Crowdfunding cultural and commercial entrepreneurs: an empirical study on motivation in distinct backer communities

Abstract

Drawing on self-determination theory (SDT), this study examines differences in the motivation of backers to support cultural and commercial entrepreneurs through reward crowdfunding. We propose that backers of commercial campaigns are a community of early-customers motivated by the prospects of attractive product offerings, while backers of cultural projects constitute a distinct community motivated to support capital-constrained cultural entrepreneurs and connect with like-minded individuals. We use data from the largest German crowdfunding platform, Startnext, and analyze 2334 rewards from 225 cultural and commercial projects. Our results provide support for our hypotheses: Rewards involving price discounts matter particularly for backers of commercial projects and rewards that engage backers with their community matter more for cultural backers. Surprisingly, however, backers of cultural projects are not altruistic; they are no more likely than commercial backers to support campaigns selflessly in response to symbolic rewards.

Attracting the Right Crowd under Asymmetric Information: A Game Theory Application to Rewards-Based Crowdfunding

“…Pitschner and Pitschner-Finn [48] observed that the average pledge is higher in social projects than in commercial projects, which suggests that backers are willing to pay (WTP) higher prices for projects with social goals. By contrast, Bürger and Kleinert [41] obtained that, on average, the reward price is higher in the projects developed by commercial entrepreneurs, compared to cultural entrepreneurs.…”

“…By contrast, other kind of incentives motivate backers interested in social projects, such as being part of a community, or supporting a social benefit related to environmental issues, social goals, education, disadvantaged groups, etc. (Younkin and Kashkooli [39], Gerber and Hui [20,40,41], Rodriguez-Ricardo et al [42], Lin et al [43], Dai and Zhang [44], Hong et al [45], and Allison et al [46]).…”

“…The empirical evidence is consistent with both explanations. Bürger and Kleinert [41] showed that backers of commercial projects are motivated by pecuniary rewards, while rewards that engage backers with their community matter more for cultural projects; backers of cultural projects are not altruistic in response to symbolic rewards.…”

“…For each primary category, the Verkami platform also uses tags for providing further information about the project nature. Following Bürger and Kleinert [41], we take the primary categories displayed on the platform to classify projects as a part of the entrepreneur's campaign strategy. Furthermore, a crowdfunding project is usually supported by backers with different profiles and motivations but, depending on the project nature, a particular profile predominates in each category.…”

“…As commercial projects, we include the Verkami categories: science and technology, design, games and art. These types of projects are characterized by a greater presence of backers with high self-interest motivations, looking for a knowledge-intensive or creative product (Ryu and Kim [38], and Bürger and Kleinert [41]). Other empirical studies that considered these categories or similar as commercial are the following: Thürridl and Kamleitner [22], André et al [28] and Parhankangas and Renko [51].…”