Social identity and signalling success factors in online crowdfunding

Kromidha, Endrit; Robson, Paul

doi:10.1080/08985626.2016.1198425

Cited by 153 publications

(149 citation statements)

References 100 publications

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“…The crowdfunding literature has already identified communication to be a key driver of success. Studies have focused on quality indicators of projects' communication [Mollick, 2014], dialogue between fundraisers and pledgers [Beaulieu and Sarker, 2013, Kromidha and Robson, 2016, Wang et al, 2018, and project descriptions' language [Herzenstein et al, 2011b, Frydrych et al, 2016, Gafni et al, 2017 These results tie in with related findings by Stanko and Henard [2017] with respect to the relationship between crowdfunding and innovation. It seems that an engaging dialogue between project and its community during the campaign can be beneficial in at least three dimensions.…”

Section: Resultssupporting

confidence: 52%

“…The use of structural as well as narrative elements in the project presentation increases the chances of a positive outcome [Frydrych et al, 2016]. The extent of exchange between creator and pledger in the project's forum is positively correlated with funding success [Kromidha andRobson, 2016, Wang et al, 2018]. The project description's language matters for funding success [Gafni et al, 2017].…”

Section: Minantmentioning

confidence: 99%

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It's never too late: Funding dynamics and self pledges in reward-based crowdfunding

Crosetto

Regner²

2018

Research Policy

103

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Crowdfunding recently emerged as an alternative funding channel for entrepreneurs. We use pledge-level data from Startnext, the biggest German platform, to gain insights on funding dynamics and pledgers' motivations. We find that the majority of projects that eventually succeed are not on a successful track at 75% of their funding period. These late successes are boosted by information cascades during the final 25% of the funding duration. We conclude -in contrast with earlier literature -that project success is only partially path-dependent. While early pledges do anticipate project success, a lack of them does not necessarily mean that projects will fail. Interviews and questionnaire responses indicate that projects' communication efforts play a role in making severely under track projects succeed eventually. Moreover, our dataset uniquely allows us to quantify the extent of self funding. Self pledges account for about 10% of all initial pledges and 9% of all pledges that secure funding. Nonetheless, the late surges at severely under track projects are mostly driven by external funders. Furthermore, we find no evidence of subsequent herding triggered by self pledges.JEL classifications: L26, D03, G32, 031

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Section: Resultssupporting

confidence: 52%

Section: Minantmentioning

confidence: 99%

It's never too late: Funding dynamics and self pledges in reward-based crowdfunding

Crosetto

Regner²

2018

Research Policy

103

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“…1), our focus in this study is on the signal communicated via updates to convey the start-up's value to the crowd. In line with prior research on reward-based crowdfunding (Mollick 2014;Kromidha and Robson 2016), we propose that updates in general have a positive effect on equity crowdfunding participation as they typically are highly visible and observable for potential investors. Even though updates might not always be costly for the signaler, 1 they reduce search costs for investors.…”

Section: Visibility Of Updates and Its Effects On Crowd Participationsupporting

confidence: 53%

“…Therefore, start-ups and crowdfunding portals typically also communicate these updates in their social media channels or via newsletters to increase investors' awareness of the update. Furthermore, posting an update has typically no immediate effect on crowd participation because investors' need some time to learn about the update and to pledge their money (Wheat et al 2013;Mollick 2014;Kromidha and Robson 2016;Vismara 2016b). Hence, the visibility of updates and their effect on crowd participation is likely to be delayed by a few days.…”

Section: Visibility Of Updates and Its Effects On Crowd Participationmentioning

confidence: 99%

Which updates during an equity crowdfunding campaign increase crowd participation?

2017

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Start-ups often post updates during equity crowdfunding campaigns. However, little is known about the effects of such updates on crowd participation. We investigate this question by using hand-collected data from 71 funding campaigns and 39,399 investment decisions on two German equity crowdfunding portals. Using a combination of different empirical research techniques, we find that posting an update has a significant positive effect on the number of investments made by the crowd and the investment amount collected by the start-up. This effect does not occur immediately in its entirety; rather, it lags the update by a few days. Furthermore, the effect of updates loses statistical significance with the number of updates posted during a campaign. We also find that an easier language used in updates increases crowd participation, whereas the length of updates has no effects. With respect to the update's content, we find that the positive effect can be attributed to updates about new developments of the start-up such as campaign developments, new funding, business developments, and cooperation projects. Updates on the start-up team, business model, product developments, and promotional campaigns do not have meaningful effects. Our paper contributes to the literature on the effects of information disclosure on equity crowdfunding participation. Furthermore, our results have practical implications for start-ups and their investor communication during equity crowdfunding campaigns.

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“…Online word of mouth about a crowdfunding project has significant influence on prospective backers' funding decision and the funding performance of the project (Thies, Wessel, & Benlian, ; Wessel, Thies, & Benlian, ). In addition, shared values and social identity are significant factors affecting funding performance (Beaulieu & Sarker, ; Gleasure & Feller, ; Kromidha & Robson, ; Zhao, Chen, Wang, & Chen, ). For instance, the extent to which sponsors have similar values with entrepreneur could lead to a higher trust of the crowdfunding project.…”

Section: Literature Reviewmentioning

confidence: 99%

Sponsor's cocreation and psychological ownership in reward‐based crowdfunding

Zheng

Zhang

et al. 2018

Information Systems Journal

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Crowdfunding is a new financing channel for small and mediumsized enterprises and individual entrepreneurs to raise funds for innovation projects online. In reward-based crowdfunding, project sponsors invest money and receive rewards as a return. They may also participate in product development and project implementation as value cocreators. This paper investigates how sponsors' cocreation behaviours lead to their generation of psychological ownership in the crowdfunding projects. The research model was developed, and data were collected from sponsors on Zhongchou (www.zhongchou.com), a well-known crowdfunding platform in China. The results indicated that psychological ownership is an important mental state for sponsors in crowdfunding, which significantly affects their commitment to projects. We also identified the important routes to sponsor psychological ownership in crowdfunding: perceived control and intimate knowing, through which sponsors' cocreation significantly influences the emergence of psychological ownership. The effects of cocreation process are moderated by 2 important factors: entrepreneur activeness, and sponsor's social connection, in the crowdfunding projects. This paper contributes to crowdfunding research and has practical implications for crowdfunding projects and platforms.

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Social identity and signalling success factors in online crowdfunding

Cited by 153 publications

References 100 publications

It's never too late: Funding dynamics and self pledges in reward-based crowdfunding

It's never too late: Funding dynamics and self pledges in reward-based crowdfunding

Which updates during an equity crowdfunding campaign increase crowd participation?

Sponsor's cocreation and psychological ownership in reward‐based crowdfunding

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