The Theory of Crowd Capital

1. The Theory of Crowd Capital John Prpić & Prashant Shukla Proceedings of the Hawaii International Conference on System Sciences – January 2013

2. Research Question • We are observing an increasing number of organizations undertaking activities to engage dispersed populations through Information Systems (IS). • Why are they doing so? • How are they doing so?

3. The Phenomena – Practitioner Domain • The preceding fact is exemplified by these examples, and many others, in the practice domain: • FoldIT • The Iowa Electronic Market • SETI @ Home • Wikipedia • The Goldcorp Challenge • ReCaptcha

4. The Phenomena –Research Domain • This preceding fact has spawned a number of new areas of organizational research including: • Gamification (Cooper et al 2010) • Prediction Markets (Arrow et al 2008) • Citizen Science (Hand 2010) • Peer Production (Benkler 2006) • Open Innovation (Chesbrough 2003) • Crowdsourcing (Howe 2006)

5. Many Gaps… One Theory • Despite all of these activities, a central, unifying theory, is still lacking in the both IS & the Strategy literature to explain how and why these disparate phenomena exist. • We address these gaps, by building upon the literature of the RBV& KBV, and IS to conceive and propose the Theory of Crowd Capital.

6. What is Crowd Capital? • Crowd Capital is a heterogeneous organizational knowledge resource, generated by an organization’s Crowd Capability. • Crowd Capability is an organizational level capability that defines the structure, content, and process, by which an organization engages with the dispersed knowledge of individuals.

7. Theory of Crowd Capital - Diagram

8. The Three Elements of Crowd Capital Dispersed Knowledge: • “…the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess” (Hayek 1945). • “The problem which we meet here is by no means peculiar to economics but arises in connection with nearly all truly social phenomena… and constitutes really the central theoretical problem of all social science” (Hayek 1945).

9. The Three Elements of Crowd Capital Crowd Capability: • Is an organizational level capability, stemming from a firm’s existing resources. • The capability includes three dimensions to engage the dispersed knowledge of individuals: • Structure • Content • Process

10. The Three Elements of Crowd Capital Crowd Capability: • Structure - The geographical divisions, the functional units, and the technological means that are employed to engage the dispersed knowledge of individuals. • Content: The knowledge, information or data goals that the organization seeks from the population of dispersed individuals. • Process: The internal procedures that the organization uses to organize, filter, and integrate the incoming knowledge, information, and/or data.

11. The Three Elements of Crowd Capital Crowd Capital: • A heterogeneous knowledge resource. • A form of capital because it requires investment and potentially pays knowledge dividends. • You do not need Social Capital (ie relationships) to generate Crowd Capital.

12. Contributions • Synthesizes research from RBV, KBV, IS and knowledge realms. • Synthesizes and generalizes the many works of practitioners and researchers into a parsimonious Theory of Crowd Capital. • Describes & details how organizations can generate Crowd Capital. • Explains the How & Why of organizations reaching out to dispersed populations.

13. Discussion • Does Crowd Capital lead to competitive advantage and or a sustainable competitive advantage? • What are the pros & cons of Crowd Capital derived from Episodic vs. Continuous means? • How might we measure Crowd Capital? Objective measures? • What’s the relative efficacy of different forms of Crowd Capability dimensions? • Crowd Capital and other fields…Innovation… Marketing?

14. Conclusion Thank you !