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This paper aims to explore the effects of innovation awards on subsequent innovation behaviors in organizations. Specifically, the authors investigate whether winning an external innovation award helps diffuse the award-winning innovations and develop additional innovation projects in the organization. Furthermore, the authors study the contextual influence of innovators’ organizational hierarchy on experiencing and using the winning consequence.

The authors collected survey data from clinics and hospitals that participated in a state-level innovation award program sponsored by a large health-care insurer and provider in Midwestern states. The authors tested the hypotheses using ordinary least squares regressions and supplemented the method with a post hoc analysis using Fisher’s least significant difference test.

The authors find that awards help a “bottom-up” innovation (i.e., an innovation initiated by a lower-level employee) disseminate at a larger scale due to award-bestowed legitimacy and reputation, whereas a “top-down” innovation (i.e., an innovation initiated by a top manager) does not experience the same benefit. On the other hand, the organizations that won the innovation award with a “top-down” innovation showed a higher number of additional innovation projects after winning, as manager–innovators experienced a boost in their confidence to engage in further innovation projects.

This paper offers a unique and nuanced examination of how innovation awards influence organizational innovation. By bridging literatures on awards and innovation, the authors propose the mechanisms through which innovation awards confer legitimacy and reputation upon the award winners and their innovations. Furthermore, the authors add insights into the recent academic interests in employee-driven innovation by showing the different benefits of innovation awards depending on the innovators’ organizational hierarchies.