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Broken promises in crowdfunded projects: reasons and mitigating governance mechanisms

Author

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  • Sophia Shtepa
  • Oleksiy Osiyevskyy

Abstract

Reward-based crowdfunding is a popular method of obtaining financing for new ventures, allowing to attract funding for projects from numerous individual backers, who pledge small amounts of money in return for future products/services, discounts, acknowledgement, or branded merchandise. Yet, more than half of all crowdfunded projects deliver rewards to backers late (i.e., after the promised date), and around 5% do not deliver at all. Relying on the premises of bounded reliability and bounded rationality of project creators, we pose the following research questions: 1) What are the reasons for failed commitments (i.e., delayed or cancelled delivery) in crowdfunded projects? 2) Which governance mechanisms prevent these failed commitments? We address these questions using a qualitative investigation of reward-based crowdfunded projects, comparing cases of successful and failed implementation.

Suggested Citation

  • Sophia Shtepa & Oleksiy Osiyevskyy, 2022. "Broken promises in crowdfunded projects: reasons and mitigating governance mechanisms," International Journal of Entrepreneurship and Innovation Management, Inderscience Enterprises Ltd, vol. 26(3/4), pages 161-194.
    • Handle: RePEc:ids:ijeima:v:26:y:2022:i:3/4:p:161-194
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