Creating Project Legitimacy – The Role of Entrepreneurial Narrative in Reward-Based Crowdfunding

Frydrych, Denis; Bock, Adam J.; Kinder, Tony

doi:10.1108/978-1-78560-315-020151006

Cited by 22 publications

(20 citation statements)

References 42 publications

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“…The crowdfunding literature has already identified communication to be a key driver of success. Studies have focused on quality indicators of projects' communication [Mollick, 2014], dialogue between fundraisers and pledgers [Beaulieu and Sarker, 2013, Kromidha and Robson, 2016, Wang et al, 2018, and project descriptions' language [Herzenstein et al, 2011b, Frydrych et al, 2016, Gafni et al, 2017 These results tie in with related findings by Stanko and Henard [2017] with respect to the relationship between crowdfunding and innovation. It seems that an engaging dialogue between project and its community during the campaign can be beneficial in at least three dimensions.…”

Section: Resultsmentioning

confidence: 54%

“…In a field experiment, 4 Kickstarter projects with updates have a higher success rate [Xu et al, 2014]. The use of structural as well as narrative elements in the project presentation increases the chances of a positive outcome [Frydrych et al, 2016]. The extent of exchange between creator and pledger in the project's forum is positively correlated with funding success [Kromidha andRobson, 2016, Wang et al, 2018].…”

Section: Minantmentioning

confidence: 99%

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It's never too late: Funding dynamics and self pledges in reward-based crowdfunding

Crosetto

Regner²

2018

Research Policy

109

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Crowdfunding recently emerged as an alternative funding channel for entrepreneurs. We use pledge-level data from Startnext, the biggest German platform, to gain insights on funding dynamics and pledgers' motivations. We find that the majority of projects that eventually succeed are not on a successful track at 75% of their funding period. These late successes are boosted by information cascades during the final 25% of the funding duration. We conclude -in contrast with earlier literature -that project success is only partially path-dependent. While early pledges do anticipate project success, a lack of them does not necessarily mean that projects will fail. Interviews and questionnaire responses indicate that projects' communication efforts play a role in making severely under track projects succeed eventually. Moreover, our dataset uniquely allows us to quantify the extent of self funding. Self pledges account for about 10% of all initial pledges and 9% of all pledges that secure funding. Nonetheless, the late surges at severely under track projects are mostly driven by external funders. Furthermore, we find no evidence of subsequent herding triggered by self pledges.JEL classifications: L26, D03, G32, 031

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Section: Resultsmentioning

confidence: 54%

Section: Minantmentioning

confidence: 99%

It's never too late: Funding dynamics and self pledges in reward-based crowdfunding

Crosetto

Regner²

2018

Research Policy

109

View full text Add to dashboard Cite

show abstract

“…Related studies also find a positive correlation between project success and the dialogue between fundraisers and pledgers(Beaulieu and Sarker 2013;Kromidha and Robson 2016;Allison et al 2017;Clauss et al 2018;Wang et al 2018), project descriptions' language(Frydrych et al 2016;Yuan et al 2016;Gafni et al 2019;Parhankangas and Renko 2017), or social media usage(Borst et al 2017). …”

mentioning

confidence: 87%

Crowdfunding a monthly income: an analysis of the membership platform Patreon

Regner¹

2020

J Cult Econ

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Membership platforms allow creators to crowdfund a monthly income, while campaigns on conventional reward crowdfunding portals aim to reach a specified funding target within a preset period. We study transaction-level data from Patreon, the biggest membership platform, to gain insights about behavioral patterns at this emerging type of crowdfunding. Our analysis shows that hundreds of creators crowdfund a sizable income (more than $2500 monthly). We also find that measures of communication quality are determinants of project success, in line with the related literature. Funding dynamics-pledges as well as deletions-are heterogeneous across campaigns. Our analysis suggests that the option to delete the monthly pledge to a creator at any time serves as a feedback mechanism. We conclude that crowdfunding a monthly income offers the creative class a viable alternative to advertising-based business models.

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“…A small body of literature has examined the content characteristics of reward-based crowdfunding (see Anglin et al , 2018; Frydrych et al , 2016; Gorbati and Nelson, L. 2015; Parhankangas and Renko, 2017). Anglin et al (2018) examined the content of campaign pitches from Kickstarter and their results show that positive narratives and passion have a positive effect on crowdfunding performance.…”

Section: Related Literaturementioning

confidence: 99%

Examining the role of narratives in civic crowdfunding: linguistic style and message substance

Lee

Bian

Karaouzene

et al. 2019

IMDS

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Purpose The purpose of this paper is to explore how linguistic style and message substance influence persuasion in civic crowdfunding marketplaces in which written narrative pitch become a vital communication to attract private contributions to public goods and services. Drawing on the elaboration likelihood model (ELM), the authors operationalize the linguistic style of the narrative pitch as language power and message substance as issue-relevant argument quality. In this paper, the authors examine how characteristics of both style and message are related to the outcome of civic crowdfunded projects. Design/methodology/approach The data on civic crowdfunding projects were retrieved from Spacehive, the platform that dedicated mainly to civic projects ranging from community programs, social-oriented enterprises, to infrastructure or facility development. Each of the narrative samples is analyzed using a computerized text analysis package called the Linguistic Inquiry and Word Count to extract the features of the linguistic style and message substance in the narratives. The logistic regression models are estimated to assess the impact of both linguistic style and message substance on crowdfunding decisions. Findings The results show that funding outcomes can be improved with psychological language dimensions (i.e. positive affective and perceptual language). However, extensive use of social language does not help project creators to increase their chance of funding performance; but instead, such language reduces the likelihood of project success. Additionally, message substance or issue-relevant information such as money and risk language influences funding outcome. Originality/value Very few empirical studies investigated the differential effects of language style and message substance on funding performance of crowdfunding campaigns. The authors draw upon the dual process of persuasion as a theoretical base to identify a comprehensive set of linguistic style and message substance and to examine the role of such features in an emerging civic crowdfunding market. This study advances the application of the dual process in ELM by identifying and examining distinct persuasive cues originating from linguistics styles and message contents.

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Creating Project Legitimacy – The Role of Entrepreneurial Narrative in Reward-Based Crowdfunding

Cited by 22 publications

References 42 publications

It's never too late: Funding dynamics and self pledges in reward-based crowdfunding

It's never too late: Funding dynamics and self pledges in reward-based crowdfunding

Crowdfunding a monthly income: an analysis of the membership platform Patreon

Examining the role of narratives in civic crowdfunding: linguistic style and message substance

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