Discovering innovation: research team wins Australian Research Council grant

By Tamara Heath

Economists Nisvan Erkal and Jun Xiao are delving into the world of innovation contests after winning a 2017 Discovery Grant from the Australian Research Council (ARC).

Prizes have long been used as a prompt for innovation - from the British Government offering £20,000 in 1714 for a method of determining longitude at sea, to the French offering 12,000 francs in 1795 for a food preservation solution that resulted in the invention of canning.

In the modern age, innovation contests are becoming increasingly popular in the public and private sectors as a cheap and effective way of unearthing groundbreaking technology, products and ideas.

With innovation heralded as a key to Australia’s economic future, the Faculty of Business and Economics’ Professor Nisvan Erkal and Dr Jun Xiao are investigating the optimal design of innovation contests to ensure they attract the best and brightest entrants.

The pair has been awarded a $155,000 Discovery Project grant over three years for their research project – one of 72 University of Melbourne projects to win funding from the ARC in the latest round.

Using experiments involving human subjects, Professor Erkal and Dr Xiao will test existing and alternative innovation contest models, working from the assumption that to solve a problem, a solver must first have an idea and then the incentive to invest.

Professor Nisvan Erkal

The pair will investigate how the quality of the initial idea impacts on the solver’s participation and effort decisions, with the “best ideas likely to require less effort,” according to Professor Erkal.

The researchers will also investigate the best incentives for contests with an inherently difficult ‘problem’, making it likely to attract fewer entrants – and therefore having a smaller pool of ideas from which to draw.

Professor Erkal says innovation has long been one of her research interests.

But she says much of the current research in the field focuses on the effort it takes to develop an innovative solution, while creativity is often overlooked.

I have always been interested in finding ways to capture the role of creativity within the innovation process. Professor Nisvan Erkal

With the mining boom receding, Professor Erkal says the role of innovation will become even more important for the nation’s future economic performance.

She says Australia is currently lagging behind other developed countries when it comes to ideas, and is rated a ‘mediocre innovator’ in a 2015 Australian Innovation System Report.

“Our research aims to study optimal prize structures and deliver results which will foster Australia’s productivity by improving the incentives given for innovation,” Professor Erkal says.