Introducing a Wisdom of the Crowd’s Process Model for Achieving Effective Crowd Performance

Wisdom of the crowds (WoC) has been extensively studied as an approach to generate better solutions to solve a wide range of problems, such as financial predictions, marketing, and management decision-making. Nonetheless, there seems to be a lack of clarity about how it works. To better understand how WoC is conceptualized and can be applied, and to create a solid foundation for its development, we have reviewed the WoC and crowd performance literature. Based on our analysis, we: (1) integrate dispersed findings into an Input–Process–Output(IPO)-based multi-stage process model that links preparation inputs to judgment generation and aggregation processes and, ultimately, to the outputs—the manifestation of crowd performance; (2) explain why commonly presumed WoC “enabling” conditions yield mixed effects and translate this logic into three testable propositions: a Goldilocks (non-linear) crowd-size effect, shared biases or common cues as boundary conditions that weaken the benefits of diversity, independence, and decentralization, and a cost-effectiveness trade-off between accuracy and overall value; and (3) conceptualize and define crowd performance and distinguish it from related terms to reduce conceptual ambiguity. The practical implications and directions for future research are also provided.