IDEAS home Printed from https://ideas.repec.org/a/sae/entthe/v45y2021i3p626-657.html
   My bibliography  Save this article

Searching for Success—Entrepreneurs’ Responses to Crowdfunding Failure

Author

Listed:
  • Erk P. Piening
  • Ferdinand Thies
  • Michael Wessel
  • Alexander Benlian

Abstract

In this study, we seek to provide new insights into the process of problemistic search by examining entrepreneurs’ behavioral responses to failures. Using a comprehensive dataset of over 65,000 crowdfunding projects, we specifically explore how negative performance feedback influences entrepreneurs’ search distance. Our results demonstrate that the severity and persistence of failure have a U-shaped and inverted U-shaped relationship with search distance, respectively. Moreover, greater temporal distance between an entrepreneur’s failure experience and a subsequent crowdfunding project is not only associated with increases in search distance, but also attenuates the curvilinear main effects.

Suggested Citation

  • Erk P. Piening & Ferdinand Thies & Michael Wessel & Alexander Benlian, 2021. "Searching for Success—Entrepreneurs’ Responses to Crowdfunding Failure," Entrepreneurship Theory and Practice, , vol. 45(3), pages 626-657, May.
    • Handle: RePEc:sae:entthe:v:45:y:2021:i:3:p:626-657
    DOI: 10.1177/1042258720980710
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1042258720980710
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1042258720980710?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Wessel, Michael & Thies, Ferdinand & Benlian, Alexander, 2017. "Opening the floodgates: the implications of increasing platform openness in crowdfunding," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 109637, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    2. Joel A. C. Baum & Tony Calabrese & Brian S. Silverman, 2000. "Don't go it alone: alliance network composition and startups' performance in Canadian biotechnology," Strategic Management Journal, Wiley Blackwell, vol. 21(3), pages 267-294, March.
    3. 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.
    4. Thies, Ferdinand & Wessel, Michael & Benlian, Alexander, 2018. "Network Effects on Crowdfunding Platforms: Exploring the Implications of Relaxing Input Control," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 108635, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    5. Mantere, Saku & Aula, Pekka & Schildt, Henri & Vaara, Eero, 2013. "Narrative attributions of entrepreneurial failure," Journal of Business Venturing, Elsevier, vol. 28(4), pages 459-473.
    6. Markus C. Becker, 2004. "Organizational routines: a review of the literature," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 13(4), pages 643-678, August.
    7. William H Starbuck & Philippe Baumard, 2005. "Learning From Failures: Why It May Not Happen," Post-Print hal-03228735, HAL.
    8. Ethan Mollick & Ramana Nanda, 2016. "Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts," Management Science, INFORMS, vol. 62(6), pages 1533-1553, June.
    9. Walter J. Ferrier & Cormac Mac Fhionnlaoich & Ken G. Smith & Curtis M. Grimm, 2002. "The impact of performance distress on aggressive competitive behavior: a reconciliation of conflicting views," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(4-5), pages 301-316.
    10. Theresa K. Lant, 1992. "Aspiration Level Adaptation: An Empirical Exploration," Management Science, INFORMS, vol. 38(5), pages 623-644, May.
    11. John Joseph & Vibha Gaba, 2015. "The fog of feedback: Ambiguity and firm responses to multiple aspiration levels," Strategic Management Journal, Wiley Blackwell, vol. 36(13), pages 1960-1978, December.
    12. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    13. Cardon, Melissa S. & Stevens, Christopher E. & Potter, D. Ryland, 2011. "Misfortunes or mistakes?: Cultural sensemaking of entrepreneurial failure," Journal of Business Venturing, Elsevier, vol. 26(1), pages 79-92, January.
    14. Pasi Kuusela & Thomas Keil & Markku Maula, 2017. "Driven by aspirations, but in what direction? Performance shortfalls, slack resources, and resource-consuming vs. resource-freeing organizational change," Strategic Management Journal, Wiley Blackwell, vol. 38(5), pages 1101-1120, May.
    15. Joel A. C. Baum & Kristina B. Dahlin, 2007. "Aspiration Performance and Railroads’ Patterns of Learning from Train Wrecks and Crashes," Organization Science, INFORMS, vol. 18(3), pages 368-385, June.
    16. Jo Thori Lind & Halvor Mehlum, 2010. "With or Without U? The Appropriate Test for a U‐Shaped Relationship," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(1), pages 109-118, February.
    17. Dahlin, Kristina & Chuang, You-Ta & Roulet, Thomas J, 2018. "Opportunity, Motivation, and Ability to Learn from Failures and Errors: Review, Synthesis, and Ways to Move Forward," SocArXiv 4qwzh, Center for Open Science.
    18. Jens Foerderer & Thomas Kude & Sunil Mithas & Armin Heinzl, 2018. "Does Platform Owner’s Entry Crowd Out Innovation? Evidence from Google Photos," Information Systems Research, INFORMS, vol. 29(2), pages 444-460, June.
    19. David Maslach, 2016. "Change and persistence with failed technological innovation," Strategic Management Journal, Wiley Blackwell, vol. 37(4), pages 714-723, April.
    20. Parhankangas, Annaleena & Renko, Maija, 2017. "Linguistic style and crowdfunding success among social and commercial entrepreneurs," Journal of Business Venturing, Elsevier, vol. 32(2), pages 215-236.
    21. Vivianna Fang He & Charlotta Sirén & Sheetal Singh & George Solomon & Georg von Krogh, 2018. "Keep Calm and Carry On: Emotion Regulation in Entrepreneurs’ Learning from Failure," Entrepreneurship Theory and Practice, , vol. 42(4), pages 605-630, July.
    22. Thies, Ferdinand & Wessel, Michael & Benlian, Alexander, 2016. "Effects of Social Interaction Dynamics on Platforms," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 84688, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    23. Wessel, Michael & Thies, Ferdinand & Benlian, Alexander, 2017. "Opening the floodgates: the implications of increasing platform openness in crowdfunding," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 87237, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    24. Schilling, Melissa A. & Green, Elad, 2011. "Recombinant search and breakthrough idea generation: An analysis of high impact papers in the social sciences," Research Policy, Elsevier, vol. 40(10), pages 1321-1331.
    25. Daniel A. Levinthal & James G. March, 1993. "The myopia of learning," Strategic Management Journal, Wiley Blackwell, vol. 14(S2), pages 95-112, December.
    26. Yasuhiro Yamakawa & Mike W. Peng & David L. Deeds, 2015. "Rising from the Ashes: Cognitive Determinants of Venture Growth after Entrepreneurial Failure," Entrepreneurship Theory and Practice, , vol. 39(2), pages 209-236, March.
    27. Richard F. J. Haans & Constant Pieters & Zi-Lin He, 2016. "Thinking about U: Theorizing and testing U- and inverted U-shaped relationships in strategy research," Strategic Management Journal, Wiley Blackwell, vol. 37(7), pages 1177-1195, July.
    28. Ryan W. Angus, 2019. "Problemistic search distance and entrepreneurial performance," Strategic Management Journal, Wiley Blackwell, vol. 40(12), pages 2011-2023, December.
    29. David W. Lehman & Jungpil Hahn & Rangaraj Ramanujam & Bradley J. Alge, 2011. "The Dynamics of the Performance--Risk Relationship Within a Performance Period: The Moderating Role of Deadline Proximity," Organization Science, INFORMS, vol. 22(6), pages 1613-1630, December.
    30. Varkey Titus Jr. & Owen Parker & Jeffrey Covin, 2020. "Organizational Aspirations and External Venturing: The Contingency of Entrepreneurial Orientation," Entrepreneurship Theory and Practice, , vol. 44(4), pages 645-670, July.
    31. Mollick, Ethan, 2014. "The dynamics of crowdfunding: An exploratory study," Journal of Business Venturing, Elsevier, vol. 29(1), pages 1-16.
    32. Thomas H. Allison & Blakley C. Davis & Jeremy C. Short & Justin W. Webb, 2015. "Crowdfunding in a Prosocial Microlending Environment: Examining the Role of Intrinsic versus Extrinsic Cues," Entrepreneurship Theory and Practice, , vol. 39(1), pages 53-73, January.
    33. C. S. Richard Chan & Annaleena Parhankangas, 2017. "Crowdfunding Innovative Ideas: How Incremental and Radical Innovativeness Influence Funding Outcomes," Entrepreneurship Theory and Practice, , vol. 41(2), pages 237-263, March.
    34. Norbert Steigenberger & Hendrik Wilhelm, 2018. "Extending Signaling Theory to Rhetorical Signals: Evidence from Crowdfunding," Organization Science, INFORMS, vol. 29(3), pages 529-546, June.
    35. Wei Yu & Maria Minniti & Robert Nason, 2019. "Underperformance duration and innovative search: Evidence from the high‐tech manufacturing industry," Strategic Management Journal, Wiley Blackwell, vol. 40(5), pages 836-861, May.
    36. Vincenzo Butticè & Massimo G. Colombo & Mike Wright, 2017. "Serial Crowdfunding, Social Capital, and Project Success," Entrepreneurship Theory and Practice, , vol. 41(2), pages 183-207, March.
    37. Patrick M. Kreiser & Brian S. Anderson & Donald F. Kuratko & Louis D. Marino, 2020. "Entrepreneurial Orientation and Environmental Hostility: A Threat Rigidity Perspective," Entrepreneurship Theory and Practice, , vol. 44(6), pages 1174-1198, November.
    38. Thies, Ferdinand & Wessel, Michael & Benlian, Alexander, 2016. "Effects of Social Interaction Dynamics on Platforms," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 82420, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    39. Gerard Hoberg & Gordon Phillips, 2010. "Product Market Synergies and Competition in Mergers and Acquisitions: A Text-Based Analysis," The Review of Financial Studies, Society for Financial Studies, vol. 23(10), pages 3773-3811, October.
    40. June-Young Kim & Ji-Yub (Jay) Kim & Anne S. Miner, 2009. "Organizational Learning from Extreme Performance Experience: The Impact of Success and Recovery Experience," Organization Science, INFORMS, vol. 20(6), pages 958-978, December.
    41. Cope, Jason, 2011. "Entrepreneurial learning from failure: An interpretative phenomenological analysis," Journal of Business Venturing, Elsevier, vol. 26(6), pages 604-623.
    42. Saku Mantere & Pekka Aula & Henri A. Schildt & Eero Vaara, 2013. "Narrative attributions of entrepreneurial failure," Post-Print hal-02313027, HAL.
    43. Pino G. Audia & Henrich R. Greve, 2006. "Less Likely to Fail: Low Performance, Firm Size, and Factory Expansion in the Shipbuilding Industry," Management Science, INFORMS, vol. 52(1), pages 83-94, January.
    44. Markus C. Becker, 2004. "Organizational routines : a review of the literature," Post-Print hal-00279010, HAL.
    45. Stephan Billinger & Nils Stieglitz & Terry R. Schumacher, 2014. "Search on Rugged Landscapes: An Experimental Study," Organization Science, INFORMS, vol. 25(1), pages 93-108, February.
    46. Christopher Courtney & Supradeep Dutta & Yong Li, 2017. "Resolving Information Asymmetry: Signaling, Endorsement, and Crowdfunding Success," Entrepreneurship Theory and Practice, , vol. 41(2), pages 265-290, March.
    47. Sharon Simmons & Johan Wiklund & Jonathan Levie, 2014. "Stigma and business failure: implications for entrepreneurs’ career choices," Small Business Economics, Springer, vol. 42(3), pages 485-505, March.
    48. Ohad Ref & Zur Shapira, 2017. "Entering new markets: The effect of performance feedback near aspiration and well below and above it," Strategic Management Journal, Wiley Blackwell, vol. 38(7), pages 1416-1434, July.
    49. Diwas KC & Bradley R. Staats & Francesca Gino, 2013. "Learning from My Success and from Others' Failure: Evidence from Minimally Invasive Cardiac Surgery," Management Science, INFORMS, vol. 59(11), pages 2435-2449, November.
    50. Stephen J. Mezias & Ya-Ru Chen & Patrice R. Murphy, 2002. "Aspiration-Level Adaptation in an American Financial Services Organization: A Field Study," Management Science, INFORMS, vol. 48(10), pages 1285-1300, October.
    51. Kristina Dahlin & Joel A.C Baum, 2007. "Aspiration performance and railroads' patterns of learning from train wrecks and crashes," Post-Print hal-00480399, HAL.
    52. Juanjuan Zhang & Peng Liu, 2012. "Rational Herding in Microloan Markets," Management Science, INFORMS, vol. 58(5), pages 892-912, May.
    53. Matthew A. Barlow & J. Cameron Verhaal & Ryan W. Angus, 2019. "Optimal distinctiveness, strategic categorization, and product market entry on the Google Play app platform," Strategic Management Journal, Wiley Blackwell, vol. 40(8), pages 1219-1242, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xiong, Jiwei & Wang, Tao & Yang, Haibin, 2024. "Innovation search after failure: The role of peers," Journal of Business Research, Elsevier, vol. 183(C).
    2. 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).
    3. Angus, Ryan W. & Houghton, Jeffery D. & Neck, Christopher B. & Kip Holderness Jr., D., 2024. "Who responds to critical feedback? The effects of self-leadership on entrepreneurial product pivoting behavior," Journal of Business Research, Elsevier, vol. 172(C).
    4. Argiolas, Alessia & Rawhouser, Hans & Sydow, Alisa, 2024. "Social entrepreneurs concerned about Impact Drift. Evidence from contexts of persistent and pervasive need," Journal of Business Venturing, Elsevier, vol. 39(1).
    5. Xiao, Shufeng & Yu, Tianjiao, 2024. "Underperformance duration and R&D internationalization: Institutional contingencies in an emerging economy," International Business Review, Elsevier, vol. 33(4).
    6. Su, Taoyong & Yu, Yuzhu & Chen, Yongheng & Hou, Wanrong, 2023. "On or off: The triggering effect of underperformance duration on cooperative innovation," Technovation, Elsevier, vol. 126(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nikolaus Lipusch & Dominik Dellermann & Ulrich Bretschneider & Philipp Ebel & Jan Marco Leimeister, 2020. "Designing for Crowdfunding Co-creation," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 62(6), pages 483-499, December.
    2. Su, Taoyong & Yu, Yuzhu & Chen, Yongheng & Hou, Wanrong, 2023. "On or off: The triggering effect of underperformance duration on cooperative innovation," Technovation, Elsevier, vol. 126(C).
    3. Hendriks, Guus & Slangen, Arjen H.L. & Heugens, Pursey P.M.A.R., 2024. "Country portfolio diversity and firms’ portfolio adjustment decisions: A behavioral perspective," International Business Review, Elsevier, vol. 33(4).
    4. Calic, Goran & Shevchenko, Anton, 2020. "How signal intensity of behavioral orientations affects crowdfunding performance: The role of entrepreneurial orientation in crowdfunding business ventures," Journal of Business Research, Elsevier, vol. 115(C), pages 204-220.
    5. 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.
    6. Moritz Hagen & Wenjia Su & Sebastian Junge, 2024. "60th birthday of ‘A Behavioral Theory of the Firm’: a review of the relational concepts and recommendations for future research," Management Review Quarterly, Springer, vol. 74(4), pages 2637-2682, December.
    7. Francesco Cappa & Michele Pinelli & Riccardo Maiolini & Maria Isabella Leone, 2021. "“Pledge” me your ears! The role of narratives and narrator experience in explaining crowdfunding success," Small Business Economics, Springer, vol. 57(2), pages 953-973, August.
    8. Cheng, Lulu & Xie, En & Fang, Junyi & Mei, Nan, 2022. "Performance feedback and firms’ relative strategic emphasis: The moderating effects of board independence and media coverage," Journal of Business Research, Elsevier, vol. 139(C), pages 218-231.
    9. David Maslach & Oana Branzei & Claus Rerup & Mark J. Zbaracki, 2018. "Noise as Signal in Learning from Rare Events," Organization Science, INFORMS, vol. 29(2), pages 225-246, April.
    10. Berns, John P. & Jia, Yankun & Gondo, Maria, 2022. "Crowdfunding success in sustainability-oriented projects: An exploratory examination of the crowdfunding of 3D printers," Technology in Society, Elsevier, vol. 71(C).
    11. Chan, C.S. Richard & Parhankangas, Annaleena & Sahaym, Arvin & Oo, Pyayt, 2020. "Bellwether and the herd? Unpacking the u-shaped relationship between prior funding and subsequent contributions in reward-based crowdfunding," Journal of Business Venturing, Elsevier, vol. 35(2).
    12. Linda Argote & Sunkee Lee & Jisoo Park, 2021. "Organizational Learning Processes and Outcomes: Major Findings and Future Research Directions," Management Science, INFORMS, vol. 67(9), pages 5399-5429, September.
    13. Hadar Gafni & Marek Hudon & Anaïs Périlleux, 2021. "Business or Basic Needs? The Impact of Loan Purpose on Social Crowdfunding Platforms," Journal of Business Ethics, Springer, vol. 173(4), pages 777-793, November.
    14. Swati Oberoi & Rohit Joshi & Atul Mehta & Smita Srivastava & Vishal K. Gupta, 2024. "Crowdfunding Research: Critical Analysis and Constructive Agenda for Future Inquiry," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 33(3), pages 651-699, August.
    15. Alex Murray & Suresh Kotha & Greg Fisher, 2020. "Community-Based Resource Mobilization: How Entrepreneurs Acquire Resources from Distributed Non-Professionals via Crowdfunding," Organization Science, INFORMS, vol. 31(4), pages 960-989, July.
    16. 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.
    17. Lingfei Deng & Qiang Ye & DaPeng Xu & Wenjun Sun & Guangxin Jiang, 2022. "A literature review and integrated framework for the determinants of crowdfunding success," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-70, December.
    18. Janina Sundermeier & Tyge-F. Kummer, 2022. "Does personality still matter in e-commerce? How perceived hubris influences the assessment of founders’ trustworthiness using the example of reward-based crowdfunding," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1127-1144, September.
    19. Shuangfa Huang & David Pickernell & Martina Battisti & Thang Nguyen, 2022. "Signalling entrepreneurs’ credibility and project quality for crowdfunding success: cases from the Kickstarter and Indiegogo environments," Small Business Economics, Springer, vol. 58(4), pages 1801-1821, April.
    20. Lars Hornuf & Johannes Voshaar, 2024. "What Is an Effective Signal in Crowdfunding? Evidence from Expert Researchers and a Meta-Study," CESifo Working Paper Series 11501, CESifo.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:entthe:v:45:y:2021:i:3:p:626-657. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.