Abstract: Innovative ideas are inherently uncertain in quality and commercial potential, making their evaluation challenging for managers who must rely on experience and expertise. Past research has delved into the biases in idea evaluation. Although many ideas never see the light of day, some undergo successful evaluation and implementation. As these ideas materialize, managers can retrospectively assess the accuracy of their evaluations, identifying whether they were underestimating or overestimating their true value. Using unique data from a large firm in the aircraft industry and its idea management system, we explore how managers adjust their evaluation strategies in response to these discrepancies. We find that managers tend to become more conservative after overestimation mistakes, rejecting more ideas to avoid future errors. As such, they "play it safe" as type II errors are difficult to observe but may result in missed opportunities for the company. We expand work on idea evaluation by providing fresh insights into managerial conservatism in idea evaluation, highlighting the strategic avoidance of easily observable mistakes at the expense of less detectable ones.

 

(Joint work with Johanna Schnier and Christina Raasch)

 

 

 

This seminar represented an integrative and important part of the House of Innovation's strategy to build a research environment through engagement with prominent guests and their work.

 

This seminar was part of the Academic Seminar Series offered in cooperation with the Stockholm School of Entrepreneurship.