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Article

How to Manage Innovators for the Public Good

Social Innovation

Today’s major societal challenges – such as climate change, migration and inequality - urgently call for new ideas and approaches that can create both economic growth and social value. Recent years have seen a surge of support programs targeted specifically at nascent social entrepreneurs - new actors on the innovation scene -, widely thought to be invaluable for bringing forth and inspiring such ideas. It is essential, now more than ever, for organizations to understand how they can motivate and manage teams or nascent entrepreneurs to innovate for the public good. An interview with one of the scholars at the forefront of research on innovations for the public good, HEC Paris Professor Marieke Huysentruyt, Academic Director of the Inclusive Economy Center at the Society & Organizations Institute (S&O), on her experimental approaches and results.

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©ribkhan on Adobe Stock

How to evaluate what really motivates nascent social entrepreneurs?

To identify what really motivates nascent social entrepreneurs and whether motivation matters to nascent social entrepreneurs’ performance, we designed a large-scale field experiment, which we carried out with one of the United Kingdom’s largest support agencies for social entrepreneurs. Explained in this research article, "How Do Nascent Social Entrepreneurs Respond to Rewards? A Field Experiment on Motivations in a Grant Competition", the experiment consisted of making salient different types of rewards and then evaluating who decides to compete for the grant, given this.

 

grande vague pollution - Aldo Moyersoen
©Aldo Moyersoen

 

How did you test the candidates’ different types of motivations?

I suppose we could have just asked them, say using a set of survey questions. However, we know that the answers we would not be representative, nor very reliable. We know that people tend to say what they believe others would like to hear. 

Now interestingly, to attract high-quality candidates, these support programs typically not only appeal to candidates’ intrinsic motivation to make a real, positive difference in society, but also offer participants extrinsic rewards, mostly cash and in-kind support. They thus seek to tap multiple motives - that is, extrinsic (financial or in-kind) and intrinsic (prosocial) motives - for candidates to apply and pursue a social entrepreneurial career, as if these motives are complementary. Yet, it is unclear how these mixed incentives affect who applies (the size and composition of the applicant pool) and applicant success, and whether selection of the candidates has a real impact on the subsequent success of the nascent social enterprises.

This provided us with an ideal context to vary the salience of different incentives, without actually changing the actual rewards that successful candidates would receive.

The experiment encouraged over 400 nascent social entrepreneurs to submit a full application for a 12-month grant program that provides cash and in-kind mentoring, through an email sent by the agency. 

The individuals were randomly assigned to three groups: one group received a mailing that emphasized the intrinsic rewards of the program, that is, the opportunity to do good (we call it a “Social treatment”), while the two other groups received a mailing that instead emphasized the extrinsic rewards - either the financial rewards (“Cash treatment”) or the in-kind rewards (“Support treatment”). 

So, what motivates the nascent social entrepreneurs? Social, cash or in-kind rewards?

Results show that the extrinsic rewards cues led fewer candidates to apply and “crowded out” the more prosocial candidates while “crowding in” the more money-oriented ones. 

Sure enough, the extrinsic reward cues increased application effort, which led these candidates to be more successful in receiving the grant. Yet, the successful applicants following both the extrinsic monetary and in-kind reward cues performed effectively worse at the end of the one-year grant period. 

 

We found that using extrinsic incentives to motivate nascent social entrepreneurs may backfire in the longer run.

 

Our results highlight the critical role of intrinsic motives to the selection and performance of social enterprises and suggest that using extrinsic incentives to promote the development of successful social enterprises may backfire in the longer run.

What motivates us to voluntarily search for solutions when our effort is costly?

Today, we observe a great need for new ideas that can meaningfully address the problems of poor or declining educational systems, unequal access to affordable health care, imminent environmental challenges, international terrorism, social fragmentation, and the chronic offending in low-income, urban neighborhoods, to name but a few. In other words, we need people to innovate, search for alternative solutions increasingly so in partnership

 

refugees - Aldo Moyersoen
©Aldo Moyersoen

 

In a complementary research publication, “Exploration in Teams and the Encouragement Effect: Theory and Experimental Evidence,” we ask what motivates individuals to voluntarily search for solutions. What motivates them when any expended effort is privately costly but cannot be directly contracted upon, when the value of the discovery or public benefit is known (and shared), when a finite number of possible solutions exists, and when exploration is open (information is shared)? We found lab experimental evidence delivering sharpened insight into the strategic considerations that determine exploration in partnership. 

We found that when there is uncertainty about whether the public good solution will be discovered, people actually contribute more, not less. So uncertainty helps to motivate exploration and contributions to the public good. 

 

Uncertainty helps to motivate exploration and contributions to the public good.

 

The reason is that in strategic settings, like sequential exploration for the public good by two players, sometimes player 1 has an incentive to explore just because this encourages player 2 to subsequently also explore, if no solution has been found. This is the famous encouragement effect. We show that this encouragement effect gets stronger when people have prosocial preferences and imperfectly optimize. 

Our findings also underscore the importance of information sharing as a non-monetary channel that motivates exploration, and highlight the critical role of social preferences for team exploration outcomes. 
Our findings are relevant for motivating and managing groups and teams innovating not only for the private but also and especially so, for the public good.

How did you design your field experiment?

Incentive design in such settings must deal with not only dynamic free-riding but also the inherent process of learning or information sharing and externalities.

We designed a novel experimental paradigm, made use of video-instructions to ease participants’ understanding of the game, and compared the participant’s decisions in an ‘exploration in partnership’ game with those in a pay-off-equivalent game where people must decide whether to voluntarily contribute to a public good but where there is no uncertainty about the outcome of the contributions.


More researchers need to jump on board: to study important questions about social entrepreneurship, innovation and the public good using well-designed experimental approaches. Our findings are relevant for motivating and managing groups and teams innovating not only for private but also and especially so, for public goods.

 

Interview based on two academic articles by Marieke Huysentruyt of HEC Paris and Stockholm School of Economics: "How Do Nascent Social Entrepreneurs Respond to Rewards? A Field Experiment on Motivations in a Grant Competition", co-authored by Ina Ganguli of University of Massachusetts Amherst and Stockholm School of Economics, and Chloe Le Coq of University of Paris II Panthéon-Assas (CRED) and Stockholm School of Economics, and “Exploration in Teams and the Encouragement Effect: Theory and Experimental Evidence”, co-authored by Emma von Essen of Aarhus University and Stockholm University and Topi Miettinen of Hanken School of Economics. Both papers are forthcoming in Management Science. In October 2020, Professor Huysentruyt received a grant from the HEC Foundation for doing more experimental research on the topic of ‘innovation for the public good’ – study several extensions to the exploration game paradigm that she developed together with Emma von Essen and Topi Miettinen.

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