Linguistic style and crowdfunding success among social and commercial entrepreneurs

Parhankangas, Annaleena; Renko, Maija

doi:10.1016/j.jbusvent.2016.11.001

Cited by 467 publications

(359 citation statements)

References 86 publications

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“…Even though scholars have paid attention to this new phenomenon, much still remains unknown (Short et al, ). A number of past studies of micro‐financing focus on signaling theory, which examines the predicting power of project characteristics in campaign success (Gafni et al, ; Parhankangas and Renko, ). However, since backers are the decision makers in a funding process, motivation theories, such as self determination and cognitive evaluation, start to receive attention.…”

Section: Discussionmentioning

confidence: 99%

“…Due to the voluntary nature, past research is often based on a theoretical assumption that the backer's intrinsic motivation in crowdfunding is to help others (e.g., project creators), which is inherently rooted in altruism. This is not surprising because a majority of prior studies on micro-financing focus on social entrepreneurship via social platforms (e.g., kiva.org) and social projects (e.g., healthcare) (Moss et al, 2015;Parhankangas and Renko, 2017). Also, past studies of helping behavior primarily focus on social causes, such as community (Íñigo-Mora, 2004), charity (White and Peloza, 2009), and blood donation (Ferguson et al, 2008).…”

Section: Theoretical Implicationsmentioning

confidence: 99%

“…In addition, extant literature predominantly examines helping behavior for social causes, such as blood donation (Ferguson, Farrell, and Lawrence, ), charity (White and Peloza, ), and volunteering (Finkelstien, ). Likewise, many existing studies of crowdfunding focus on either social platforms such as kiva.org (Moss, Neubaum, and Meyskens, ) or social projects such as health and community categories (Parhankangas and Renko, ). However, we argue that past findings cannot be fully applied to reward‐based platforms such as kickstarter.com, because it is logical to expect that other‐orientation (i.e., helping others) is a salient factor for social causes.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Backer Motivation in Crowdfunding New Product Ideas: Is It about You or Is It about Me?

Zhang¹,

Chen²

2018

J of Product Innov Manag

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Entrepreneurs are using crowdfunding to reach out to the general public to obtain financial support for their new product development. Those who offer project creators financial support are called backers. In this research, the authors examine two types of backer motivation, other‐orientation and self‐orientation, and their respective effects on a backer’s funding decision on new product ideas at the reward‐based crowdfunding platform. Other‐orientation is defined as a backer’s altruistic motivation to help others when making a funding decision; and self‐orientation is defined as a backer’s egoistic motivation to pursue internal feeling, such as personal satisfaction and power to control the project. They find that self‐orientation has a stronger positive effect than other‐orientation on the backer’s funding decision. Furthermore, the authors examine the difference between men and women, and find that the relationship between other‐orientation and funding decision is stronger for women than men, but the relationship for self‐orientation is stronger for men than women. The authors conduct three empirical studies to test the hypotheses in both the backer’s and the project creator’s contexts. In Study 1, they adopt a survey method to investigate effects of the backer’s motivation on his or her funding decision in the film category. In Study 2, they use data of 600 film projects from kickstarter.com to examine linguistic cues used by project creators that stimulate backer motivation. In Study 3, they conduct an experiment to further validate results of the difference between men and women. Although some research suggests that extrinsic reward is a reason for backers’ funding behavior, the authors emphasize that their psychological need also plays an influential role. In addition, findings of the difference between men and women enrich the crowdfunding literature by discovering distinct backer subgroups.

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Section: Discussionmentioning

confidence: 99%

Section: Theoretical Implicationsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Backer Motivation in Crowdfunding New Product Ideas: Is It about You or Is It about Me?

Zhang¹,

Chen²

2018

J of Product Innov Manag

View full text Add to dashboard Cite

show abstract

“…We use three different DV proxies for the success measures: fully funded, the number of backers, and funding amount. These estimated indicators have been used in prior research work [17,20,49,[59][60][61]. The fully funded dichotomous variable (0/1) specifies whether the target amount is being received by the project.…”

Section: Success Flagmentioning

confidence: 99%

Does the Role of Media and Founder’s Past Success Mitigate the Problem of Information Asymmetry? Evidence from a UK Crowdfunding Platform

et al. 2019

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Crowdfunding is an innovative concept for a new start-ups seeking financial support for their distinctive and novel projects. Despite their popularity, crowdfunding platforms face several key challenges amongst which is information asymmetry between entrepreneurs and influential backers, where credible information must be disclosed by the founders (entrepreneurs) to the potential "backers" in order to assess the potentiality of the project. In order to fill this gap, we developed and tested a model that examines the signaling interaction between the founder and a potential backer through media and the founders' past success. This model also examines how these two signals (i.e., media and past success) interact so as to mitigate the problem of information asymmetry and to make the project successful. A total of 14,887 projects were extracted from a reward-based platform named Crowdfunder. The data was analyzed by performing Tobit and logistic regression and the model was validated by using the robustness technique. The results strongly mitigate the problem of information asymmetry which improves the rate of success in projects floated on the Crowdfunder platform. We believe that our study will significantly contribute to this nascent yet developing research area by probing for information mechanisms to succeed in crowdfunding.Sustainability 2019, 11, 692 2 of 24 collect a reasonable contribution from a large number of backers. The enormous development of crowdfunding platforms provide a resilient opportunity for sustainable economic development [7]. Despite its popularity, crowdfunding faces several key challenges, one of them being the information asymmetry between founders and influential backers. This is because the project founder has more knowledge of the quality of the product/service while the backers have less information about the intellectual capital and credibility of the project founder [8]. Therefore, the founders must disclose credible information about the value proposition to the potential backers so that they can assess the potentiality of the crowdfunding projects [6]. Belleflamme et al. [9] compared two forms of crowdfunding and discussed the effect of information asymmetry in the choice of crowdfunding form. They concluded that in the presence of information asymmetry, the founders hold more private information related to the product description and quality than the backers. In such a situation, the potential backers prefer to finance the profit-earning scheme rather than pre-ordering so as to protect their financing. Kirmani and Rao [10] found that information asymmetry arose whenever there is a lack of information between the investors and the customers regarding the qualitative attributes of the firm. To alleviate this asymmetric information gap, the potential backers must determine the start-up attributes and the founder's actions that may reflect the prevailing quality of the start-up [11].In crowdfunding, as compared to traditional financial instruments, transactions are mediated on platf...

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“…Therefore, they might be more easily convinced through the storytelling of entrepreneurs (Parhankangas and Renko, 2017). Furthermore, crowdfunding allows individuals to fund business projects directly.…”

Section: Impression Management and The Role Of Languagementioning

confidence: 99%

Przedsiębiorczość w teorii i badaniach. Perspektywa młodych badaczy

Richert–Kaźmierska¹,

Polańska²

2017

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Linguistic style and crowdfunding success among social and commercial entrepreneurs

Cited by 467 publications

References 86 publications

Backer Motivation in Crowdfunding New Product Ideas: Is It about You or Is It about Me?

Backer Motivation in Crowdfunding New Product Ideas: Is It about You or Is It about Me?

Does the Role of Media and Founder’s Past Success Mitigate the Problem of Information Asymmetry? Evidence from a UK Crowdfunding Platform

Przedsiębiorczość w teorii i badaniach. Perspektywa młodych badaczy

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