Technological Innovation and Prize Incentives

Technological Innovation and Prize Incentives

The Google Lunar X Prize and Other Aerospace Competitions

Luciano Kay

In this in-depth study, Luciano Kay focuses on three recent cases of prize competitions in the aerospace industry: the Google Lunar X Prize, the Ansari X Prize and the Northrop Grumman Lunar Lander Challenge. Using a combination of real-time and historical analysis based on personal interviews, workplace visits and questionnaire and document data analysis, the author examines the particular dynamics of the prize phenomenon and offers a comprehensive discussion of the potential of prizes to induce innovation. This fascinating volume also sets out a systematic method to studying prize incentives, offering a concrete innovation model and case study design approach that will prove highly useful to further research efforts in the field.

Chapter 8: Theory, policy and research implications

Luciano Kay

Subjects: innovation and technology, innovation policy, technology and ict, politics and public policy, public policy


The findings of this investigation in four key themes (motivations, R & D activities, technology outputs and overall effect on innovation) (summarized in Table 8.1) have shown that in fact each prize is a unique, complex phenomenon whose understanding requires not only the incorporation of new explanatory factors in our prize theories but also the investigation of other entrant-and context-level factors that affect the development of competitions. Prizes have generally been investigated using formal economic models in which a prize sponsor offers a unique monetary reward (the cash purse) to induce either increasing R & D activity in a specific technological field or the production of a single innovation. This innovation is generally assumed to be placed in the public domain. These models typically involve rational, profit-maximizing R & D performers or prize entrants that factor out monetary benefits, costs and the probability of success in their choices and decisions to participate. Moreover, entrants’ pre-existing and/or post-prize activities are not generally considered. This investigation has shown however that the prize phenomenon has strong connections with a number of entrant-and context-level factors, is influenced by multiple both monetary and non-monetary incentives and involves entrants that make decisions based on pre-existing activities, goals that may go beyond the prize challenge, and beliefs and subjective perspectives about the merit and risks of prize participation.

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