Building more entrepreneurial organizations through external innovation contests

Abstract Firms are increasingly adopting innovation contests to obtain ideas for new products and services from external parties, but many firms may not be sufficiently entrepreneurial to benefit from those ideas. Using an inductive longitudinal case study of three financial service firms, we explore the value of external innovation contests for less entrepreneurial and stagnant firms. Our findings indicate that stagnant firms indeed struggle to benefit from ideas generated through external innovation contests. However, we also show that firms undergo a structural change process toward higher entrepreneurial orientation through such contests. In particular, they become aware of an organizational readiness gap and act on it by (i) developing entrepreneurial skills, (ii) collaborating with external partners, and (iii) adapting organizational design and governance. Based on our findings, we propose an original framework for a corporate entrepreneurial learning process triggered by the innovation contest experience.