Crowdsourcing: How is value created?

Crowdsourcing is the act of outsourcing work to a large, undefined crowd through an open call. This study examines the nature, practice and value creation potential of crowdsourcing in relation to management literature. A qualitative, theory building approach is used of eight crowdsourcing firms utilizing informants comprising firm executives matched with firm crowd members. Findings reveal that businesses entirely based on crowdsourcing are new, unique, industry-disruptive and create value for disparate stakeholders. The grounded data reveals that value is created by and for all three key stakeholders: the firm, client and crowd. Theoretically, this paper contributes to an expanded boundary model of where value is created. Crowdsourcing firms use their crowds both as a firm-centric labour resource and as a consumer of their products in the same business cycle. This challenges notions of upstream firm-centric versus downstream consumer- focused value creation frameworks - especially because the amorphous crowds operating in both spheres are indistinguishable and not mutually exclusive. Findings also establish value drivers of innovation, attraction/engagement, size/scale and efficiency in relation to crowdsourcing. Such value drivers help form the conception that crowdsourcing is a unique type of business model with its own business model design.