Tough Love: A Story of Stigmatization in Crowdfunding Communities

Abstract

Why entrepreneurs entering a new community might be stigmatized? We adopt the perspective of evaluators, who are very influential actors in a community, to develop a theory of strategic stigmatization. Whereas extant research has focused on the pro-community orientation of the valuators, we propose that valuators may derive private gains from stigmatization processes. We use data from Kickstarter, an online crowdfunding platform, to understand the processes by which entrepreneurs get socially sanctioned and stigmatized. Results show that valuators’ status plays a fundamental role in the stigmatization processes of newcomers in a community. We also show that cumulative and extreme sanctioning can turn into a boomerang effect: reducing both valuators’ status in the community and the community’s attractiveness to newcomers. With these findings, our study extends the theory on social sanctioning and stigma by understanding its strategic application in crowdfunding platforms. Why entrepreneurs entering a new community might be stigmatized? We adopt the perspective of evaluators, who are very influential actors in a community, to develop a theory of strategic stigmatization. Whereas extant research has focused on the pro-community orientation of the valuators, we propose that valuators may derive private gains from stigmatization processes. We use data from Kickstarter, an online crowdfunding platform, to understand the processes through which entrepreneurs can be socially sanctioned and stigmatized. Results show that valuators’ status plays a fundamental role in the stigmatization processes of newcomers in a community. We also show that cumulative and extreme sanctioning can turn into a boomerang effect: reducing both valuators’ status in the community and the community’s attractiveness to newcomers. With these findings, our study extends theory on social sanctioning and stigma by understanding its strategic application in crowdfunding platforms.