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|Title:||Success Factors for Crowdfunding Campaigns|
|Authors:||Tajvarpour, Mohammad Hossein|
|Abstract:||The exponential growth of crowdfunding over the past 10 years signals its evident importance as an alternative method of marketing and funding innovation. Because of the arm’s length relationship between innovators and their backers in this system, signaling quality of the project is vital for success of a campaign. Backers mainly make decisions based on quality signals they receive, and because the average spatial distance between them and innovators is substantial in a crowdfunding setting, this (together with the effectiveness of quality signals) has consequences on the relationship between them. In this modern setting, the type of signals used by campaign owners differs from the traditional costly signals of quality. Due to the relatively small size of crowdfunding projects, and the small investments made by each backer, innovators provide less costly and rhetorical quality signals, which have become a topic of academic inquiry in this field. In this dissertation, I conducted two studies to investigate important aspects of crowdfunding. First, I studied geographic distance and its interaction with quality signals (both costly and less costly signals). I argue that that the information gap between backers and innovators rises with the increase of geographic distance. Drawing on signaling theory, I argue that since distant backers face higher levels of information disadvantage (compared to nearby backers), the value and importance of quality signals are amplified for them. I find support for my proposition that quality signals used to reduce the information gap between two sides of a trade become more valuable and influential with increases in geographic distance between backers and the innovator. Heretofore, no study has examined the interaction between geographic distance and quality signals. In study 1, using a sample of 102,179 Kickstarter crowdfunding campaigns launched in 156 different countries (i.e. creators are from 156 different countries), I show that quality signals including human capital, endorsement, preparedness, and positive psychological capital are more influential on the likelihood of success of crowdfunding campaigns that are collecting funds from more geographically remote backers than campaigns that are receiving funds from more geographically proximate backers. The results hold true even after controlling for cultural differences. Second, I investigate the role of less costly signals of quality and their interaction with traditional quality signals. I also examine their interaction with meaning in crowdfunding campaign narratives. Study 2 investigates the importance of textual description, its focus on reward/risk rhetoric, and its quality. Using a sample of 187,769 Kickstarter projects, I show that the meaning and quality of a project’s textual description can affect the success/failure of that project in securing funds and creating a market for the innovative idea. I show that textual quality and fluency functions as a less costly signal of preparedness, which can reduce the negative effect of risk rhetoric and increase crowdfunding performance. Interestingly, my study proposes and shows evidence of the moderating role of quality, preparedness and human capital signals (i.e. quality of the text and its creator) in reducing the effect of risk rhetoric and increasing the effect of reward rhetoric (i.e. the meaning of the text). The findings of my second study are significant as they show the interaction between text quality and text meaning. It is interesting to see that the perceived risk of a project can change due to the presence or absence of quality signals.|
|Appears in Collections:||Open Access Dissertations and Theses|
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