The Role of Internationalization Decision and Institutional Distance on Crowdfunding Performance

Abstract

In this study, we examine whether the performance of entrepreneurial ventures opting for financial investments through crowdfunding are influenced by the distances embedded within country level information pertaining to the crowdfunder and the venture. Grounded on a consumer perspective i.e. combining ‘contagion- authenticity’ effects and drawing on institutional theory, we analyze how the institutional distance influences a) entrepreneurs’ decision to select a country to raise their financial capital, and b) crowdfunders’ decision to fund a venture based on entrepreneurs’ country of origin, hence affecting venture performance. We merge data from Kickstarter, Globe cultural measures, Global Competitiveness Index and World Bank Reports. Our results based on a multilevel probit regression model, suggest that entrepreneurial decision to internationalize is positively influenced by their prior venture creation and venture support experiences and negatively influenced by the institutional distances between their home and host country. Similarly, crowdfunders’ decision to fund a venture is negatively influenced by the institutional distance. The results also indicate that entrepreneurial decision to internationalize has significant influence on their crowdfunding campaign success.