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Crowdsourcing contests: Understanding what brings high rewards, low risk

Crowdsourcing contests that limit the entries to professional creators but open the judging to crowd voting have the highest returns and lowest volatility in stock prices.

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During Frito-Lay’s first “Crash the Super Bowl” contest in 2006, thousands of participants submitted 30-second videos promoting Doritos. Entries were winnowed down to five finalists, and a public vote selected the winning commercial, which aired during the most watched American television broadcast of the year.

The ad boosted Doritos sales and pulled in awards, sparking other big brands, like Nestlé, BMW and Fisher-Price, to launch their own crowdsourcing contests.

“Crowdsourcing has become more prevalent over the last decade. It can generate innovative ideas and solutions and engage consumers. The contest itself serves as a promotional event that draws a lot of attention to the product or brand,” says Hui Feng, associate professor of marketing at Iowa State University.

Feng studies how certain marketing strategies affect a company’s financial outcomes, including stock prices. In a study, Feng and her co-authors show that crowdsourcing contests are associated with high returns — but also high risks. The team suggests ways companies can strike the right balance and put investors at ease.

Investors in big public firms are forward looking. So, the stock price will reflect how investors view a crowdsourcing contest regarding future cash flow, says Feng.

To collect their data, researchers analyzed more than 500 “marketing ideation crowdsourcing contests” held from 2006 to 2019. They focused specifically on contests that created either promotional content or product development, such as Ben & Jerry’s Do Us a Flavor and Google’s new power inverter design challenge. The researchers also looked at whether contests were open to the general public or professionals, judged by an expert panel or public vote and had a clearly stated purpose and narrow scope.

Feng and her co-authors then collected each firm’s accounting and stock-returns data two days before and after the official announcement of the crowdsourcing contest. If other significant events, like large layoffs or mergers, occurred during this window, the researchers removed the contest from their sample. They didn’t want other factors that could influence stock prices to muddy their dataset.

Big takeaway

The researchers found crowdsourcing contests that limit the entries to professional creators but open the judging to crowd voting have the highest returns and lowest volatility in stock prices.

“When a contest is open everyone to participate,  a lot of submissions are going to be low quality, and  bad or problematic entries can sometimes go viral because people think they’re funny and vote for them to win. The firm can lose control of the content,” explains Feng.

Restricting the judging to a panel of experts may help reign it in, but it also reduces transparency. The researchers say letting a crowd vote for professionally-created content strikes the right balance.

“Focusing contests on professionals allows for high-quality ideas to emerge that are more consistent with the firm’s objectives. In addition, consumers enjoy voting on contest submissions,” Feng adds.

Other findings

The researchers found the most significant stock return increase occurs on the event announcement day.

Crowdsourcing contests experience higher returns if the purpose is clearly defined and the scope is narrow and specific, rather than broad and general. For example, asking for a 30-second video that will build awareness and excitement around a specific product ensures more focused entries in the submission pool. Asking for a video showing how brand can improve education, health care, economic development and the environment does not, says Feng.

The researchers say new product development crowdsourcing contests also carry higher risks than promotional contests.

“In general, new product development is difficult. There’s a lot of uncertainty about whether it will be commercially successful, if there will be enough demand for it, and it could signal a new direction for the company. Promotions generally take less time and are a less risky investment,” says Feng.

Another finding is that large, well-known brands benefit more from crowdsourcing than small or niche brands because they can engage a wider audience and receive more ideas and content.

Feng emphasizes crowdsourcing is a complement to a firm’s own marketing capability, not a substitute. Having a strong marketing team is important for investors to be confident about contests, which need to be designed, promoted and managed.

The black box and ongoing research

The researchers’ latest study shows the effects of crowdsourcing, but Feng says the stock price reaction is still partially “a black box.” She and her co-authors are interested in better understanding why investors react a certain way. Future research could include additional interviews and surveys with investors, along with more experiments and analysis of contest web traffic.

Feng co-authored the paper with Zixia Cao, University of Colorado Denver, and Mike Wiles, Arizona State University.

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Modern slavery is a business decision – not an accident

Many organisations focus on compliance, reporting and audits, yet fail to build the relationships and trust needed to identify and tackle exploitation. In some cases, competitive pressures and mistrust between firms actively prevent collaboration that could reduce risks. 

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Modern slavery persists because the way global supply chains are designed allows it to remain hidden, according to new research led by Professor Glenn Parry from the University of Surrey and Dr Mike Rogerson at the University of Sussex.  The findings argue that exploitation often stems from business decisions that cut costs by pushing work further down the supply chain, leaving companies with little direct contact with workers and less visibility over how they are treated. 

Around 27 million people worldwide are estimated to be living in conditions of modern slavery, embedded within the production of everyday goods and services. While governments have introduced laws to force companies to report on risks, the research suggests that disclosure alone is not changing behaviour in a meaningful way. 

Instead, firms often maintain distance from the most vulnerable parts of their supply chains. This distance can be geographical, organisational or even digital, such as the use of algorithms that control workers without direct oversight. As a result, companies rely on indirect signals rather than engaging directly with workers, leaving serious gaps in knowledge and accountability. 

The special issue on “Modern Slavery and Supply Chain Management”, published in Supply Chain Management, brings together insights from multiple international studies across sectors including construction, social care, logistics and global manufacturing. Drawing on interviews with practitioners, workers and experts, as well as analysis of corporate reports and policy frameworks, the work examines how governance, partnerships and digital systems shape labour conditions across complex supply networks. 

Glenn Parry, co-editor of the issue and Professor of Digital Transformation at the University of Surrey, said: “Modern slavery is a problem buried in supply chain structures and it is often the result of how those chains are built and managed. When companies prioritise cost and efficiency above all else, they create the conditions where exploitation can thrive.”

The research found that many organisations focus on compliance, reporting and audits, yet fail to build the relationships and trust needed to identify and tackle exploitation. In some cases, competitive pressures and mistrust between firms actively prevent collaboration that could reduce risks. 

It also finds that partnerships between businesses, governments and NGOs can help, but only when they are built on genuine understanding and shared goals. Superficial collaboration risks becoming a tick-box exercise rather than a driver of real change. 

A major recommendation is to shift focus from reporting to knowledge. Companies need to invest in understanding their supply chains in depth, including listening directly to workers. Bringing “upstream voices” into decision making is seen as critical to designing effective anti-slavery measures. 

Professor Glenn Parry added: “If we are serious about tackling modern slavery, we need to stop treating supply chain complexity as an excuse. It is often a choice. That means it can be changed.” 

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Long-serving CEOs may weaken innovation, study finds

Companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

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A new study from the University of East London has found that companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

The research examined 215 FTSE 350 companies over an 11-year period between 2010 and 2021. It explored how CEO tenure and independent directors influence a company’s “R&D knowledge stock”, which is the research, expertise and technological capability built through investment in innovation.

The study published in the journal Corporate Governance found that CEOs who remain in office for many years often become more cautious and less willing to back risky research and development projects. These companies were more likely to reduce investment in innovation and long-term technological growth.

Firms with higher numbers of independent directors were more likely to continue building innovation capacity with experienced CEOs and independent directors forming an effective partnership, to combine deep company knowledge with outside challenge.

However, both experienced CEOs and independent directors become more cautious and less willing to back risky research and development projects when the company fails to meet performance aspirations, suggesting that independent directors do not have stable risk preferences.

The findings suggest that innovation is shaped not only by technology and finance, but also by leadership culture and corporate governance structures.

Author Dr Igbekele Sunday Osinubi, of the Royal Docks School of Business and Law, said: “Long-serving CEOs can bring valuable experience and stability, but there is also a risk that leaders become too cautious or too attached to existing ways of thinking. Our findings show that independent directors play an important role in encouraging companies to continue investing in innovation, especially during difficult periods when firms may otherwise retreat from long-term research and development.”

He added: “This matters beyond individual companies. Innovation drives productivity, competitiveness and economic growth. The study highlights how governance structures can influence whether firms continue building the knowledge and technologies that shape future industries.”

The paper argues that regulators and policymakers should consider governance reforms and incentives that encourage long-term innovation strategies, particularly in firms led by long-serving executives. The findings may also influence how boards think about CEO succession planning, oversight and the balance between short-term financial pressures and long-term investment.

Osinubi’s research, “Long CEO tenure, independent directors and R&D knowledge stock: the moderating effect of performance shortfalls”, was published in the Corporate Governance: The International Journal of Business in Society

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Office owners or managers, take note: Increased risk of bullying in open-plan offices

In traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

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Open-plan offices entail a clearly increased risk of workplace bullying compared with employees having their own office or sharing with just a few colleagues. This is shown in research from Linköping University, Sweden. 

“Increased bullying is a tangible negative consequence of how you choose to organise the workplace. It’s important to highlight this, as it hasn’t previously been examined,” says Michael Rosander, professor at the Division of Psychology at Linköping University.

Open-plan offices, where many employees share the same space, have become increasingly common. Employers often justify this development as a way to use premises more efficiently and to encourage creative interactions between employees. However, research has shown that open-plan offices do not promote health, job satisfaction or productivity.  

Until now, it has been unclear whether open-plan offices also affect the risk of bullying and employees’ motivation to look for another job. Through surveys of more than 3,300 randomly selected individuals in employment in Sweden, Michael Rosander has now provided an answer. The results are published in the journal Occupational Health Science. 

Thirty per cent of those with some form of office-based work reported that they worked in a traditional open-plan office with no access to private space. Thirteen per cent worked in so-called activity-based offices, where employees spend part of their time in an open-plan environment but also have access to designated rooms for tasks requiring peace and quiet. The remainder had their own office or shared one with only a few colleagues.

For traditional open-plan offices, the survey responses showed a clearly increased risk of bullying compared with those who had their own office or shared an office with only a few colleagues. The difference remained regardless of factors such as personality traits and the extent of remote working. This suggests that the problems are indeed caused by the work environment in the office.  

The researchers’ explanation is that in traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

Activity-based open-plan offices, by contrast, showed no increased risk of bullying, likely due to the availability of private spaces. However, in both types of open-plan office, employees were more likely to consider changing jobs. One possible explanation is that activity-based offices also involve more distractions, according to Michael Rosander.

For employers who have introduced, or are planning to introduce, open-plan offices, there are some lessons to be learned. One is to be prepared to deal with irritation and conflicts before they escalate. Another is the importance of providing rooms where employees can work undisturbed. Placing individuals with similar needs and tasks near one another may also reduce the risk of disruption.

“Traditional open-plan offices are in themselves negative for the individual, for productivity, and make people more likely to leave their job. Social interaction also suffers. So it’s worth considering how to handle it,” says Michael Rosander.

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