Does network externality affect your project? Evidences from reward-based technology crowdfunding

Abstract

Crowdfunding projects on a platform could be relevant, such as those adopting similar technologies or based on similar ideas. Such connections are important for new projects since potential backers may make funding decisions by referencing existing projects, especially in the technology entrepreneurship context where technological development and change rely on collective innovation. Still, we know little about the impact of existing projects. Applying network externality theory, this study extended the source of that inter-project impact to existing similar projects and explored the mechanisms through which they affect the focal project's performance. We proposed that they may affect the focal one from three features, namely the number, performance, and effort of existing similar projects. Moreover, this study further explored how the interval between projects moderates these three effects. Data on 19,910 technology projects on Kickstarter from 2009 to 2018 were analyzed to test our hypotheses. This study has implications not only for research on technology entrepreneurship, crowdfunding performance, and network externality theory, but also for the crowdfunding industry.