Dancing to Multiple Tunes: How Institutional Pluralism in Narratives Drives Crowdfunding Performance

Abstract

In search for funding, entrepreneurs often face the challenges of institutional pluralism, i.e. simultaneously addressing diverse audiences with heterogeneous, sometimes detrimental, preferences and logics. This paper examines how an entrepreneurial narrative and its orientation towards such diverse audiences affects crowdfunding success. Hereby, it focuses on the following questions: (1) Is it more important for creators of crowdfunding campaigns to appear warm and authentic, catering to community-based logics of crowdfunders, or to be competent and analytic, catering more to the professional logic of traditional investors? (2) Is it more promising for crowdfunding projects to attempt satisfying the pluralistic demands of multiple audiences simultaneously or to solely rely on the commitment of their crowdfunding community? Using a data set of 572 crowdfunding campaigns by green technology new ventures, we show the following main findings: Taken alone, highly warm and authentic narratives, addressing community logics, and highly competent and analytic ones, addressing professional logics, both independently foster crowdfunding success. Using both simultaneously, however, leads to a mitigation of these positive effects. The favorable effect of a large audience size on crowdfunding success is alleviated for new ventures that address multiple audiences. While accumulating numerous small contributions works best for many projects, focusing on multiple audiences is advisable only for new ventures which seek high audience commitment, and thus target a rather small audience size.