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The role of signals and third-party endorsements in reward-based crowdfunding: does the funding goal matter?

Author

Listed:
  • Soumodip Sarkar
  • José Jacinto Bilau
  • Jorge Pires

Abstract

This study uses the twin lenses of signalling theory and certification theory, to explore the role of signals and third-party endorsement in reward-based crowdfunding success. We follow 339 rewards-based crowdfunding campaigns to capture campaign characteristics and funding outcomes. The study provides an insight into on the role of signals and third-party endorsement, extending extant knowledge to reveal that both signals' variables and third-party endorsement variables influence a project success. We also find a differential role of these variables according to the funding goal. Overall, our paper's contribution in the context of reward-based crowdfunding assumes great relevance given the prevalence of information asymmetries in crowdfunding compared to other more traditional financing mechanisms. Project founders can make use of the results to improve the information related to their projects to increase the chance to have a project successfully funded. Results are also relevant for crowdfunding platforms itself that might automatically assess the chance of successful funding of projects.

Suggested Citation

  • Soumodip Sarkar & José Jacinto Bilau & Jorge Pires, 2023. "The role of signals and third-party endorsements in reward-based crowdfunding: does the funding goal matter?," International Journal of Entrepreneurial Venturing, Inderscience Enterprises Ltd, vol. 15(3), pages 232-255.
    • Handle: RePEc:ids:ijeven:v:15:y:2023:i:3:p:232-255
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