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The following are outputs produced by this research program on innovation prizes. Please visit this website again for updates or like our Facebook page.


New book: Technological Innovation and Prize Incentives. The Google Lunar X Prize and Other Aerospace Competitions.

Inducement prizes--cash rewards offered to motivate the attainment of specific targets--have long been used to stimulate scientific discovery and technology research and development. This volume presents an empirical investigation of the effect of these prizes on innovation.

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.

Scholars, policymakers and corporate officials interested in incentives for innovation and the practical implementation of prize competitions will find this an invaluable resource. Potential prize sponsors and entrepreneurs, professionals and other individuals or organizations interested in participating in such competitions will also find much of interest in this groundbreaking book.

What other scholars say about this book:

"The recent renaissance in the use of prizes to spur innovation and extraordinary novel performance warrants close attention. Luciano Kay does so through a series of compelling case studies which shows the potential of prizes, the range of factors that influence their performance and the importance of understanding their non-pecuniary dimensions, even when there is a substantial purse. This is an important contribution to the innovation literature."
- David J. Teece, University of California, Berkeley, USA

"In the last decade innovation prizes have caught the imagination of policy makers and rich donors alike; those who actually care about the process and outcome of prizes and not only the hype, would do well to read Luciano's new book."
- Dan (Danny) Breznitz, Georgia Institute of Technology, USA

"A ground-breaking book on how prizes leverage a family of incentives to spur creativity and innovation."
- Calestous Juma, Harvard Kennedy School, USA

Link to book information and order: Publisher's website (10% discount): USA, Other countries | Other stores: | Google E-books

Citation: Kay, Luciano (2012). “Technological Innovation and Prize Incentives. The Google Lunar X Prize and Other Aerospace Competitions.” Edward Elgar: Northampton, MA.


Opportunities and Challenges in the Use of Innovation Prizes as a Government Policy Instrument (Minerva)


Inducement prizes have been long used to stimulate individuals and groups to accomplish diverse goals. Lately, governments have become more and more interested in these prizes and sought to include this kind of incentives within the set of policy tools available to promote science, technology, and innovation. To date, however, there has been little empirically-based scientific knowledge on how to design, manage, and evaluate innovation prizes. This note discusses aspects of the prize phenomenon and the opportunities and challenges related with the use of innovation prizes as a government policy instrument. Compared to other incentive mechanisms, prizes are likely to present advantages to, for example, accelerate the development and commercialization of technologies that are held back for diverse reasons and help to leverage public money with external ideas, collaborative efforts, and the participation of diverse individuals and organizations. Still, despite these advantages and other interesting features of prizes, there are key questions that policy-makers and scholars must address to better understand this kind of incentives and further improve prize designs and implementations before governments move forward to a more widespread use of innovation prizes in science and technology policies.

Link to full research note (requires journal access):

Citation: Kay, Luciano (2012). “Opportunities and Challenges in the Use of Innovation Prizes as a Government Policy Instrument.” Minerva Special Issue “Young scholars take a forward look”, 50, 2, 191-196.


The effect of inducement prizes on innovation: evidence from the Ansari X Prize and the Northrop Grumman Lunar Lander Challenge (R&D Management)


Inducement prizes are increasingly popular because of their potential to induce technological innovations and attain related goals. Academic research, however, has barely investigated these prizes. This paper investigates the motivation of prize entrants, the characteristics of their research and development (R&D) activities, and the overall effect of prizes on innovation using case study research and documentary data sources. The Ansari X Prize and the Northrop Grumman Lunar Lander Challenge, both considered successful technology competitions in the aerospace sector, are investigated. The findings show that, first, incentives created by competitions, particularly those that are nonmonetary, attract unconventional entrants. The market value of the prize technologies motivate entrants as well but do not attract traditional industry players. Second, limited technology development lead times and no up-front funding characterize prize R&D activities, yet their differences with traditional industry practices are caused by participant-level factors. Most importantly, the introduction of novel R&D approaches is associated with the participation of unconventional entrants. Third, these prizes induced innovations over and above what would have occurred anyway, with the caveat that they were linked to significant technology incentives and fundamentally, ongoing R&D processes. These findings put forward lessons that inform the design of more effective prize competitions.

Link to full article (requires journal access):

Citation: Kay, Luciano (2011). “The effect of inducement prizes on innovation: evidence from the Ansari X Prize and the Northrop Grumman Lunar Lander Challenge.” R&D Management, 41, 4, 360-377.


Managing Innovation Prizes in Government

The use of prizes and awards is a visible element of the Obama Administration�s efforts to promote innovation in government. For example, the Office of Management and Budget (OMB) has sponsored a competition among federal employees to find cost savings and the White House has created the �� website where federal agencies can pose problems in hopes of getting solutions from the public. OMB issued guidance to encourage agencies to offer challenges and prizes, as well.

The use of prizes gained a legislative boost in December 2010 when Congress included a prizes component in legislation designed to increase American innovation and competition. This new legislation expands the authorization to use prizes to every agency head, and creates a framework and eases existing administrative constraints for conducting a prize competition for those outside government.

In this report, author Luciano Kay surveys the literature and offers several case studies of recent prizes awarded for technology innovations: the Ansari X Prize for re-usable space craft, the Northup Grumman Lunar Lander Challenge, and a Defense Department prize for autonomous road vehicles.

Click to download report

Citation: Kay, Luciano (2011). Managing Innovation Prizes in Government. The IBM Center for the Business of Government.


Conference and other presentations

Get a sneak peek at some of the research findings published in the book "Technological Innovation and Prize Incentives. The Google Lunar X Prize and Other Aerospace Competitions.", with this poster presented at the recent U.S. National Science Foundation SciSIP PI Conference September 20-21, 2012, Washington, DC. And do not miss the book, already available from, which contains full details on this research project, its findings, and implications for policy-making, technology management and future research.


Prize Research in the media

Technological Innovation and Prize Incentives
(ElgarBlog, Jan 18, 2013)

White House touts 'challenge' prizes for tech solutions
(USA Today, Apr 10, 2012)

A Win-Win
(Government Executive, Oct 1, 2011)

Spurring Innovation via Contests and Prizes
(Governing, Feb 21, 2011)

Using Prizes as Innovation Engines
(GovLoop, Feb 8, 2011)

Stay tuned for updates!

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Latest update: 2013-01-22 6:00 PM by Luciano