et al. Research Empirical data Survey with 104 answers from owners and Impact of knowledge owners' motivations and Owners
(2011) tournaments/ their 1435 postings competences diversity on the quality of the developed
innovation ideas
contests
Fu et al. Research Mathematical N.A. The role of subsidies and prizes to design optimal Seekers
(2012) tournaments/ approach innovation contests
innovation
contests
Füller et al. Technology Empirical data 980 Postings for the Swarovski Enlightened The impact of collaboration among knowledge owners on Owners
(2011) strategy competition and a survey with 174 answers the quantity and quality of the developed ideas
from owners
Fullerton Research Mathematical Experimental setting with 66 subjects Implications of using auctions in research tournaments Seekers
et al. tournaments/ approach and
(2002) innovation experiment
contests
Gans and Technology Theoretical N.A. A framework to evaluate commercialization strategies by Owners,
Stern strategy approach innovating start-ups seekers
(2003)
Gans and Market analysis Theoretical N.A. Conditions that favor the efficiency of a market for ideas Ideas
Stern approach
(2010)
Gebauer et al. Research Case study The case of the SPAR Bag Design Contest Influence of perceived fairness, satisfaction with the Owners
(2013) tournaments/ outcome, and sense of community on knowledge owners'
Innovation activities
contests
Håkanson Technology Case study The case of the InnovationXchange' MFI Three core competences for MFIs, as network spanning Ideas
et al. (2011) strategy capability, organizational memory, and credibility and
intermediation skills
74 A. Natalicchio et al. / Technovation 34 (2014) 65–76

Table A1 (continued )

Study Perspective Methodology Sample Key results Focus

Hicks and Technology Empirical data 1071 U.S. firms Characteristics of firms that successfully sell their Owners
Hegde strategy knowledge assets in markets for ideas
(2005)
Huston and Technology Case study The case of Procter and Gamble's open Investigation on the strategies through which Procter and Seekers
Sakkab strategy innovation strategies Gamble sources knowledge from outside the company
(2006)
Hutter et al. Research Empirical data 3285 Postings for the OSRAM LED contest Impact of collaborative and competitive behavior of Owners
(2011) tournaments/ knowledge owners on the quality of their submitted ideas
innovation
contests
Jeppesen and Research Empirical data 166 challenges posted in InnoCentive, data on Influence of knowledge owners' technical and social Owners
Lakhani tournaments/ 12,786 owners, and a survey with 320 answers marginality on their success in providing valuable ideas to
(2010) Innovation from owners seekers
contests
Kani and Market analysis Empirical data 636 Japanese firms Analysis of firms' propensity to license their knowledge Owners
Motohashi assets through markets for ideas
(2012)
Konrad and Research Mathematical N.A. Relevance of the dispersion of knowledge owners' skill Owners
Kovenock tournaments/ approach value on their payoff in research tournaments
(2010) innovation
contests
Lakhani and Research Theoretical N.A. Identification of the types of knowledge owners more Owners
Jeppesen tournaments/ approach likely to successfully submit valuable ideas
(2007) innovation
contests
Lampel et al. Research Theoretical N.A. Overview on the characteristics of innovation contests in Owners,
(2012) tournaments/ approach MFIs seekers
innovation
contests
Leimeister Research Case study and The case of the SAPiens competition and a Influence of incentives on the motivations that drive Owners
et al. tournaments/ empirical data survey with 32 answers from owners knowledge owners to participate in innovation contests
(2009) innovation
contests
Lichtenthaler Technology Empirical data 25 German and Swiss firms Study of the strategies allowing MFIs to be more impactful Owners,
and Ernst strategy for both seekers and owners seekers
(2008a)
Lichtenthaler Technology Empirical data 152 German, Swiss, and Austrian firms Analysis on the possibility of overcoming market Owners
and Ernst strategy inefficiencies when knowledge owners sell their
(2008b) knowledge assets
Morgan and Research Theoretical N.A. Overview on the use of innovation contests to retrieve Owners
Wang tournaments/ approach knowledge assets within MFIs
(2010) innovation
contests
Nambisan Technology Case study 43 Projects by IP2Biz Strategies and practices that may increase the likelihood of Seekers
et al. (2012) strategy innovation capitalists' success in using MFIs
Parjanen Technology Empirical data Survey with 28 answers from owners and 228 Analysis of brokerage to favor recombination of different Owner
et al. (2012) strategy idea statements experience and collaboration among knowledge owners
Piller and Research Empirical data 82 Idea submissions from 57 owners Discussion about the challenges and tasks that a Seekers
Walcher tournaments/ knowledge seeker has to face when managing an idea
(2006) innovation competition
contests
Pisano and Technology Case studies Four cases of options to collaborate with Description of using a MFI as a strategy to collaborate with Owners
Verganti strategy innovation partners presented innovation partners
(2008)
Schöttner Research Mathematical N.A. Analysis of rewarding systems in innovation contests Seekers
(2008) tournaments/ approach
innovation
contests
Sieg et al. Technology Case studies Seven cases of chemical companies that seek Discussion about the managerial challenges knowledge Seekers
(2010) strategy knowledge through InnoCentive seekers have to face when participating in MFIs
Silveira and Technology Mathematical N.A. Characteristics of ideas and their influence on the Ideas,
Wright strategy approach dynamics of the market owners
(2010)
Taylor (1995) Research Mathematical N.A. Equilibrium conditions in research contests Owners,
tournaments/ approach seekers
innovation
contests
Terwiesch Research Mathematical N.A. Analysis of the benefits for seekers in having a high Owners,
and Xu tournaments/ approach number of knowledge owners involved in an innovation seekers
(2008) innovation contest
contests
 A. Natalicchio et al. / Technovation 34 (2014) 65–76
selected a list of keywords to retrieve academic papers and books.
An initial list of keywords was identified by the research team to
investigate the distinctive dynamics and critical features of MFIs,
in terms of actors and exchanged goods. The initial list of key-
words was refined with the early findings from the literature,
being thus more accurate and consistent with the aims of the
review. The keywords in the final list were combined to create the
following search strings: [“innovation contestn”], [“open innova-
tion”], [“marketn for idean”], [“marketn for technologn” and
“innovation”], [“marketn for knowledge” and “innovation”],
[“online marketplacen” and “innovation”], [“research tourna-
mentn”], [“research contestn”], and [“innovation intermediarn”].
The search strings were used to perform a search for academic,
peer-reviewed journal articles, and books, published until 2012,
using databases that include Abi Proquest, EBSCO host (Business
Source Premier), Web of Science – Social Science Citations Index,
and Google Scholar.
In the first phase of the documents retrieval process, we excluded
articles clearly not relevant for the aims of this study. Then, we defined
a shortlist of 193 articles and confined our search to articles published
in journals listed in the subject categories “Management,” “Economics,”
and “Business,” according to the ISI Web of Knowledge classification. At
the end of this step, we removed 41 articles. Afterwards, abstracts of
the shortlisted journal articles and books' introductions were accurately
read in order to include in our analysis only those works strictly related
to the topic under investigation. This phase was autonomously
executed by each team member to avoid personal biases. Disagree-
ments about the relevancy of the documents were commonly dis-
cussed to reach a unanimously accepted agreement. Finally, we
considered 46 documents (43 articles and three books) as relevant. It
emerged that almost all the studies were published in the last decade,
especially in years between 2006 and 2012, hence confirming the
emerging character of the topic. The 43 articles were published in 26
journals. In particular, Creativity and Innovation Management, Industrial
and Corporate Change, and R&D Management published the most
articles (four each), followed by Harvard Business Review and Research
Policy with three papers, and by California Management Review,
Innovation: Management, Policy, and Practice, Management Science, and
The American Economic Review with two papers each. A total of 92
authors participated in the publication of the 46 studies.
Furthermore, we noticed that MFIs have been mainly investi-
gated by adopting three different perspectives – market analysis,
technology strategy, and research tournaments and innovation
contests. Studies following the market analysis perspective ana-
lyze the characteristics of the demand and offer sides, the
peculiarities of ideas, and the effectiveness and efficiency of the
market. Instead, researches focusing on technology strategy dis-
cuss the use of MFIs to sell and buy knowledge, highlighting
managerial challenges, trade-offs, and dilemmas that seekers and
owners have to face. Finally, studies dealing with MFIs from the
research tournaments and innovation contests perspective inves-
tigate the dynamics within the contests proposed by knowledge
seekers to obtain valuable ideas. In conclusion, among the 46
studies retrieved from the literature analysis, nine were theore-
tical, nine have applied mathematical approaches, 15 works were
based on empirical data, 11 were based on case studies, and two
were based on both case studies and empirical data. In Table A1,
the 43 articles are presented reporting their theoretical perspec-
tive, methodology, main findings, and research focus.
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