Reward-based Crowdfunding Projects Research Articles

The Effects of Consumer Innovation, Price Sensitivity, Conformity, and Consumer Values on Consumer Attitudes and Intentions to Participate in the Crowdfunding of Fashion Products

This study examined consumer attitudes and intentions to participate in reward-based crowdfunding projects for fashion products. We focused on consumer innovation, price sensitivity, conformity, and consumer values as factors that might influence such attitudes and intentions. A survey was conducted with 228 individuals aged 18 years and older who are aware of or have had experience using crowdfunding. Respondents were asked to answer questions based on the example of actual fashion crowdfunding projects. To analyze the data, reliability tests, the generation of descriptive statistics, factor analysis, and multiple regression were performed using SPSS 25.0. The results revealed that consumer innovativeness, non-conforming tendency, and emotional, quality, social, and ethnical consumer values had a significant influence on attitudes, which in turn affected intentions to participate in crowdfunding. Consumer innovativeness, price sensitivity, emotional value, and social value also had a direct influence on intentions to participate. In addition to its academic contribution, this study has important marketing implications for project initiators striving to identify and understand consumers who are willing to participate in reward-based crowdfunding for fashion products.

Determinants of overfunding in reward-based crowdfunding

AbstractWhile research on factors contributing to the success of a reward-based crowdfunding project is abundant, research dedicated to projects that were not only successful, but received significantly more funds than initially targeted—overfunded projects—is still scarce. Following a qualitative case-study approach, this study sought to shed light on this phenomenon through examining expert interviews with supporters and team members of an overfunded crowdfunding project considered a critical case. The results are divided into three phases that differentiate characteristics ascribed to the crowd, the project, and the communication. The main findings highlight the central role of the project founders’ reputation and experience, that a positive sentiment among the crowd towards the project must be encouraged and maintained and that the core target group must be correctly identified and attracted. This core target group is crucial for attracting a broader audience, a mechanism that is supported if the project benefits from network effects. A narrative of the project as a vision or ‘dream’ of the project founders thereby contributes to creating a hype and ‘social buzz’. Ultimately, this study contributes to reward-based crowdfunding literature through offering novel insights on project overfunding and illustrating possibilities for new and small ventures how to attract and maintain customers through reward-based crowdfunding.

How heuristic cues impact crowdfunding performance: The moderating role of platform competition intensity and platform demand potential

Crowdfunding is an emerging financial channel for entrepreneurs to finance ventures. Nevertheless, the funding success rates of reward-based crowdfunding projects are low, apparently due to information asymmetries between entrepreneurs and potential investors. Using heuristic cues to improve crowdfunding performance has attracted increasing attention from both scholars and practitioners. To expand understanding of the role of heuristic cues in crowdfunding, the current study explores how platform contextual factors leverage the effect of heuristic cues on crowdfunding performance. This study analyzed 6363 projects on the Jingdong crowdfunding platform and found that the performance benefits of heuristic cues were substantially contingent on platform competition intensity and platform demand potential. The results provide empirical evidence that platform competition intensity can weaken the heuristics-performance relationship, while platform demand potential can strengthen it. These findings extend current conceptions of the relationship between signals and performance in signaling theory and the crowdfunding literature.

Untangling the influence of perceived sustainability orientation on value-co-creation behavior in crowdfunding process: investigating a mediation model

PurposeSustainability-oriented projects are prevalent on crowdfunding platforms nowadays. The relationship between crowdfunding and sustainability has attracted the attention of many scholars. This study aims to examine the effects of perceived sustainability orientation on value-co-creation behavior from the perspective of backers and explore the mediation effects of three psychological factors: perceived affective reaction, perceived self-effectiveness and perceived risk.Design/methodology/approachThe study recruits 455 backers to evaluate 100 projects on a crowdfunding platform. Structural equation modeling based on partial least squares is used to analyze data and test the hypotheses.FindingsThe results show that perceived sustainability orientation influences value-co-creation behavior through perceived affective reaction and self-effectiveness. Furthermore, perceived sustainability orientation impacts participation behavior through perceived risk.Research limitations/implicationsOur study mainly focuses on sustainability-oriented and reward-based crowdfunding projects. Future research can examine other types of projects and other crowdfunding platforms.Practical implicationsThese findings can provide implications for project creators to improve the values co-created with backers in future sustainability-oriented projects. Furthermore, the findings can provide implications for backers and help them evaluate crowdfunding projects.Originality/valueThe existing studies are mostly concerned with project creators’ perspectives. This paper is one of the few to investigate how a project’s sustainability orientation influences backers’ psychological factors and value-co-creation behavior.

How to Engage the Crowds to Create Value? Evidence from the Pathfinder Arena Case

Reward-based crowdfunding has emerged in recent years as an interesting channel business that can leverage to obtain new financial resources outside the traditional ones. In this study, we explore how the creators of a reward-based crowdfunding campaign have engaged the crowd to create value and co-create knowledge to reduce both financial and market risks. Accordingly, we analyze the case study of the Kickstarter Campaign for Pathfinder Arena, a board game created by Giochi Uniti, an Italian Gaming Company. Through the lens of the social identity theory, we show that backers can generate the feedback processes needed to improve the product, when they want to belong in a community and when they want to interact with the creators. This research could have important implications for both researchers and future creators of reward-based crowdfunding projects, showing them the way to implement some instrument for involving the crowd to generate value.

Implications of warm-glow effect and risk aversion in reward-based crowdfunding

Introducing a downside risk model, this paper examines the impacts of two conflicting behavioral factors, backer warm-glow effect and creator risk aversion, on the creator’s optimal decisions of selling price and financing target of an All-or-Nothing reward-based crowdfunding project. We find that a less risk-averse creator should choose a high-price high-financing-target strategy when backer warm-glow effect is strong, or vice versa. The creator should only target at backers who have high project valuation when there is a large variation among backer valuation, and should target at all potential backers when the variation is small. In addition, we also explore the impacts of backer risk aversion. We reveal that the creator can only select a low-price low-financing-target strategy when the overall backer risk-aversion is high. However, the creator is not restricted to the low-price low-financing-target strategy when the overall risk-aversion is low. Last, by formulating the problem as a Stackelberg game with the platform acting as the game leader and the creator as the follower, the platform’s optimal cultivation level is derived. We provide several insights and implications for future research and crowdfunding practice.

What Impacts Backers’ Behavior to Fund Reward-Based Crowdfunding Projects? A Systematic Review Study

Background: With Covid-19 spreading across the world, many economic issues have raised. Effort is continued to support vulnerable individuals and start-ups to survive during this pandemic. Reward-based crowdfunding (RBCF) is seen as alternative sustainable finance in the Fintech industry. It allows fund-seekers to pledge an investment through RBCF platforms such as Kickstarter for funding their projects. Backers will get a reward in return. Research has shown that factors impacting the backers' behavior are crucial in determining the success of RBCF campaigns. However, there is a literature gap in providing a holistic view of these factors. Therefore, this paper aims to review and identify factors impacting backers' behavior by conducting a Systematic Literature Review (SLR). Method: This paper employs the three stages in conducting the SLR. It starts with identifying the review strategy where a search string is developed. A total of 323 papers from 2012 up to 2019 from two main academic databases, i.e. IEEE Xplore and ScienceDirect were retrieved. After applying the quality assessment criteria, 33 papers were qualified for the analysis. Thematic analysis was then applied to thematically categories the identified factors. Results: A large set of factors was identified in the literature. Identified factors were classified under nine main themes. These themes are Team Characteristics, Project Characteristics, Social Influence, User Generated Content, Risk, Distrust, Upfront Marketing, Environment Readiness, and Backers Motivation. Conclusions: This paper contributes theoretically by comprehensively identify factors impacting backers’ behavior toward using RBCF. The findings also contribute empirically, particularly to the fund-seekers, to help them understand what factors might impact the backer’s behavior and enhance their chances of designing a successful campaign.

The impact of common success factors on overfunding in reward-based crowdfunding: An explorative study and avenues for future research

PURPOSE: While there is abundant literature on the key determinants of reward-based crowdfunding success, little research is dedicated to crowdfunding projects that are not only successful but receive significantly more funds than initially targeted through the defined funding goal. This study seeks to shed light on this vastly neglected topic in crowdfunding research. METHODOLOGY: Drawing on a rich dataset of 338 rewardbased crowdfunding projects, this study applied a two-step statistical analysis. First, regression analyses to determine relevant crowdfunding success factors were conducted in order to corroborate extant literature and to highlight that the data properly reflects the already identified key findings on crowdfunding success. In a second step, the very same factors were investigated for the case of overfunded projects, utilizing logistic regression analyses and a Blinder-Oaxaca Decomposition. FINDINGS: Although this study confirmed the findings of previous research considering the factors that increase the success probability of crowdfunding projects, the very same factors turned out to not explain the emergence of project overfunding. For instance, while project founders can provide updates, a higher number of different rewards, or utilize social media pages to increase the likelihood for success, these factors do not contribute to explain the phenomenon of project overfunding. IMPLICATIONS: The results of this study emphasize that in order to understand overfunding of crowdfunding projects, future research must go beyond the basic crowdfunding success factors. Building on the notion of the Two-Factor Theory, the findings suggest that the factors contributing to success can be considered hygiene factors that are required to succeed in the first place. However, these factors do not motivate the crowd to provide further funding to an already successful project. Hence the motivating factors remain yet unobserved in extant literature. In practice, this means that project teams achieving their funding goal cannot rely on the same factors that were helpful to succeed to encourage further funding from the crowd. The differentiation of hygiene and motivating factors for overfunding in reward-based crowdfunding offers rich opportunities for future research. More subjective factors, such as the individual perception of crowd members towards crowdfunding projects, are suggested to play an important role for the occurrence of project overfunding. ORIGINALITY/VALUE: By investigating project overfunding, this study addresses the research gap concerning the factors contributing to the emergence of project overfunding. There is little evidence on the characteristics of overfunded crowdfunding projects, and thus this study provides essential theoretical and empirical groundwork for future research to build upon this study’s results.

Does gender matter? Evidence from crowdfunding

The lack of resources and support for female entrepreneurs and their ventures lowers their chances of success and ultimately leads to the underrepresentation of female led ventures in the economy. Thus, to remedy this problem, it is crucial for female entrepreneurs to attract potential investors. The latter may use in their decision-making process cues such as the number of supporters, which provides social validation of the ventures. To test this, we analyze 2275 reward-based crowdfunding projects to investigate the effects of female entrepreneurs’ presence, and the consequences of social validation (i.e., number of supporters), on their crowdfunding success.

Do Externality Affect Your Project? An Empirical Study of Reward-based Crowdfunding

The connections among crowdfunding projects are considered important for entrepreneurial performance. This study focuses on the effect of externalities on the performance of reward-based crowdfunding projects. Based on the externality theory, we theorize and test the impacts of existing similar projects on the performance of new ones. We extend the source of externalities to projects that are similar to each other and consider three variables—the quantity, quality, and effort of these similar projects—which reflect the number, average performance, and average effort of similar projects, respectively. We also explore the time effects of these externalities. We examine a sample of 20,092 technology reward-based crowdfunding projects on Kickstarter from 2009 to 2018. We find that the quality of similar projects is positively related to project performance, whereas the quantity and effort are negatively related. Furthermore, the negative impacts of quantity and effort on project performance are weakened by the time interval, but the moderating effect of the time interval on the positive impact of quality is not supported. These findings have implications not only for policy and practice but also for research on entrepreneurial performance, externality theory, and crowdfunding strategy.

Choosing a crowdfunding model considering strategic customer behaviour

Initial creators can launch reward-based crowdfunding projects using either of two models: All-Or-Nothing (AON) and Keep-It-All (KIA). Under AON, creators receive nothing unless the funding target is achieved. Under KIA, creators keep the entire amount raised, regardless of whether the funding target is achieved. Therefore, under AON, customers will obtain high-quality products if the funding target is achieved, and otherwise, obtain nothing. Under KIA, high-quality products are produced if the goal is met and otherwise, the results are scaled-down products whose quality depends on the amount of funding raised. We build a two-stage model in which two customers (representing informed and uninformed customers) sequentially make their decisions in the two stages. This paper focuses on the opportunity cost borne by the informed customer who pledges in the first stage and we analyse how his strategic behaviour affects the creator's model selection. Our analysis shows that when the fixed cost is large, the AON model has a higher success rate and is more profitable than the KIA model. By analysing the expected profit, success rate and risk by numerical study, we show that (1) when the fixed cost is small, KIA is more profitable than AON. (2) The success rate using the AON model is always higher than that using the KIA model. (3) The risk under AON is higher than under KIA in most cases.

Pricing and package size decisions in crowdfunding

Pricing and package size decisions are critical to the success or failure of reward-based crowdfunding projects; the importance of these decisions has been overlooked in the existing crowdfunding literature. In this paper, we develop a two-period model to study pricing and package size decisions in a crowdfunding game where a creator sells perishable products to sequentially arriving consumers. Consumers are heterogeneous in their usages and valuations and they get utility by consuming products rather than owning them. The creator can choose to provide a product menu that contains two types of packages or only provide one type of package to match the consumers’ usages and valuations. The project would succeed only when the project target is achieved during the funding period; otherwise, the transaction would be canceled. We show that consumers’ usages and valuations have a large impact on deciding the creator’s optimal pricing strategy and project target regardless of whether the exogenous or endogenous package sizes are used. In addition, market outcomes depend not only on the optimal pricing strategy but also on the optimal project target. Moreover, the creator can benefit from providing two types of packages instead of one type of package. Finally, the creator can strategically reduce the size of the large package and narrow the gap between the two packages to attract more funds.

Do Timelines Matter? An Empirical Study Based on Reward-Based Crowdfunding

This paper focuses on the effect of timelines in reward-based crowdfunding on its performance. Based on intertemporal choice theory, we adopted temporal framing as a theoretical lens and theorized and tested the effect of temporal framing set by founders in crowdfunding projects on their performance through its influence on consumer willingness to provide funds. We considered three temporal framing variables—temporal frequency, temporal vagueness, and temporal distance—which reflect the number of temporal cues, ambiguity or incompleteness of temporal cues, and the period from the end of a project to the estimated delivery time, respectively. We examined a sample of 20,604 technology reward-based crowdfunding projects on Kickstarter from 2009 to 2018, which revealed that the three variables individually and interactively influence project performance. We found that temporal frequency was positively related to project performance, whereas temporal vagueness and temporal distance were negatively related. Moreover, the interaction terms between temporal frequency and the other two temporal variables had negative impacts on project performance. These findings provide a deeper understanding of crowdfunding and reveal that temporal framing set by founders may affect the performance of crowdfunding projects.

A Descriptive Study of Crowdfunding Projects Related Coronavirus Pandemic

Bu çalışmanın amacı, Covid-19 pandemisi ile ilgili bağış ve ödül temelli kitle fonlama projelerini irdelemek ve pandemi ile mücadeleye etkilerini tartışmaktır. Özellikle pandemi süreci ile ortaya çıkan kriz; girişimcilik açısından yeni talepleri yaratması ile fırsat oluştururken girişim için gerekli olan sermayenin elde edilmesini de zorlaştırmaktadır. Covid-19 pandemisi ile ilgili kitle fonlaması projelerinin hem sermaye bulma hem de yeni talepleri karşılama potansiyeli ile önemli bir gelişme göstereceği beklenmektedir. Bu doğrultuda, araştırma örneklemini Kickstarter’daki Covid-19 ile ilgili 196 proje oluşturmaktadır. Projeler; amaçlarına, kategorilerine, kökenlerine göre sınıflandırılmıştır. Covid-19 ile ilgili projeler ile bütün zamanlardaki projeler karşılaştırılmıştır. Analizlere göre, A.B.D. proje sayısı ve toplanan fon açısından en başarılı ülkedir. Pandemi ile ilgili yayın, teknoloji ve oyun kategorilerinde projeler yoğunluktayken, teknoloji projelerinin çok düşük başarı oranı bulunmaktadır. Amerika kıtası ülkelerinin pandemi ile ilgili doğrudan ve dolaylı mücadele amaçlı projelere yöneldiği, Avrupa Birliği üyelerinin ise Covid-19 temalı ürün ve yardım talebi ile ilgili projelere yöneldiği görülmektedir. Çalışma sonuçlarının, Kickstarter platformunda pandemi ile ilgili kitle fonlaması projesi yürütecek olan girişimcilere, mevcut durumun (başarılı projelerin amaçları, menşeileri ve kategorileri) eğilimlerini ortaya koyarak yol göstermesi umulmaktadır.

Financial Returns in Reward-Based Crowdfunding

We quantify financial returns to backers in reward-based crowdfunding projects on Kickstarter and show that such investments provide profitable opportunities in addition to non-monetary benefits. The average unconditional annualized return is 11.5% and the average return on successful projects is 30%. Hence, backing money near the end of a campaign is a profitable strategy. The most attractive is the Design category, where successful projects yield 73%, on average. Short-term projects are more profitable than long-term ones. Financial return is an important type of extrinsic motivation in reward-based crowdfunding, which has generally been neglected in academic literature.

Analysis of success factors in crowdfunding projects based on rewards: A way to obtain financing for socially committed projects

This paper examines the determinants that influence crowdfunding success. In particular, this study focuses on reward-based crowdfunding, in which funders receive a reward for supporting a project.By studying hand-collected data from 335 reward-based crowdfunding projects and 33,036 investment decisions from the Spanish Goteo platform and using the ordinary least squares regression, the negative binomial, the logit and the Cox proportional hazard models, we highlight the factors that explain the success of a project.We find statistically significant results for crowdfunding project success for the following variables: location, experience, human capital and gender. Thus, the success of crowdfunding campaigns depends on the experience of the project members since it lends credibility to the project.Furthermore, the geographic location variable indicates that crowdfunding success is higher in projects located in Spain than in those located outside of Spain. Our results also suggest that crowdfunding related to the support of social impact initiatives that involve the ecological typology does not perform well.

Reward-Based Crowdfunding and EU Consumer Rights

Crowdfunding has become a popular and mainstream way of financing projects and businesses, ranging from community projects and charities to small and mediumsized enterprises (SMEs), creative projects and high potential start-ups. Of the four types of crowdfunding that can be distinguished, this article focuses on reward-based crowdfunding. It will be argued that contracts concluded under a reward-based crowdfunding project within the EU will generally fall within the scope of several EU consumer rights regulations, including the Consumer Rights Directive. This article will focus on the contractual rights and obligations under this directive. As a reward-based crowdfunding project, apart from some exceptions, will have to comply with this directive, the crowdfunding platform and/or the crowdfunding initiator will have to comply with information and delivery requirements, of which especially the delivery requirement do not fit the nature of reward-based crowdfunding. Non-compliance may lead to consumers having the right to terminate, which may compromise the crowdfunding project, as it depends on the participation of the crowd. Possibly the biggest threat to reward-based crowdfunding is the right of withdrawal. Where the withdrawal period for services contract ends 14 days after the conclusion of the contract, with sales contract this period only ends 14 days after the delivery of the goods. The article argues for tailor made exemptions in the Consumer Rights Directive in order to avoid that exercising the right to withdrawal by one or more consumers leads to the collusion of the crowdfunding project.

Potential funders’ motivations in reward-based crowdfunding. The influence of project attachment and business viability

Although reward-based crowdfunding projects have experienced high growth in recent years, it is necessary to emphasize that not all the campaigns have success. Under these circumstances, this paper studies the influence of two potential funders' motivations (i.e., project attachment and business viability) on their behavioral intentions (i.e., the intention to fund a crowdfunding project, and the intention to spread positive physical and electronic word-of-mouth about it). It also explores how the effect of these motivations is moderated by two campaign characteristics: the percentage of target capital pledged and the time remaining until the funding deadline. With this aim, this paper simulates a crowdfunding project and collects 311 survey responses about it. Subsequently, a PLS-SEM approach is applied to test the model proposed. Findings demonstrate that potential funders’ intentions are mainly influenced by their attachment to the project. For its part, the business viability, as perceived by potential funders, plays a secondary role mainly influencing their word-of-mouth intentions. Finally, the campaign characteristics moderate the effect of attachment and viability on electronic word-of-mouth intentions.

Learning how to price intelligently on a reward-based crowdfunding platform

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings This research paper concentrates on determining the optimal pricing strategy for a reward-based crowdfunding project. In most market scenarios an early-bird pricing strategy using only high quality rewards was found to be the optimal strategy for maximizing revenue and minimizing product development costs, in comparison with a versioning pricing strategy. A reasonable project funding goal figure should also be selected to avoid the project failing to reach its all-or-nothing target. Originality/value The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Keep it or give back? Optimal pricing strategy of reward-based crowdfunding with a hybrid mechanism in the sharing economy

Reward-based crowdfunding is a new fund-raising method in sharing economy, and it can also be a powerful tool for companies to handle the time mismatch between money invested and revenue generated in Circular Economy (CE). While all-or-nothing (AON) mechanism and keep-it-all (KIA) mechanism are both used in crowdfunding projects, some websites start using a new hybrid mechanism where the creator can keep a proportion of the funds raised even if the crowdfunding project fails. In this paper, we investigate this hybrid mechanism in reward-based crowdfunding projects. For a basic two-stage model, we find that AON can provide the creator with the largest expected revenue under different pricing policies when the valuation of investors is discrete. However, with continuous investors’ valuation, a hybrid mechanism is better for the creator, and the price in the first stage should be lower than the one in the second stage. For a three-stage model, we find that the results with continuous valuation still hold, and a hybrid mechanism will be the optimal mechanism under menu pricing with discrete valuation.