Search Results (29)

This paper investigates two marketing strategies a reward-based crowdfunding platform employs to align its preferences with an entrepreneur’s choice of pledge and target levels. These are (a) how to promote campaigns to potential backers, and (b) how to share campaign revenues with the entrepreneur. Kickstarter, for instance, promotes a set of campaigns by compiling a list of “recommended” projects. This research shows that the platform’s choice of the promotion rule may expose entrepreneurs to the risk of not generating sufficient funds to start production, which can damage their and the platform’s reputation. When the platform’s reputational risk is not very high, it reduces the risk of non-delivery by increasing the revenue share of the entrepreneur. The platform’s strategies are likely to ensure production when backers derive warm glow from pledging, when the entrepreneur’s development cost is low, or when the entrepreneur has minimal reputational cost if production fails. However, low reputational costs motivate the entrepreneur to lower the target, thus increasing the likelihood of insufficient funds to start production. We propose strategies the platform can use, including customizing the revenue share based on the campaign characteristics, to rectify such misalignments. Full article

The COVID-19 pandemic disrupted traditional financing channels, accelerating the adoption of crowdfunding as an alternative capital-raising mechanism across Africa. Limited access to finance for women entrepreneurs remains a pivotal issue globally, particularly in Africa, where most women are significantly underrepresented. This study investigates the role of gender differences in campaign design, communication, and signalling in crowdfunding success during the COVID-19 pandemic, rather than focusing on gender as a direct factor. Guided by signalling, Congruity, Feminist Economics, and Social Network theories, the research investigates whether gender-related differences in campaign presentation and communication strategies contributed to variations in funding outcomes. A quantitative research approach was adopted to analyse reward-based crowdfunding campaigns launched between March 2020 and December 2020. The study measures success through funding attainment ratios and goal achievement rates. The findings reveal nuanced gender effects, with male-led campaigns exhibiting strengths in social engagement and narrative appeal, while female-led campaigns demonstrated advantages in higher average contribution sizes. This awareness contributes to the literature on gender and entrepreneurial finance in crisis contexts, offering practical implications for platform design, policy interventions, and inclusive funding strategies in Africa’s evolving crowdfunding ecosystem. In line with the empirical results, the impact of gender is mostly indirect and mediated by campaign variables such as updates, videos, and engagement intensity. Full article

When are emotional appeals effective for entrepreneurial ventures seeking funding? Questioning the assumption that all positive emotions are equally effective, we propose and empirically validate the idea that only emotions well-aligned with an organization’s purpose retain their signaling value. We use EmoBERTa, a transformer-based emotion detector, to analyze 275,197 Kickstarter campaigns (2009–2020) and find that emotional expression generally reduces campaign success, indicating increased professionalism in the crowdfunding marketplace. However, campaigns with an explicit prosocial mission are more successful when they express caring emotions compared to other positive emotions (admiration, desire, excitement, joy, love, and optimism). We also found that this effect is more pronounced when campaigns receive no institutional endorsement, such as Kickstarter staff picks. Together, this suggests that emotional appeals matched to an organization’s mission are most effective, especially when the projects are not institutionally recognized. Together, this study enhances our understanding of when and why certain positive emotions are more persuasive than others, challenging conventional wisdom that all positive emotions are equally effective. Full article

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. Full article

This study focused on investigating the factors that drive reward-based crowdfunding in Africa, particularly considering the increasing limitations that entrepreneurs face in accessing traditional financial resources globally, by analysing 215 crowdfunding projects from prominent platforms like Kickstarter, IndieGoGo, and Fundraised. The research aimed to identify the key drivers of crowdfunding success. The results from an econometric logistic regression analysis revealed that while images, longer campaign durations, and videos positively influenced crowdfunding, they did not significantly contribute to achieving success. In contrast, the number of backers showed a positive and significant impact on outcomes, whereas the targeted funding amount negatively influenced the success. Notably, the presence of spelling errors was found to have a positive, though statistically insignificant, relationship with crowdfunding success. These findings enhance the existing literature on crowdfunding and offer valuable insights into concepts such as information asymmetry and signalling theory within the context of reward-based crowdfunding. Full article

Crowdfunding nowadays has become a significant source of financing for all those entrepreneurs who require funds to start their operations, specifically for social ventures. Furthermore, determining what factors decide whether a project will successfully raise funds is a very relevant question. Past literature has examined various factors that influence fundraising success. Of these factors, information efficiency is the determinant of successful fundraising due to precise project descriptions and effective message delivery. Despite this fact, few studies have investigated how such project descriptions affect the success of crowdfunding campaigns, specifically sustainable projects. The present study tries to fill this gap by examining the relation between the length and readability of the crowdfunding project descriptions and the success rate for sustainable projects in a reward-based model. For the analysis, data were obtained from Kickstarter, the largest crowdfunding platform in the world, with a sample of 12,613 projects, employing a multiple logistic regression model. The results show that the word count and readability of the project descriptions are positively related to crowdfunding success. Furthermore, the analysis shows that using more words related to SDG keywords results in positive fundraising. Such insights reflect that good project descriptions are important for crowdfunding success and, on the theoretical level, provide practical value for project owners. Full article

This research seeks to clarify the uncertainty in crowdfunding literature regarding the relationship between the number of updates and campaign success. By integrating signal theory and the notion of information overload, this study posits a curved, inverted U-shaped relationship between the number of updates and campaign success. Empirical evidence to support this hypothesis is drawn from an analysis of 2852 projects sourced from a reward-based crowdfunding platform. The aim of this inquiry is to provide insights into the intricate dynamics that influence how the number of updates impacts the results of crowdfunding campaigns. Full article

This study examined whether fixed or flexible funding mechanisms influence crowdfunding success. Under the fixed funding mechanism, the pledges contributed to the crowdfunding campaign projects are returned to the backers if the project fails, whereas, under the flexible funding mechanism, the project creator can keep all the raised pledges, irrespective of whether the project succeeds or fails. Secondary data consisted of reward-based crowdfunding projects retrieved from The Crowd Data Centre. Logistic regression was employed to respond to research objectives. The results reveal that the fixed funding mechanism increases the probability of success more than flexible funding. Entrepreneur experience, spelling errors, and project description negatively affect crowdfunding success, and backers positively affect crowdfunding success. The findings guide entrepreneurs seeking financing to design and choose an appropriate funding mechanism that effectively reduces the failure rate. Although many entrepreneurs seek funding in the crowdfunding market, relatively little research has been conducted on the influence of flexible or fixed funding mechanisms on crowdfunding success in Africa. This study provides entrepreneurs with appropriate financing strategies that enhance crowdfunding success. The empirical literature indicates that the flexible funding mechanism creates distrust among backers due to unrealistic target amounts. Full article

This paper presents the results of a survey of small and medium-sized enterprises (SMEs) in Poland that have benefited from crowdfunding (CF). Based on these results, a new business model was developed. On this basis, the CF equity, reward and donation models were analyzed, and the impact of CF on the way of creating value in the company in the context of sustainable development was determined. The survey results show that the use of CF promotes the sustainable development of SMEs in Poland and significantly impacts their business model. In practical terms, this research has contributed to a better understanding of value creation by these companies. The results of our analysis are useful for consulting companies and CF platforms that help SMEs organize campaigns. In theoretical terms, the study conducted and the methodology used allow the presentation of a new definition of CF and a sustainable business model for a company using CF as well as contribute to the value management theory in SMEs. Full article

Based upon social identity theory, having a strategic entrepreneurial orientation is crucial for ventures seeking funding, since entrepreneurial orientation (viewed as an entrepreneurial organizational culture) has a significant influence on investors’ decision-making for resource allocation. However, the attitude of investors toward women entrepreneurs’ behavioral orientation is controversial. Women entrepreneurs may not benefit from specific behavioral orientations because of gender bias. In this study, we had a sample of 5105 ‘design and technology’ campaigns with explicit gender information on Kickstarter, utilizing a computer-aided text analysis dictionary of entrepreneurial orientation to examine whether the five dimensions of entrepreneurial orientation signals affected the relationship between women entrepreneurs and their performance in reward-based crowdfunding. Our findings demonstrated that investors tended to support women entrepreneurs who displayed many of the signals for autonomy and risk-taking, while backers were skeptical of women entrepreneurs displaying a high number of the signals for proactiveness. This study will enable an in-depth understanding of the link between investors’ decision-making and women’s entrepreneurial behaviors, in addition to determining which specific entrepreneurial behavior is important for helping women entrepreneurs to obtain funding in the context of reward-based crowdfunding, from a practical perspective. Full article

Due to the profitability and selfishness of crowdfunding system users, under fixed budget conditions, there are problems, such as low task completion rate due to insufficient participants and low data quality. However, the existing incentive mechanisms are mainly based on traditional economics, which believes that whether users participate in tasks depends on whether the benefits of the task outweigh the costs. Behavioral economics shows that people judge the value of gains and losses according to a reference point. The weight given to losses is more important than the weight given to the same gains. Therefore, this article considers the impact of reference dependency and loss aversion on user decision-making and proposes a participant selection mechanism based on reference dependency (PSM-RD) and a quality assurance mechanism based on loss aversion (QAM-LA). PSM-RD uses reference points to influence user pricing and selects more participants based on relative value. QAM-LA pays additional rewards based on the data quality of participants and motivates them to improve data quality by reconstructing utility functions. The simulation results show that compared with the ABSee mechanism, data quality has improved by 17%, and the value of completed tasks has increased by at least 40%. Full article

Agri-food crowdfunding, a new financing method, not only solves the financing constraints in agricultural development, but also realizes the effective connection between agricultural products and the market. Thus, exploring the impact of project factors on financing performance can help initiators design scientific and reasonable crowdfunding project plans. Based on the trust theory and the elaboration likelihood model (ELM), the trust mechanism is constructed with the characteristic attributes as the central path, the competitive attributes as the edge path, and the commitment as the mediator. Using the data of 1166 agri-food crowdfunding projects on the Taobao crowdfunding platform, I investigate the impact of disclosed project attribute information on financing performance and the mediating role of project risk. The results show that projects with a detailed explanation of the crowdfunding reason and the capital uses, a low funding goal, product qualification certificates issued by authoritative institutions, multiple types of rewards, a short reward delivery time, and a low investment threshold achieve good financing performance. The factor of commitment plays an intermediary role in the relationship between project attributes and financing performance. Based on the research conclusions, practical enlightenment is proposed for initiators, crowdfunding platforms, and regulators. Full article

Rewards-based crowdfunding (RBC) has recently gained popularity as an alternative means of finance to help entrepreneurs bring novel projects to life. We theorize that crowdfunding backers perceive an implicit psychological contract with campaign creators. When promised rewards fail to materialize post fundraising, backers may perceive entrepreneurs’ failure to deliver rewards as a violation of their psychological contract with him or her. Drawing on psychological contract theory and using Eisenhardt’s comparative case methodology, we generate insights about crowd reactions to creators’ failure to deliver rewards to backers. Our research generates the novel insight that in the event of delivery failure, backers who perceive a transactional psychological contract with creators are more likely to display negative emotional reactions, while backers who perceive a relational psychological contract are more likely to display positive emotional reactions. Furthermore, we identify three progressive stages of backers’ interaction with creators in failed RBC campaigns, ‘committing’, ‘crisis handling’, and ‘coping-up’ and highlight the crowds’ emotional valence associated with each stage. Our analyses of the campaign comments reveal insights of interest to RBC players and hold implications for the future development of crowdfunding. Full article

Reward-based crowdfunding has emerged in recent years as an interesting channel business that can leverage to obtain new financial resources outside the traditional ones. In this study, we explore how the creators of a reward-based crowdfunding campaign have engaged the crowd to create value and co-create knowledge to reduce both financial and market risks. Accordingly, we analyze the case study of the Kickstarter Campaign for Pathfinder Arena, a board game created by Giochi Uniti, an Italian Gaming Company. Through the lens of the social identity theory, we show that backers can generate the feedback processes needed to improve the product, when they want to belong in a community and when they want to interact with the creators. This research could have important implications for both researchers and future creators of reward-based crowdfunding projects, showing them the way to implement some instrument for involving the crowd to generate value. Full article

In this paper, we investigate rewards-based crowdfunding as an innovative financing form for startups and firms. Based on game-theory models under asymmetric information, we test research hypotheses about the positive effects of two main campaign features: funding target and number of rewards. Furthermore, we examine how and when these characteristics are effective in attracting crowdfunders, by signaling high-quality projects (target) and by pricing according to backers’ preferences (rewards). Conditional process analysis is applied to a dataset of 1613 projects launched on the Spanish platform Verkami from 2015 to 2018. As expected, our study shows that market size is positively influenced by the target and the number of rewards, separately. Further analysis gives some interesting findings. Firstly, we find significant and positive mediating roles of social networks (in the relationship between target and market size) and of backers’ preferences (between rewards and market size). Secondly, the main orientation of a campaign, commercial or social, is relevant to explain previous relationships. While high funding targets are more effective in commercial projects, a high number of rewards is more effective in the social projects. This research provides new insights into the design of optimal crowdfunding, with theoretical and empirical implications. Full article