Digital Dreams, Institutional Realities: How Entrepreneurs’ Country’s Economic Development and Corruption Shape Their Crowdfunding Outcomes

Abstract

Entrepreneurs based in developing nations, as well as in contexts with significant corruption, find significant issues when seeking financing, and this was exacerbated by the 2008 financial crisis. Nevertheless, recently developed financial approaches such as international reward-based crowdfunding (RBC), may provide support for these entrepreneurs. Based on this, this study investigates how entrepreneurs’ macroeconomic context, specifically, country-level economic development and corruption, affect crowdfunding outcomes. This aim was addressed by using campaigns on Kickstarter, the world’s leading digital RBC platform, as its study population, and examining campaigns conducted between 2009 and November 2016. Logistic and ordinary least squares multi-level models showed that country-of-origin macroeconomic context was significantly associated with crowdfunding outcomes. After controlling variables specific to the entrepreneur and campaign, developing-economy entrepreneurs found greater success on the platform than those from developed countries. Nevertheless, corruption at the country level has a significant adverse association with campaign outcomes. The study’s empirical findings show robustness and consistency under a range of testing approaches. Implications for digital platforms, entrepreneurial individuals, and policymakers are highlighted.

1. Introduction

Entrepreneurial activity drives economies to grow and develop, and the entrepreneur has a vital function in employment creation, innovative activity, and producing a dynamic economic environment (Beck et al., 2005). Nevertheless, in developing countries, significant obstacles to entrepreneurship can be present, and may inhibit efforts towards launching and then scaling projects; in particular due to difficulties in accessing finance (Abraham & Schmukler, 2017; Wang, 2016).

The reasons for such barriers to finance are multiple and embedded within issues in developing economies’ institutional landscape, in which credit safety law is insufficient, information systems are lacking, and financial markets are less well-developed (Beck, 2007; Abraham & Schmukler, 2017). This lack of sound institutional foundations leads to a context in which would-be entrepreneurs are prevented from pursuing conventional financing channels, such as loans from banks and formal credit channels. This suppresses entrepreneurial growth and constrains this sector’s contribution to the developing economy.

Such issues became heightened following the global financial crisis, in which credit markets contracted and conventional financing pathways closed further, with a disproportionate impact on entrepreneurs in the emerging/developing economic world (Hale, 2012; Bordo et al., 2010). This led to a situation in which entrepreneurs in those regions sought out alternative financing channels which could help them avoid the conventional financial intermediary in order to access venture capital.

Corruption also poses significant challenges to the ability of entrepreneurs in developing countries. Two strands of literature consider the effects of corruption on economies. Firstly, the “grease the wheels” perspective highlights the potential for corruption to enable more economic transactions through the circumvention of inefficient bureaucratic systems (Leff, 1964; Leys, 1965; Méon & Weill, 2010). The second is the “sand in the wheels” view, in which corruption is viewed as a foundational impediment to economic development and the proper functioning of the financial sector (Mauro, 1995; Del Monte & Papagni, 2007). Recently, research has tended to contribute evidence for the sand-in-the-wheels hypothesis, in which reduced investment confidence, higher transaction costs, and general uncertainty impede financial development, deterring investors based both within and outside the country (Alsagr & van Hemmen, 2022; Song et al., 2021).

With the advent of internationally available reward-based crowdfunding (RBC) platforms, a novel and possibly highly significant financing mechanism has emerged, through which a number of the obstacles to entrepreneurship in developing countries might be mitigated. The RBC platform forms an online intermediary through which entrepreneurs seek finance for projects by requesting minor financial contributions from many investors and offering a product or reward for this contribution (Belleflamme et al., 2014; Gierczak et al., 2016). Kickstarter is one such platform, and since its launch in 2009 has become the leader in its field, allowing over USD 5 billion to be raised in funds through enabling entrepreneurs to access both consumers and financiers internationally (Mollick, 2014). This offers an entrepreneur in a developing economy a novel opportunity to circumvent conventional intermediaries when seeking financing and interact directly with international capital markets.

Despite this development, questions remain as to how much entrepreneurs in developing and corrupt countries are able to successfully utilize RBC platforms. The crowdfunding effectiveness literature to date has mostly investigated campaign-specific variables, including entrepreneurial quality, design of campaigns, and use of language (Ahlers et al., 2015; Courtney et al., 2017; Mollick, 2014), with less study of institutional and macroeconomic factors. This forms a prominent knowledge gap, especially since investors using international platforms may tend to rely upon country-level factors when making investment decisions, including perceptions of risk by country and national stereotypes in their assessments (Bannister & Saunders, 1978; Chao, 1998).

Crowdfunding investors have been shown to rely upon commonly available heuristics and restricted information processing when making decisions (Steigenberger & Wilhelm, 2018; Townsend & Kahn, 2014). Given such approaches, factors relating to an entrepreneur’s country could have a significant impact on how investors perceive the probability of delivery, as well as product quality, and these two basic considerations tend to underpin investment decision-making on reward-based platforms (Mollick, 2014). Indicators of economic development are also reported to affect the perceptions of consumers via the impact of national stereotypes (Bohanes & Garza, 2012), and corruption level could impact how backers assess the trustworthiness and credibility of projects.

The influence of corruption on entrepreneurship is not limited to directly felt transactional costs but also includes more general impacts upon the quality of institutions and market confidence. As crowdfunding requires investors to estimate the probability that the promised reward will be delivered, corruption level could form a proxy for the more general trustworthiness of institutions and of quality of governance (Cooray & Schneider, 2018). A higher level of corruption could indicate weakness in enforcement mechanisms, insufficient protection in law, and a greater risk of projects failing or of fraudulent campaigns, and this may pose a deterrent to international investors when considering campaigns by entrepreneurs in countries with significant corruption.

The development level of the country-of-origin of an entrepreneur may also impact upon how they are perceived by potential backers in various ways. Investors may associate developed countries with enhanced quality standards for products, greater infrastructural reliability for logistics, and more stringent consumer protections (Elliott & Cameron, 1994). Such perceptions could lead backers to prefer to finance entrepreneurs in developed economies, and this effect may persist after campaign- and entrepreneur-specific factors are controlled for.

In light of the growing global significance for entrepreneurs of alternate financing avenues, and of the specific issues affecting entrepreneurs within developing and high-corruption countries, research is urgently required to determine the impact of both macroeconomic and institutional factors on crowdfunding outcomes. This has importance for entrepreneurs in developing effective approaches to fundraising, for those responsible for policy interventions in promoting an entrepreneurial environment, and for digital platforms in facilitating inclusiveness in accessing fundraising opportunities. In developing countries, crowdfunding is still at an early stage. According to the World Bank (2013), around 344 million households in these countries could potentially invest small amounts in community businesses through crowdfunding. In 2024, the global crowdfunding market was worth about USD 1.60 billion (Fortune Business Insights, 2025). Without a doubt, this is an important research topic that addresses issues in developing and corrupt countries.

This gap in the current literature is addressed here by exploring to what extent entrepreneurs in developing countries and those with high levels of corruption face disadvantages within RBC. The study investigates the impact of the country-level macroeconomic context, in terms of economic development and corruption, for fundraising outcomes. To this end, the US-based platform Kickstarter was chosen as the global leader in RBC platforms, and campaigns were analyzed between 2009, when the platform launched, and November 2016. Logistic and ordinary least squares multi-level models were applied to study entrepreneurial fundraising outcomes in relation to the macroeconomic context in individuals’ home country, with entrepreneur- and campaign-specific factors controlled for.

In order to fill the above-stated gaps, this study makes the following contributions to the entrepreneurship and finance literature. First and foremost, the study demonstrates how the corruption level within an economy can impact an entrepreneur’s success and influence the ability of entrepreneurs to acquire financial capital. Second, the study also sheds light on the role of a country’s economic progress as a catalyst for entrepreneurs’ success. Third, the study also extends the literature by examining the influence of unemployment on the entrepreneur’s success. Fourth, combining the corruption level, GDP, and unemployment within the entrepreneurial framework helps us comprehend how the overall corruption level, economic progress, and labor-market conditions of a country jointly shape the probability of entrepreneurs’ success by influencing the ability of the entrepreneur to acquire financial capital. While prior research has primarily focused on campaign-specific variables (Ahlers et al., 2015; Mollick, 2014; Courtney et al., 2017), this study contributes to the literature by adopting a cross-country, multi-level analysis of Kickstarter campaigns and explicitly testing how these institutional variables impact entrepreneurial outcomes. Unlike equity or lending-based crowdfunding models, the RBC model was chosen for this study because it lowers entry barriers for entrepreneurs in developing countries and represents the most globally accessible platform for entrepreneurial fundraising (Belleflamme et al., 2014; Kraus et al., 2016). RBC involves lower regulatory requirements, does not transfer equity, and allows entrepreneurs to validate products with international consumers, making it particularly suited to contexts where formal capital markets are underdeveloped (Bruton et al., 2013). Our work thus advances theoretical understanding by integrating signaling theory and institutional theory to explain mechanisms through which country-level economic development and corruption affect RBC outcomes. It also addresses the practical needs of entrepreneurs and policymakers by shedding light on how macroeconomic conditions may advantage or disadvantage entrepreneurs seeking alternative financing on global platforms.

We choose reward-based crowdfunding because it is the most commonly used method for emerging firms and new entrants into the market to raise capital without giving up ownership or incurring debt. In several nations, particularly the developing ones, where the banking systems and stock markets are not well-developed, or developed at all, and where the public, in general, do not have complete faith in them, this strategy is more accessible and appealing. Reward programs are directly influenced by how much the public trust the entrepreneur or the group starting the business, making them more vulnerable to factors such as corruption and the overall economic condition in the economy. On the other hand, equity and loan models are mostly based on strict laws and business regulations, which make them better suited for professional investors, and can mask the informal effects on the fundraising activities we want to investigate.

2. Literature Review and Hypothesis Development

2.1. Determinants of Successful Crowdfunding

There have been significant developments in crowdfunding research since Kickstarter and other platforms have become established, and three main groups of success factors have emerged: entrepreneur-specific, campaign-specific, and macro-level factors. Empirically, the literature is consistent in pointing to the significant influence of entrepreneur-specific factors on fundraising success. Previous experience of crowdfunding appears to be especially significant, and Butticè et al. (2017) report a 23% greater success rate for those who have launched campaigns previously compared to those new to the platform, based on their greater credibility and greater understanding of the platform. The impact of gender is also strong: Johnson et al. (2018) find that being female increases the likelihood of success by 32%, especially for the creative and consumer product sectors.

Fundamental drivers of success in fundraising campaigns include campaign design and strategic decisions. Mollick (2014) reports a clearly evidenced requirement to effectively balance funding targets against the likelihood of succeeding, finding that each additional USD 1000 sought decreased the probability of reaching the target by around 1.2%. Videos, in particular, significantly influence crowdfunding outcomes, and the use of video pitches increases the likelihood of a campaign succeeding by 30% compared to pitches without video (Kraus et al., 2016). The significant impact of early momentum has been shown by Kuppuswamy and Bayus (2017), in which campaigns which achieved 20% of their targets in the first 7 days had a 90% likelihood of succeeding, compared with 10% otherwise. Other significant predictors of success are the quality and amount of content; although the benefit gained was found to be less significant beyond 1000 words of descriptive text (Scheaf et al., 2018). Additionally, geographical patterns of funding impact performance; Agrawal et al. (2015) report that early backing from local investors results in a 40% increase in the probability of reaching the target.

Recent academic directions in the crowdfunding field significantly include increased understanding of the role of macro-environmental variables in determining campaign outcomes. Alsagr et al. (2023) present the first comprehensive investigation of the effects of geo-political risks on international crowdfunding outcomes in an analysis of 1672 campaigns based in 19 developing economies. The results point to a significant negative association between geo-political risk and successful campaigns, which persists when campaign quality is controlled for, and this effect operates through concern from backers as to the reliable delivery of rewards. This study expands upon Hsieh and Vu’s (2021) investigation of the impact of uncertainty of economic policy upon US-based campaigns, which suggests that the effects of macro-level uncertainty are not limited to domestic campaigns but influence international crowdfunding outcomes as well.

Signaling theory is applied as the main underlying theoretical framework for exploring these complex relationships due to the significant informational asymmetry between campaign founders and their potential contributors. Ahlers et al. (2015) uncover various signals for quality, such as entrepreneurial credentials, prototype products, and 3rd-party endorsement, and recent studies show that the macro-environment can render signaling more or less effective. Works aiming to integrate established signaling perspectives and institutional factors point to a need for a comprehensive study considering the impact of context upon investors’ decision-making process.

The literature currently suffers from a lack of evidence regarding the impact of various factors in the macro-environment, as well as limited understanding of how success factors evolve over time and a need for further research on the comparative significance of various determinants derived from the institutional and macro-environmental conditions existing in the entrepreneur’s country. In light of these knowledge gaps, this study integrates macro success factors for RBC to create a broader framework.

2.2. Effects of Country-Level Economic Development on Crowdfunding Outcomes for Entrepreneurs

The theoretical basis of the first hypothesis in this study is derived from studies of crowdfunding investigating prosocial behavior and intrinsic motivation. Economic growth helps promote RBC because the higher GDP of the economy positively influences the per capita income, efficiency and function of the financial system, and digitalization campaigns within the economy that become pivotal in enhancing the pool of potential backers and reducing transaction costs (Adamek & Janku, 2022). In contrast, due to a higher growth rate within the economy, investors are more inclined towards formal equity or lending platforms compared to reward-based models, leading to a negative influence of GDP on the success of fundraising activities. We theorize that investors on RBC platforms may exhibit pro-social motivations to support entrepreneurs from less developed countries, perceiving a higher marginal impact of their contribution (Allison et al., 2015; Zvilichovsky et al., 2018). Moreover, lower costs of production and fewer competing ventures from these countries may enhance perceived value and product differentiation (Burtch et al., 2013; Xu et al., 2014). Thus, entrepreneurs from developing economies may be more likely to succeed, controlling campaign-specific factors.

Allison et al. (2015) show that intrinsic motivation is frequently a factor for backers on RBC platforms, who contribute to ventures to support them as opposed to being solely motivated by profit. Zvilichovsky et al. (2018) identify a motivation towards “making-the-product-happen”, in which a backer gains a sense of reward when supporting a project which may not be implemented without that support. This reinforces findings by Calic and Mosakowski (2016) in which social mission has a significant positive association with crowdfunding outcome, particularly when a project will benefit underserved communities. According to Cholakova and Clarysse (2015), the intrinsic motivations of investors can outweigh extrinsic motivation, particularly in their support for campaigns from poorly represented locations. In addition, Gerber et al. (2012) report that the motivations of crowdfunding contributors frequently include a wish to support other groups or individuals and to support social change. By contrast, investors’ sense of impact from their contributions to ventures in countries with well-developed financial systems may be reduced by perceptions that such projects are less necessary (Bruton et al., 2013).

The hypothesis is also supported by the mechanisms of perceived value and competitive advantage. Small and medium enterprises in developing economies generally enjoy significantly lowered costs for workers and production, which allows for more competitive pricing of similar products; a factor reported as significant for crowdfunding outcomes (Burtch et al., 2013). Novelty-seeking behaviors, as found by Xu et al. (2014), suggest a further motivation for investors in the possible discovery of novel products or cultural or experiential assets when supporting entrepreneurs in developing economies, in the form of culturally distinctive, original, or innovative products. Such entrepreneurs also have fewer competitors on international platforms in comparison with those in developed economies, who are in competition with established, conventional financing mechanisms (Ahlstrom & Bruton, 2006). Mollick (2014) and Kuppuswamy and Bayus (2017) report that crowdfunding effectiveness frequently requires a campaign to stand out from multiple other ventures.

Entrepreneurs in developing economies may also benefit from psycho-social factors. For example, Kuppuswamy and Bayus (2017) point to social signaling value, suggesting that providing backing to entrepreneurs in developing economies creates a strong positive social signal of social consciousness and global understanding.

The impact of country of origin as recorded by Maheswaran (1994) and Peterson and Jolibert (1995) might be reversed within the context of crowdfunding contexts, in which backers may not perceive such extensive need for support in entrepreneurs in developed economies. Cumming et al. (2015) point to the need to provide a compelling narrative in order to succeed in crowdfunding campaigns, and state that frequently, entrepreneurs in developing countries present more compelling narratives, involving positive response to adversity and the potential for social impact. In addition, Burtch et al. (2014) find empirically that greater distance between investors and entrepreneurs, whether in terms of geography or culture, at times can support the tendency to contribute to campaigns, as backers may be curious about the distant community or wish to support it. Further, Lehner (2013) finds that social entrepreneurship projects frequently perform better on crowdfunding platforms than solely commercial projects, and social ventures form a higher proportion of ventures in developing economies. In light of the above discussion, Hypothesis 1 is stated as follows:

Hypothesis 1.

Economic development in the entrepreneur’s home country is negatively associated with fundraising outcomes on international reward-based crowdfunding platforms.

2.3. Effects of Country-Level Corruption on the Crowdfunding Success of Entrepreneurs

The main theoretical underpinning in the “sand in the wheels” perspective is that corruption impedes economic development through causing inefficiency, with raised transaction costs and a reduction in trust in the institutional environment (Mauro, 1995; Del Monte & Papagni, 2007). This view can be applied to crowdfunding when considering ways in which country-level corruption may have a negative impact on entrepreneurial crowdfunding. Corruption may affect RBC in two distinct ways. High levels of corruption may enhance fear among the investors that entrepreneurs will misuse cash or that contracts will never be materialized, significantly reducing their support for ventures according to the “sand in the wheels” hypothesis (Hoinaru et al., 2020). On the other hand, while red-tapism can unnecessarily delay the development of new firms and businesses and shake the confidence of individuals who provide financial support, corruption can sometimes support entrepreneurs in bypassing bureaucratic hurdles and enhance the confidence of funders. Consequently, corruption facilitates the fundraising campaign and supports the “grease the wheels” hypothesis (Méon & Sekkat, 2005).

Our results are most consistent with a signaling mechanism in which higher corruption levels warn reward-based crowdfunding backers about a greater risk that promised rewards will not be delivered. The continued negative association between corruption and outcomes, even after accounting for founder characteristics, implies that country-level institutions matter independently of individual quality (Cascino et al., 2019; Johan et al., 2024). This fits the distinctive risk profile of RBC: backers care chiefly about fulfillment rather than the long-run success of the venture, so institutional quality becomes pivotal for cross-border delivery expectations. In this context, corruption likely stands in for broader institutional weaknesses that undermine delivery reliability, limited consumer protection, inefficient logistics, and weak contract enforcement or dispute resolution.

Deception and fraud are significant issues related to crowdfunding, with Wessel et al. (2017) reporting that suspicions of fraud were raised in around 14% of Kickstarter campaigns, with a notable deterrent effect on potential investors. Cumming et al. (2020) also find consistent evidence of fraud in crowdfunding campaigns, and state that entrepreneurs are at times dishonest about their intent, abilities or qualifications. For entrepreneurs in a highly corrupt country, investors’ concerns could be increased through their perception of associations linking corruption in a country with an increased likelihood that individuals will commit fraud (Gächter & Schulz, 2016).

In assessing crowdfunding campaigns, investors’ decision-making processes are constrained (Steigenberger & Wilhelm, 2018) and this increases the likelihood that they will use country-level perceptions in assessing risk, with the two major considerations for reward-based crowdfunding being quality of products and the probability of delivery (Mollick, 2014).

In terms of the perceived quality of products, adverse effects based on country of origin have long been documented and continue to be reported (Bilkey & Nes, 1982). Moreover, such perceptions seem to spill over into digital contexts and could therefore be predicted to also be significant for crowdfunding platforms. Significantly, corruption also degrades the trust of investors that products will be delivered. The effects of corruption are not limited to perceptions but also include practical issues for operations. In this regard, Teixeira and Guimarães (2023) report a direct positive effect of corruption on the cost of international business transactions, with an impact on reward delivery to international investors. From this theoretical and empirical basis, Hypothesis 2 is constructed as follows:

Hypothesis 2.

Corruption in the entrepreneur’s country has a negative association with fundraising outcomes on international reward-based crowdfunding platforms.

3. Data and Methods

3.1. Data

Kickstarter leads the global reward-based crowdfunding platforms. While Kickstarter is a US firm, it is available in over 130 countries. The platform was launched in 2009, and since that time has platformed pledges of over USD 5 billion. Earlier research has applied Kickstarter data in exploring various factors affecting performance (Courtney et al., 2017; Kuppuswamy & Bayus, 2017; Alsagr et al., 2023). In a similar vein, this study takes as its population projects run on Kickstarter from its launch until November 2016. It identifies the campaigns that entrepreneurs within the dataset launch, excluding non-serious fundraising campaigns and those that ask for under USD 1000 or over USD 1,000,000 (Butticè et al., 2017; Mollick, 2014). The remaining sample contains 179,886 crowdfunding campaigns by individuals in 136 countries. The dataset covers campaigns from 2009 to November 2016. Although more recent data could be incorporated, this period was selected to ensure data completeness and comparability, as Kickstarter implemented significant policy and platform changes after 2016 that altered the crowdfunding landscape. These changes would have introduced additional confounding factors beyond the scope of the current study. We acknowledge this as a limitation and recommend that future research extends the sample period. To contextualize the findings, we note that the global crowdfunding market in developing countries has expanded significantly in the last decade, with World Bank estimates suggesting emerging economies could collectively raise over USD 90 billion annually by 2025 (World Bank, 2017). However, reward-based models remain dominant in regions with limited financial regulation and equity market depth.

Kickstarter was chosen for this study for several reasons. Firstly, as the largest and most globally recognized RBC platform, it brings together entrepreneurs from both developed and developing economies, thus offering significant variation in institutional and macroeconomic environments. This cross-country diversity is vital for investigating how national-level factors such as economic development and corruption shape entrepreneurial outcomes in digital finance. Secondly, Kickstarter’s All-or-Nothing funding model provides a comparable measure of campaign success, making it ideal for examining how country-level characteristics translate into differences in financing outcomes. Finally, its global reach and extensive campaign-level data allow the integration of individual, project, and institutional variables, directly aligning with the study’s central objective of understanding how macroeconomic context conditions crowdfunding performance.

3.2. Measures

3.2.1. Dependent Variable

The analysis aims to identify the impacts of development level and institutional variables upon campaign outcomes. While many crowdfunding platforms adopt a Keep-it-All approach, Kickstarter has an All-or-Nothing policy, in which the funds pledged are only provided to entrepreneurs where they have achieved their set target. Thus, campaign performance can be usefully measured through the achievement or otherwise of the campaign goal. The dependent variable for the study is therefore Success, with its value recorded as 1 where a campaign target is achieved and 0 where it is not.

3.2.2. Independent Variables

This study’s novel contribution lies in applying country-level variables to analyze crowdfunding campaign outcomes. As crowdfunding represents not only an alternate form of finance, but a means of launching a project (Brown et al., 2017), country-level variables are considered here which have been established as affecting entrepreneurs’ capacity to secure funding. The variables selected encompass the Gross Domestic Product of a country, its Unemployment Rate, and its Inflation Rate, with data sourced from the World Bank. In addition, considering that possible investors are basically helping to fund product development, decisions on investment may depend upon the Corruption level of the relevant country, as measured in reference to the International Country Risk Guide (ICRG).

3.2.3. Control Variables

Individual-specific factors are controlled for by the introduction of variables linked to crowdfunding outcomes. Firstly, female-initiated campaigns tend to succeed more frequently than campaigns by males, and thus, founder gender is represented by a dummy variable which equals 1 for a female-initiated campaign and 0 for a male founder. Secondly, the higher the goal is set, the less likely the entrepreneur is to achieve that goal. This is controlled for using a variable termed Project Goal, capturing the size of projects in US dollars. Thirdly, a control is developed for the individual’s previous fundraising experience, formed of two variables, Successful Experience and Failed Experience, tracking entrepreneurs’ previous campaign outcomes on the platform. The final control variable set relates to campaign content, as this has significant effects on campaign outcomes. Thus, the dummy variable Video Pitch is used, and is equal to 1 for campaigns with a video pitch and 0 for those without. Video Count records the number of videos contained in the ‘description’ section for each campaign, while Image Count records the same for images. Word Count is a measure of text length for the campaign content, and Duration represents the duration in days selected for the public availability of a campaign. Because of skewedness within the variables and zero values occurring, each continuous variable in the analysis is transformed by applying the inverse hyperbolic sine transformation, interpreted in the same manner as the natural log transformation (Alsagr et al., 2023). Each variable applied in this research is presented alongside a summary description in

Table 1. Variables Description.

Variable	Description
Dependent Variable
Success	A dummy variable = 1, if the entrepreneur’s fundraising attempt is successful.
Independent Variables
Country-level:
Corruption	The corruption index score of where the entrepreneurs are located.
Gross Domestic Product	The gross domestic product (in USD) of where the entrepreneurs are located.
Unemployment Rate	The unemployment rate (in%) of where the entrepreneurs are located.
Individual-level:
Gender	A dummy variable = 1 if the campaign’s founder is a female.
Project Goal	The campaign’s fundraising goal in dollars.
Successful Experience	The number of previous successful fundraising attempts on the crowdfunding platform.
Failed Experience	The number of previous unsuccessful fundraising attempts on the crowdfunding platform.
Video Pitch	A dummy variable = 1 if current campaign has a video pitch.
Video Count	The number of videos in the campaign’s content section.
Image Count	The number of images in the campaign’s content section.
Campaign Duration	The number of days the fundraising campaign is public on the platform.

.

3.3. Methods

This research seeks to determine impacts from macro-environmental and institutional factors on entrepreneurial crowdfunding outcomes. Because the study includes explanatory variables at both the entrepreneur and country levels, a multi-level regression model is considered an appropriate methodology (Autio et al., 2013). This type of model can recognize that entrepreneurs (Level 1) are embedded in countries (Level 2) and enables insights into the combined effects of variables on these levels on decisions to launch crowdfunding campaigns. Based on the binary nature of the selected dependent variable, a multilevel logistic regression model is selected (González-Pernía et al., 2015). Such a model fits the data across disparate levels, with variations in the dependent variable being explainable through individual (Level 1) and national (Level 2) factors. The selected model can be shown as follows:

$$\begin{array}{ll}\mathrm{Level} 1& \hspace{1em}\mathit{log}[p_{ij}/(1-p_{ij})]={\beta }_{0j}+{\beta }_{1j}{X}_{ij}+e_{ij}\\ \mathrm{Level} 2& \hspace{1em}{\beta }_{0j}={\gamma }_{00}+{\gamma }_{01}{Z}_j+u_{0j}\\ & {\beta }_{1j}={\gamma }_{10}+u_j\end{array}$$

In which $p_{ij}${\displaystyle \beta _{1j} = \gamma _{10} + u_{1j}}{\displaystyle\beta _{1j} = \gamma _{10} + u_{1j}} represents the probability of entrepreneur i in Country j successfully meeting their funding target. ${\beta }_{0j}$ is the campaign success intercept for Country j. ${\beta }_{1j}$ represents the impact of entrepreneur-specific controls, $X_{ij}$, for Country J. At level 2, ${\beta }_{0j}$ forms a function of country-specific variables $Z_j$, with effects from those variables given by ${\gamma }_{01}$. ${\gamma }_{00}$ denotes the mean value of the dependent variable identified at level 1 once country-level predictors are controlled for. ${\beta }_{1j}$ represents an aggregate constant measured through ${\gamma }_{10}$, representing mean effects from entrepreneur-specific variables across countries. For each level, error terms are given by $e_{ij}$, $u_{0j}$, and $u_{1j}$.

4. Results

4.1. Descriptive Statistics

Table 2. Descriptive Statistics.

Variable	Obs.	Mean	Std. Dev.	Min	Max
Success	179,886	0.3377306	0.4729375	0	1
Amount Raised (in USD)	179,886	6749	80,648	0	20,300,000
Corruption	179,598	4	1	1	6
GDP	179,886	51,944	7500	348	104,278
UNEMP	179,886	7	2	0	35
Gender	179,886	0.273	0	0	1
Project Goal (in USD)	179,886	21,495	61,615	1000	1,000,000
Successful Experience	179,886	0.142985	0.9698266	0	40
Failed Experience	179,886	0.1445026	1.029352	0	69
Video Pitch	179,886	0.7260876	0.4459658	0	1
Video Count	179,886	0.2273996	0.8836534	0	44

presents descriptive statistics for the sampled fundraising bids, of which 33.8% succeeded in raising their requested capital, and the average sum raised was USD 6749. Females are responsible for 27.63% of campaigns launched, which points to a crowdfunding gender gap (Kuppuswamy & Bayus, 2017). Project sizes averaged USD 21,495, while the sampled entrepreneurs had made an average of 14.3 previous successful fundraising bids with the platform. Most entrepreneurs sampled (73%) accompanied their bid with a video pitch, with campaigns averaging 23 additional videos within their section on campaign content.

Prior to the main analysis, multicollinearity testing was conducted.

Table 3. Correlation Matrix.

Variables	SUCCESS	la	AC	AGDPC	FEMALE90DUMMY	ag	aes	aef	VIDEOPITCH	av	ai	ad
SUCCESS	1.000
la	0.642 ***	1.000
Corruption	−0.049 ***	−0.084 ***	1.000
GDP	−0.009 ***	−0.013 ***	0.475 ***	1.000
FEMALE90DUMMY	0.084 ***	0.063 ***	−0.023 ***	−0.014 ***	1.000
ag	−0.236 ***	0.007 ***	0.029 ***	0.007 ***	−0.073 ***	1.000
aes	0.192 ***	0.188 ***	0.012 ***	0.029 ***	−0.033 ***	−0.063 ***	1.000
aef	−0.037 ***	−0.044 ***	0.004	0.020 ***	−0.065 ***	−0.064 ***	0.251 ***	1.000
VIDEOPITCH	0.268 ***	0.430 ***	−0.106 ***	−0.017 ***	0.005 **	0.049 ***	0.066 ***	−0.010 ***	1.000
av	0.107 ***	0.183 ***	−0.031 ***	−0.005 *	−0.045 ***	0.083 ***	0.065 ***	0.028 ***	0.118 ***	1.000
ai	0.173 ***	0.382 ***	−0.000	0.002	−0.022 ***	0.156 ***	0.170 ***	0.067 ***	0.239 ***	0.232 ***	1.000
ad	−0.107 ***	−0.035 ***	−0.005 **	−0.024 ***	−0.025 ***	0.157 ***	−0.072 ***	−0.005 **	−0.022 ***	−0.006 ***	−0.056 ***	1.000

*** p < 0.01, ** p < 0.05, * p < 0.1.

provides a correlation matrix including the variables for analysis. There is nothing of concern in the variables’ unconditional correlations, with no consequent significant problems of multicollinearity.

4.2. The Impacts of Macroenvironment upon Fundraising Outcomes for Entrepreneurs

The analysis then followed a multi-level mixed effects estimation model, with recognition of differences separating individual entrepreneurs in the same country. The model explored the impacts of variables related to individual- and country-level analysis.

Table 4. Multilevel Logistic Regression.

	Dependent Variable: Success
	(1)		(2)		(3)
Independent Variables	β	s.e.	β	s.e.	β	s.e.
Corruption					1.2045 ***	(0.0811)
Gross Domestic Product			−0.3535 ***	(0.0603)	−0.5435 ***	(0.0682)
Unemployment Rate			0.9872 ***	(0.0325)	1.1701 ***	(0.0358)
Gender	0.4000 ***	(0.0123)	0.4057 ***	(0.0124)	0.4065 ***	(0.0124)
Project Goal	−0.6238 ***	(0.0056)	−0.6101 ***	(0.0056)	−0.6087 ***	(0.0056)
Successful Experience	1.1921 ***	(0.0198)	1.2400 ***	(0.0199)	1.2351 ***	(0.0199)
Failed Experience	−0.8901 ***	(0.0198)	−0.8911 ***	(0.0198)	−0.8906 ***	(0.0199)
Video Pitch	1.5940 ***	(0.0159)	1.5167 ***	(0.0161)	1.5201 ***	(0.0161)
Video Count	0.3823 ***	(0.0122)	0.3593 ***	(0.0123)	0.3621 ***	(0.0123)
Image Count	0.2566 ***	(0.0043)	0.2909 ***	(0.0045)	0.3000 ***	(0.0045)
Campaign Duration	−0.3035 ***	(0.0164)	−0.3888 ***	(0.0166)	−0.4143 ***	(0.0167)
Observations	179,886		179,886		179,886
Countries	136		136		136
Chi-squared	27,376.4		27,798.1		27,904.7
Akaike Information Criterion	188,245.4		186,996.3		186,464.1
Bayesian Information Criterion	188,346.4		187,117.5		186,595.4

*** p < 0.001. Standard errors in parentheses.

provides the findings derived from the multi-level mixed effects logistic regression model. Column (1) introduces variables related to individuals, and it is seen that such variables exert impacts upon fundraising outcomes which are comparable to previous research in this area. Bids from female entrepreneurs are found to be more likely to succeed (Johnson et al., 2018), as are those from entrepreneurs who have previously succeeded (Butticè et al., 2017). More detailed fundraising pitches have a greater success rate (Courtney et al., 2017; Kraus et al., 2016; Scheaf et al., 2018), as do shorter campaigns (Mollick, 2014). Thus, backers using crowdfunding platforms give equal value to individual-specific and campaign-specific signals, irrespective of country of origin.

Column (2) in Table 4 presents economic development indicators used in the estimation model, in which when individual entrepreneur-specific variables were controlled for, the economic development indicators were found to significantly reduce the likelihood of campaigns receiving funding. It was also found that entrepreneurs in countries with lower development levels are not disadvantaged in international fundraising campaigns in cases where signaling of their individual-level qualities is effective, with well-planned campaigns and demonstration of prior performance. The findings, therefore, support Hypothesis 1, with a negative association found between economic development and fundraising outcomes.

In Table 4, Column (3), countries’ corruption level, assessed using the ICRG index, is added to the analysis. The results show that the corruption level of a country has a negative association with fundraising outcomes, and that this persists even once individual-specific variables are controlled for, in that entrepreneurs in more corrupt economies are disadvantaged. The findings suggest that crowdfunding platform investors consider a country’s corruption level in their decision to support a project or not, with this showing a negative association with funding outcomes for entrepreneurs. Therefore, Hypothesis 2 is supported.

Recent evidence of empirical research from Latin America shows that institutional quality, especially anti-corruption efforts, shapes entrepreneurs’ ability to raise funds via equity crowdfunding whereas stronger institutional frameworks are associated with better financing outcomes (Battaglia et al., 2021). Nonetheless, such results are related to equity markets, where corruption primarily alters investors’ perceived capital-loss risk and their assessment of venture viability. Reward-based crowdfunding operates differently. Backers there face delivery risk rather than equity risk, so corruption is likely to influence outcomes through channels linked to fulfillment reliability (e.g., consumer protection, logistics, dispute resolution) rather than the underlying probability that the business succeeds.

4.3. Robustness Tests

The findings were tested for robustness through a range of approaches. Firstly, as fundraising performance is measured using various proxy measures (Scheaf et al., 2018), the findings were tested for consistency across alternate continuous performance measures.

Table 5. Multilevel OLS Regression.

	Dependent Variable: Amount Raised
	(1)		(2)		(3)
Independent Variables	β	s.e.	β	s.e.	β	s.e.
Corruption					0.8473 ***	(0.0968)
Gross Domestic Product			−0.6051 ***	(0.0971)	−0.6350 ***	(0.1044)
Unemployment Rate			2.0447 ***	(0.0414)	2.2158 ***	(0.0455)
Gender	0.5098 ***	(0.0155)	0.5141 ***	(0.0154)	0.5142 ***	(0.0154)
Project Goal	−0.1397 ***	(0.0056)	−0.0916 ***	(0.0056)	−0.0901 ***	(0.0056)
Successful Experience	1.3464 ***	(0.0208)	1.4345 ***	(0.0207)	1.4306 ***	(0.0207)
Failed Experience	−0.9985 ***	(0.0213)	−0.9869 ***	(0.0211)	−0.9854 ***	(0.0211)
Video Pitch	2.6832 ***	(0.016)	2.4857 ***	(0.0162)	2.4866 ***	(0.0162)
Video Count	0.6212 ***	(0.0159)	0.5648 ***	(0.0158)	0.5658 ***	(0.0158)
Image Count	0.7025 ***	(0.0054)	0.7584 ***	(0.0054)	0.7645 ***	(0.0054)
Campaign Duration	0.0686 ***	(0.0196)	−0.1002 ***	(0.0196)	−0.1170 ***	(0.0197)
Observations	179,886		179,886		179,886
Countries	136		136		136
Chi-squared	77,886.1		83,075		83,138.50
Akaike Information Criterion	895,678.4		892,171.4		890,597.2
Bayesian Information Criterion	895,789.5		892,302.7		890,738.5

*** p < 0.001. Standard errors in parentheses.

shows the results of multi-level mixed effects OLS regressions, using Amount Raised to form the dependent variable. The findings do not differ qualitatively from the results of main analysis. Macroeconomic variables show significant associations with the level of funding achieved by entrepreneurial campaigns, demonstrating that entrepreneurs face restrictions based on their economic environment. Further, increases in an entrepreneur’s country’s corruption level have a negative effect on fundraising outcomes, supporting the study’s previous results.

4.4. Results Discussion

Our findings indicate that higher corruption negatively influences entrepreneurial fundraising campaigns, which aligns with the ‘sand-in-the-wheels’ hypothesis, because informal payments or corruption can increase doubts about the transparency and legality of the startups, deterring lenders and investors from providing financial support to entrepreneurs, and ultimately diminishing market confidence and complicating fundraising efforts. This result is supported by Dutta and Sobel (2016), who noted that corruption hurts entrepreneurship. Corruption has a negative impact on the fundraising success of entrepreneurs. Corruption hinders the growth of entrepreneurs who are trying to raise money because it creates extra costs and doubts in the minds of the investors. Within a corrupt system, entrepreneurs often have to offer bribes or informal payments to government officials to develop new businesses, which significantly increases the cost of startups and impacts their rate of return (Avnimelech et al., 2014). There is also a fear that such deals may be declared illegal at any time, forcing the investors and banks to back out on financial support. Even if they agree, they often charge higher interest or ask for more security. Consequently, it becomes more challenging for entrepreneurs to secure the necessary financial support to grow, which significantly impacts their reputation and hinders the success of their fundraising campaigns.

In contrast, the negative influence between GDP and fundraising success aligns with, as improved economic conditions within the economy reduce the informal opportunities for entrepreneurs to acquire funds. This finding is partially supported by Fasano et al. (2025), who reported similar results. GDP and fundraising success are inversely linked, which is surprising. GDP represents the country’s economic strength, which positively influences formal financial markets and institutions. As a result, investors are more likely to allocate funds for existing enterprises and lower-risk ventures, making it difficult for young entrepreneurs to attract a significant amount of funds for startups. In a well-functioning and developed economy, businesses do not rely on corrupt and informal practices to acquire funds, leading to enhanced competition for legal financing, and ultimately, they have less chances of success in fundraising endeavors.

Likewise, there exists a positive connection between unemployment and fundraising success, as higher joblessness can induce more individuals to indulge in starting their own businesses, which are mainly driven by fundraising activities. Unemployment positively influences the fundraising performance of the entrepreneurs. This result aligns with Mamaro (2025). Higher levels of unemployment often induce individuals to establish their own enterprises due to the scarcity of employment opportunities and a smaller number of jobs within the economy. Moreover, due to the higher level of unemployment, young entrepreneurs may attain more attention from investors and the government in acquiring funds for developing new businesses and firms. Further, investors also see entrepreneurship as a mechanism for job creation and unemployment reduction, and they are more likely to offer financial support for the starting of new businesses.

5. Conclusions

The research presented here has investigated the potential disadvantages facing entrepreneurs based in developing and corrupt countries in terms of global RBC and explored the ways in which the macroeconomic factors of economic development and corruption impact digital platform fundraising performance. The results offer a complex picture of the at times unanticipated interactions between digital dreams and institutional realities.

Based on this analysis of campaigns conducted through the most prominent international crowdfunding platforms, entrepreneurs based in developing economies are not disadvantaged in terms of crowdfunding after controlling for entrepreneur- and campaign-related variables. Indeed, such individuals are more likely to succeed in comparison with those in developed countries, which points to a potential role for international crowdfunding platforms in promoting a democratic environment and a more equal entrepreneurial context globally. These findings conflict with accepted views of country-of-origin impacts and point to the potential for digital crowdfunding to cut across conventional economic hierarchies when an entrepreneur is successful in demonstrating project quality.

Having said this, the study does uncover evidence of the impact of institutional realities. Corruption is shown to persistently impede successful crowdfunding, and this suggests that although digital platform crowdfunding mitigates some conventional restrictions in finance, institutional quality retains some impact. Corruption is persistently and negatively associated with fundraising outcomes, which reflects concern over the reliable delivery of projects and institutional reliability outweighing the entrepreneur’s personal abilities.

This study’s contributions to the literature on crowdfunding include support for the significance of macro-environmental variables on entrepreneurial outcomes across international platforms. The results contribute to signaling theory through demonstrating the presence of institutional signals at the level of the country. These signals are found alongside signals from the entrepreneur and campaign, enhancing or reducing the effects of signals of individual quality to form a multi-signal context. Moreover, these findings contradict simpler theories of country effects, with economic development found to have reduced impact compared to current assumptions where information asymmetry is decreased through digital platforms.

In practical terms, the study’s findings are of potential interest to various stakeholder groups. Entrepreneurs in developing countries can take encouragement from the finding that country of origin does not necessarily impact crowdfunding outcomes if a quality campaign is developed and signaling is used effectively. Notwithstanding, entrepreneurs in high-corruption economies need to understand the need to strategically respond to the barriers which this creates, e.g., through prioritizing transparency, use of thirdrd-party endorsement, and considering timing as perceived institutional risks change.

For the digital crowdfunding platform, the findings highlight an opportunity to undertake but also a responsibility. If they effectively include developing countries’ entrepreneurs, platforms can utilize this research in outreach and marketing. However, they must also make provisions to additionally support entrepreneurs faced with difficult institutional contexts; for example, through providing educational resources regarding quality of signals and reliability, partnering with locally based institutions to improve their credibility, and projects at platform level which can address concern about corruption.

Those involved in policy in developing economies should consider crowdfunding as an alternate financing avenue for entrepreneurs, which may diminish financial constraints. Despite this, the results support the need to enhance institutions and, especially, to manage corruption, which will assist entrepreneurs who seek finance opportunities internationally. Developing digital infrastructure, clear regulation of crowdfunding, and initiatives to support entrepreneurs in developing platform-specific competences may enhance their ability to benefit from international crowdfunding platforms further.

Based on the findings, several policy suggestions are proposed. Although corruption significantly decreases entrepreneurial fundraising success, this effect, in turn, promotes corrupt practices within the economy. Therefore, policymakers should focus on making the business environment more favorable and transparent, which facilitates entrepreneurs in acquiring financial capital without relying on corrupt practices. The GDP has a negative influence on fundraising success. Thus, policymakers should allocate more funds for the entrepreneurs who want to start or expand businesses so that they can utilize more formal options for fundraising. Simultaneously, they must facilitate consistent economic development and provide employment opportunities to prevent businesses from adopting informal or fraudulent methods of obtaining financial capital. Moreover, it is also suggested that governments devise policies that reduce bureaucratic hindrances, safeguard investors, and assist startups in securing equitable financing, which may enhance the integrity and robustness of entrepreneurship.

The findings offer several theoretical and practical insights. First, they highlight that country-of-origin effects persist even on digital platforms that ostensibly level the playing field. While economic development appears to work in favor of entrepreneurs from less developed countries, corruption consistently undermines backers’ confidence. This underscores the need to extend signaling theory beyond individual entrepreneurial traits to incorporate institutional signals. From a practical standpoint, entrepreneurs from high-corruption contexts may need to invest in transparency strategies, third-party endorsements, and guarantees to mitigate perceived risk. Platforms such as Kickstarter could develop tailored support tools, including verification mechanisms and trust-building programs, to help entrepreneurs in these environments. Policymakers can also foster RBC by improving institutional quality and digital infrastructure, thereby reducing barriers for their entrepreneurs.

This research is subject to certain limitations. First, it investigates only one platform, and although this allows for in-depth and consistent data and analysis, the research cannot be easily generalized to different crowdfunding platforms, which may differ in terms of audience, mechanisms, and geographic density. Moreover, since the period of study, the international crowdfunding market has developed considerably, and, together with changing global economic relationships, this means that the dynamics investigated may have changed. A further limitation lies in the corruption measure used, which, although broad, considers perceived corruption as opposed to direct experience of it. Further studies might therefore usefully increase granularity when measuring institutional quality.

The analysis in the current study could be expanded upon through multi-platform studies and using a more recent period of study, validating the results here in varied environments. Exploration of how corruption impacts investment decisions could enable in-depth understanding of the ways in which perceived institutional quality impacts funding outcomes. Longitudinal research to investigate longer-term strategy development among entrepreneurs in lower-quality institutional contexts might provide a useful understanding of adaptive learning mechanisms. Moreover, studies on approaches such as insurance, third-party certification, and platform-based guarantees could provide practical guidance for stakeholders addressing institutional obstacles. One of the limitations of the study is that we relied on perceived corruption instead of actual corruption; however, previous research indicates that perceived and real corruption levels may differ, thereby differently influencing the investors’ perceptions of risk. According to Treisman (2007) and Olken (2009), perception-based indicators are more likely to be based on information obtained from media coverage or cultural norms rather than firsthand experiences. Thus, using perceived corruption as a proxy in this analysis indicates that our outcomes are based on the investor responses to reputation rather than to real unethical practices. The upcoming study also uses instrumental variable methods for estimations. This study used limited data for analysis from 2009 to November 2016. Upcoming studies should use updated data for analysis.