This study examines how hybrid governance approaches to crowdsourcing, which combine firm-level control with emergent community-level input, affect product-market fit when solving unconstrained innovation problems. Drawing on transaction cost economics, complexity theory, and problem-finding/problem-solving frameworks, we propose that balanced governance enhances product outcomes by leveraging both top-down interventions and bottom-up self-organization. We test our hypotheses using longitudinal data from “Early Access” video games on the Steam platform. Results show that early and frequent engagement with users improves product-market fit compared to traditional, closed development. Balanced governance, characterized by active developer communication and meaningful user feedback, further increases product-market fit—especially at earlier stages of product development. Moreover, the amount of developer attention available to user feedback also increases product-market fit at early stages of product development. This paper thus contributes to research on crowdsourcing and open innovation, offering actionable insights for firms on how to harness collective intelligence in uncertain innovation environments.
