Untangling signalling strategies contributing to overfunding in reward-based crowdfunding

Untangling signalling strategies contributing to overfunding in reward-based crowdfunding

Signalling
Information asymmetries
Reward-based crowdfunding
Overfunding
Qualitative Comparative Analysis (QCA)

Crowdfunding is an Internet-based fundraising method that relies on contributions from a large crowd of investors to fund innovative and risky projects. The aim of this paper is to analyse which combinations of signals commonly studied for crowdfunding success lead to overfunding. Based on the information asymmetries between fund-seeking entrepreneurs and the crowd, this paper draws on signalling theory to explore the elements of campaign design that contribute to overfunding (i.e. raising at least 10 % above the funding target). The paper focuses on the entrepreneur’s identity as an individual or corporation, pitch video length, budget explanation length, number of images, project abstract length, and number of updates by the entrepreneur. Qualitative
comparative analysis (QCA) is performed using publicly available data sourced from 257 socially oriented projects from a reward-based crowdfunding platform. The results show the importance for entrepreneurs of using images and constantly communicating with the crowd. The results also reveal a series of configurations of design
features that result in overfunding. These findings have practical implications for the design of reward-based crowdfunding campaigns and contribute to a better understanding of how economic agents interact within crowdfunding.

Pau Sendra-Pons , Dolores Garzon, María-Angeles ´ Revilla-Camacho

https://www.sciencedirect.com/journal/european-research-on-management-and-business-economics/vol/30/issue/2

Elsevier Espana, S.L.U

17 June 2024

Sri Wahyuni

ISSN: 2444-8834

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English

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Jurnal Internasional European Research on Management and Business Economics 2024