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Signalling experience & reciprocity to temper asymmetric information in crowdfunding evidence from 10,000 projects

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  • Davies, William E.
  • Giovannetti, Emanuele

Abstract

Crowdfunding is a diffused project finance practice for funding early-stage projects by directly involving a large number of people by means of remote interaction through ICT-enabled platforms. Based on the original collection of empirical evidence from 10,000 Kickstarter crowdfunding projects, this paper develops a conceptual framework to understand and estimate the key predictors of success or failure for these funding campaigns. The main focus is on developing and testing specific hypotheses about the role that crowdfunding platforms play in facilitating the activity of signalling to mitigate the negative consequences of asymmetric information both in terms of moral hazard and adverse selection. The developed hypotheses were separated into two main categories, depending on whether signalling originated from the creator of the crowdfunding campaign, or the network supporting the crowdfunding project. Moreover, by providing an original longitudinal database, this paper emphasises the path-dependent nature of crowdfunding processes that together with additional proxies capturing social capital, reputation, patience and ambition, allows a significantly improved understanding and predictability of success or failure of these projects.

Suggested Citation

  • Davies, William E. & Giovannetti, Emanuele, 2018. "Signalling experience & reciprocity to temper asymmetric information in crowdfunding evidence from 10,000 projects," Technological Forecasting and Social Change, Elsevier, vol. 133(C), pages 118-131.
    • Handle: RePEc:eee:tefoso:v:133:y:2018:i:c:p:118-131
    DOI: 10.1016/j.techfore.2018.03.011
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    Cited by:

    1. José Campino & Ana Brochado & Álvaro Rosa, 2022. "Initial coin offerings (ICOs): Why do they succeed?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-35, December.
    2. Feng Chen & Jian Ding & Mochou Li & Bingqing Wang, 2021. "From self‐entertainment to being appreciated: how does social media transfer talent to business?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(5), pages 6113-6146, December.
    3. Wang, Yinghuan & Wang, Baolin & Yan, Yan, 2022. "Does network externality affect your project? Evidences from reward-based technology crowdfunding," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    4. Maiolini, Riccardo & Cappa, Francesco & Franco, Stefano & Quaratino, Giovanni Raimondo, 2024. "The impact of sustainable development goals in lending-based prosocial crowdfunding: A topic modeling analysis on the kiva platform," International Review of Financial Analysis, Elsevier, vol. 95(PB).
    5. Wasike, Ben, 2022. "When the influencer says jump! How influencer signaling affects engagement with COVID-19 misinformation," Social Science & Medicine, Elsevier, vol. 315(C).
    6. Rotem Shneor & Urszula Mrzygłód & Joanna Adamska-Mieruszewska & Anna Fornalska-Skurczyńska, 2022. "The role of social trust in reward crowdfunding campaigns’ design and success," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1103-1118, September.
    7. Jung, Eunjun & Lee, Changjun & Hwang, Junseok, 2022. "Effective strategies to attract crowdfunding investment based on the novelty of business ideas," Technological Forecasting and Social Change, Elsevier, vol. 178(C).
    8. Elrashidy, Zeinab & Haniffa, Roszaini & Sherif, Mohamed & Baroudi, Sarra, 2024. "Determinants of reward crowdfunding success: Evidence from Covid-19 pandemic," Technovation, Elsevier, vol. 132(C).
    9. Dahlander, Linus & Beretta, Michela & Thomas, Arne & Kazemi, Shahab & Fenger, Morten H.J. & Frederiksen, Lars, 2023. "Weeding out or picking winners in open innovation? Factors driving multi-stage crowd selection on LEGO ideas," Research Policy, Elsevier, vol. 52(10).
    10. Shneor, Rotem & Zhao, Liang & Fabian Michael Goedecke, Jann, 2023. "On relationship types, their strength, and reward crowdfunding backer behavior," Journal of Business Research, Elsevier, vol. 154(C).
    11. José Campino & Ana Brochado & à lvaro Rosa, 2021. "Success Factors of Initial Coin Offering (ICO) projects," Economics Bulletin, AccessEcon, vol. 41(2), pages 252-262.
    12. Davies, William Edmund & Giovannetti, Emanuele, 2022. "Latent network capital and gender in crowdfunding: Evidence from the Kiva platform," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    13. Miglo, Anton, 2022. "The role of location in the emergence of crowdfunding," MPRA Paper 115833, University Library of Munich, Germany.
    14. Chan, Ho Fai & Moy, Naomi & Schaffner, Markus & Torgler, Benno, 2021. "The effects of money saliency and sustainability orientation on reward based crowdfunding success," Journal of Business Research, Elsevier, vol. 125(C), pages 443-455.
    15. Tang, Xiaobo & Yao, Xingyuan & Dai, Ruyi & Wang, Qian, 2024. "Does green matter for crowdfunding? International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 92(C).
    16. Xiaobei Liang & Xiaojuan Hu & Jiang Jiang, 2020. "Research on the Effects of Information Description on Crowdfunding Success within a Sustainable Economy—The Perspective of Information Communication," Sustainability, MDPI, vol. 12(2), pages 1-36, January.
    17. Naomi Moy & Ho Fai Chan & Frank Mathmann & Markus Schaffner & Benno Torgler, 2021. "Confidence is good; too much, not so much: Exploring the effects on reward-based crowdfunding success," CREMA Working Paper Series 2021-18, Center for Research in Economics, Management and the Arts (CREMA).
    18. Presenza, Angelo & Abbate, Tindara & Cesaroni, Fabrizio & Appio, Francesco Paolo, 2019. "Enacting Social Crowdfunding Business Ecosystems: The case of the platform Meridonare," Technological Forecasting and Social Change, Elsevier, vol. 143(C), pages 190-201.
    19. Han-Chiang Ho & Candy Lim Chiu & Somkiat Mansumitrchai & Zhengqing Yuan & Nan Zhao & Jiajie Zou, 2021. "The Influence of Signals on Donation Crowdfunding Campaign Success during COVID-19 Crisis," IJERPH, MDPI, vol. 18(14), pages 1-25, July.
    20. Michael J. Ryoba & Shaojian Qu & Ying Ji & Deqiang Qu, 2020. "The Right Time for Crowd Communication during Campaigns for Sustainable Success of Crowdfunding: Evidence from Kickstarter Platform," Sustainability, MDPI, vol. 12(18), pages 1-22, September.
    21. Sven Siebeneicher & Ilker Yenice & Carolin Bock, 2022. "Financial-Return Crowdfunding for Energy and Sustainability in the German-Speaking Realm," Sustainability, MDPI, vol. 14(19), pages 1-23, September.
    22. Seyb, Stella K., 2022. "Red flags and rave reviews: Explaining too-good-to-be-true crowdfunding campaigns," Business Horizons, Elsevier, vol. 65(1), pages 69-78.
    23. Kaminski, Jermain & Hopp, Christian & Tykvová, Tereza, 2019. "New technology assessment in entrepreneurial financing – Does crowdfunding predict venture capital investments?," Technological Forecasting and Social Change, Elsevier, vol. 139(C), pages 287-302.
    24. Appio, Francesco Paolo & Leone, Daniele & Platania, Federico & Schiavone, Francesco, 2020. "Why are rewards not delivered on time in rewards-based crowdfunding campaigns? An empirical exploration," Technological Forecasting and Social Change, Elsevier, vol. 157(C).
    25. Cai, Wanxiang & Polzin, Friedemann & Stam, Erik, 2021. "Crowdfunding and social capital: A systematic review using a dynamic perspective," Technological Forecasting and Social Change, Elsevier, vol. 162(C).

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