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Institutional background in crowdfunding: trust, signals, and backers’ decisions

Author

Listed:
  • Shrestha, Prabal

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

  • Collewaert, Veroniek

    (KU Leuven)

  • Thewissen, James

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

Abstract

We propose that institutional backgrounds derived from the project location and the entrepreneur’s country-of-origin act as heuristic cues that facilitate swift trust judgment and, therefore, influence international digital exchange decisions. Using a dataset of 101,583 Kickstarter campaigns, we find that stronger institutional environments linked to the project and the entrepreneur positively affect backers’ participation. Moreover, the two institutional cues can compensate for one another. We also show that stronger institutional background of the project (yet not the entrepreneur) enhances low-cost signals’ credibility; and in the presence of some high-cost signals, institutional background (of the entrepreneur in particular) is less consequential.

Suggested Citation

  • Shrestha, Prabal & Collewaert, Veroniek & Thewissen, James, 2026. "Institutional background in crowdfunding: trust, signals, and backers’ decisions," LIDAM Reprints LFIN 2026005, Université catholique de Louvain, Louvain Finance (LFIN).
    • Handle: RePEc:ajf:louvlr:2026005
    DOI: https://doi.org/10.1007/s11187-026-01209-4
    Note: In: Small Business Economics, 2026, vol. 67(2), p. 865-914
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    Keywords

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    JEL classification:

    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • F39 - International Economics - - International Finance - - - Other
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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