RISK AND INNOVATION BALANCE IN CROWDFUNDING NEW PRODUCTS
Year: 2015
Editor: Christian Weber, Stephan Husung, Gaetano Cascini, Marco CantaMESsa, Dorian Marjanovic, Francesca Montagna
Author: Song, Chaoyang; Luo, Jianxi; Hoelttae-Otto, Katja; Seering, Warren; Otto, Kevin
Series: ICED
Institution: 1: Singapore University of Technology and Design, Singapore; 2: Massachusetts Institute of Technology, United States of America
Section: Innovation and Creativity
Page(s): 001-010
ISBN: 978-1-904670-71-1
ISSN: 2220-4334
Abstract
Many have considered that innovation through new and small companies is a vital driver for sustainable economic growth. Recent growth in Web 2.0 demands small companies to further incorporate risk management while developing innovative products. How to balance risk and innovation during new product development becomes a priority for small companies to survive the competition. Yet, the approach is not likely similar to that employed by incumbent firms. This paper explores innovation versus risk for small companies using crowdfunding products as a proxy for analysis. A database with 127 consumer electronics, namely 3D printers and smart watches, are collected from Kickstarter and Indiegogo. The metric of Real-Win-Worth is adapted to provide a well-rounded assessment of the product’s innovation, risk and other related business and engineering aspects. Our result suggests a preliminary framework of innovation and risk balance for crowdfunding NPD success. A statistical model is developed to correlate the amount of crowdfunding raised with 64% predictability. These results may contribute to better understand and balance risk and innovation in crowdfunding and small company contexts.
Keywords: New Product Development, Innovation, Risk Management, Crowdfunding