Hierarchical Distance and Idea Evaluation in Enterprise Crowdfunding

In order to innovate, organizations need to select the best ideas for implementation. Research shows that idea selection suffers from biases, but fails to consider hierarchy as a potential source of bias. We examine how the hierarchical distance between an idea’s creator and its evaluator affects the evaluation outcomes and advance three competing theoretical predictions based on homophily, competition, and status. These predictions are tested in a unique dataset an enterprise crowdfunding initiative where 265 employees evaluated 77 ideas by allocating corporate funds, resulting in 20,405 evaluation dyads. We find that idea evaluations are more favorable if the idea creator is hierarchically close to the evaluator, supporting the homophily perspective. Idea novelty amplifies this relationship, suggesting that greater uncertainty increases the propensity for social evaluations. Our findings are robust to various specifications. We contribute to the literature on idea evaluation and inform the design of idea selection processes in organizations.