Publication Type
Journal Article
Version
submittedVersion
Publication Date
1-2021
Abstract
Rewards-based crowdfunding presents an information asymmetry for participants due to the funding mechanism used. Campaign-backers trust creators to complete projects and deliver rewards as outlined prior to the fundraising process, but creators may discover better opportunities as they progress with a project. Despite this, the all-or-nothing (AON) mechanism on crowdfunding platforms incentivizes creators to set meager funding-targets that are easier to achieve but may offer limited slack when creators wish to simultaneously pursue emerging opportunities later in the project. We explore the related issues of how funding targets seem to be selected by the creators, and how dissatisfaction with the rewards outcomes may arise for the backers. We constructed a quasi-experimental (QE) research design based on an extensive dataset from Kickstarter with nearly 390,000 campaigns. Our findings show that creators who set particularly meager funding-targets for their campaigns are more likely to receive sufficient funds but are less likely to satisfy backers with the project outcomes they deliver. We also test the moderating roles of creator and campaign characteristics. Overall, this study provides evidence that the funding mechanism used in rewards-based crowdfunding may be unsustainable in its current form, unless new mechanisms are introduced to realign the diverging incentives for creators and backers.
Keywords
Computational social science (CSS), crowdfunding sustainability, fintech, incentives, information asymmetry, online fundraising, platforms, propensity-score matching (PSM), quasi-experiment, rewards-based crowdfunding
Discipline
Databases and Information Systems | E-Commerce
Research Areas
Information Systems and Management
Publication
Journal of Management Information Systems
Volume
38
Issue
3
First Page
612
Last Page
646
ISSN
0742-1222
Identifier
10.1080/07421222.2021.1987622
Publisher
Taylor & Francis (Routledge): SSH Titles
Citation
Wessel, Michael; Gleasure, Rob; and KAUFFMAN, Robert John.
Sustainability of rewards-based crowdfunding: A quasi-experimental analysis of funding targets and backer satisfaction. (2021). Journal of Management Information Systems. 38, (3), 612-646.
Available at: https://ink.library.smu.edu.sg/sis_research/6848
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1080/07421222.2021.1987622