Beyond Money: Incentive Effects of Tokenized Ownership on User Contribution in <scp>DAOs</scp>

ABSTRACT Blockchain technologies have catalyzed the rise of decentralized autonomous organizations (DAOs), which operate in an incentive network fueled by crypto tokens. In essence, these tokens are imbued with either payment rights (i.e., transactional tokens) or ownership rights (i.e., governance tokens). The decentralized organizational paradigm dismantles the traditional management structure and bring new research opportunities to Operations Management (OM). While the performance of DAOs has been largely examined in current OM literature, the effectiveness of their internal incentive mechanisms—specifically the one that uses ownership as rewards to promote user contributions—remains unclear. Focusing on DAO‐enabled virtual communities, we seek to examine whether decentralized ownership provides stronger incentives for user behaviors, such as creation and curation, in comparison to traditional monetary rewards through the lens of psychological ownership theory. We obtained data from Steemit that captures the reward, creation, curation and transaction behaviors of 98,000 users from May 2017 to April 2019. By leveraging the “power‐up” action as a shock that increases user ownership shares, we established a quasi‐experimental setting. Employing the PSM‐DID model, we found that the use of governance tokens is associated with enhanced creation and curation efforts but declined creation novelty, compared to the use of transactional tokens. Our additional analyses further reveal that the incentive effects of governance tokens diminish over time. However, upon the recurrence of the intended choice, these effects become reinforced. Notably, we find that governance token ownership is more strongly associated with curation efforts for users with weaker social ties. Conversely, for users with high reputation scores, their content creation behaviors are less strongly associated with governance token ownership. This study contributes to the burgeoning discourse on blockchain and cryptocurrency from an operational perspective, providing valuable insights for the design of incentive mechanisms in DAOs and advancing our understanding of operational efficiencies and stakeholder engagement in decentralized structures within Operations Management.