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The experience matters: participation-related rewards increase the success chances of crowdfunding campaigns

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  • Tobias Regner
  • Paolo Crosetto

Abstract

Crowdfunding recently emerged as an alternative funding channel for start-ups, creative artists and social endeavors. On specialized web platforms, project creators ask the crowd for support and provide in return a set of rewards, modulated according to the amount of support pledged. We analyze the role played by the type of reward in mobilizing pledgers; specifically, we look at self- and social-image enhancing rewards and to what extent they determine project success. Our data consist of the pledges to 346 projects hosted by Startnext, the biggest crowdfunding platform in Germany. We show that higher shares of reward levels that let pledgers participate in and experience the project are correlated with project success. Our paper contributes to the literature on the motivation driving pledgers in reward crowdfunding. A practical implication for the managing of a successful campaign is to employ the reward levels as a tool to involve the crowd in the project.

Suggested Citation

  • Tobias Regner & Paolo Crosetto, 2021. "The experience matters: participation-related rewards increase the success chances of crowdfunding campaigns," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 30(8), pages 843-856, November.
    • Handle: RePEc:taf:ecinnt:v:30:y:2021:i:8:p:843-856
    DOI: 10.1080/10438599.2020.1792606
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    1. Massimo G. Colombo & Chiara Franzoni & Cristina Rossi–Lamastra, 2015. "Internal Social Capital and the Attraction of Early Contributions in Crowdfunding," Entrepreneurship Theory and Practice, , vol. 39(1), pages 75-100, January.
    2. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
    3. Mollick, Ethan, 2014. "The dynamics of crowdfunding: An exploratory study," Journal of Business Venturing, Elsevier, vol. 29(1), pages 1-16.
    4. James Andreoni & B. Douglas Bernheim, 2009. "Social Image and the 50-50 Norm: A Theoretical and Experimental Analysis of Audience Effects," Econometrica, Econometric Society, vol. 77(5), pages 1607-1636, September.
    5. BELLEFLAMME, Paul & LAMBERT, Thomas & SCHWIENBACHER, Armin, 2011. "Crowdfunding: tapping the right crowd," LIDAM Discussion Papers CORE 2011032, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Denis Frydrych & Adam J. Bock & Tony Kinder & Benjamin Koeck, 2014. "Exploring entrepreneurial legitimacy in reward-based crowdfunding," Venture Capital, Taylor & Francis Journals, vol. 16(3), pages 247-269, July.
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    Cited by:

    1. Crosetto, Paolo & Regner, Tobias, 2018. "It's never too late: Funding dynamics and self pledges in reward-based crowdfunding," Research Policy, Elsevier, vol. 47(8), pages 1463-1477.
    2. Anna Prisco & Valerio Muto & Ciro Troise & Mario Tani, 2022. "How to Engage the Crowds to Create Value? Evidence from the Pathfinder Arena Case," Sustainability, MDPI, vol. 14(7), pages 1-22, April.

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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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