Who benefits from the wisdom of the crowd in crowdfunding? Assessing the benefits of user-generated and mass personal electronic word of mouth in computer-mediated financing

Kaminski, Jermain; Hopp, Christian; Lukas, Christian (2018). Who benefits from the wisdom of the crowd in crowdfunding? Assessing the benefits of user-generated and mass personal electronic word of mouth in computer-mediated financing Journal of Business Economics, 88(9), pp. 1133-1162. Springer 10.1007/s11573-018-0899-3

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In this work, we explore the link between electronic word of mouth in the form of user-generated content (online forum interactions on Kickstarter) and through mass personal communication (sharing information through Facebook) on the performance of crowdfunding campaigns. Our formal theoretical model implies that the efficiency of electronic word of mouth is determined by the quality of the underlying crowdfunding campaign. Using a sample of 572 project observations, we test our theoretical predictions in cross-sectional logistic regression and ancillary Granger analyses. Our results highlight the interactive contingency of social media engagement and the success of the crowdfunding campaign. While a higher quality campaign is benefitting from user generated electronic word of mouth (online comments), the returns are diminishing. For mass personal electronic word of mouth (Facebook shares), we even find a reverse causal effect. Social media activity follows a successful campaign, but does not affect the success probability of the campaign. Crowdfunding campaigns need to approach their social media activities with a certain note of sensitivity to achieve the objective of successfully reaching their campaign goal.

Item Type:	Journal Article (Original Article)
Division/Institute:	Business School > Business Foundations and Methods
Name:	Kaminski, Jermain; Hopp, Christian0000-0002-4095-092X and Lukas, Christian
ISSN:	0044-2372
Publisher:	Springer
Language:	English
Submitter:	Christian Hopp
Date Deposited:	16 Sep 2020 14:36
Last Modified:	16 Aug 2023 11:21
Publisher DOI:	10.1007/s11573-018-0899-3
Uncontrolled Keywords:	Crowdfunding, Social capital, Entrepreneurial finance, Electronic word of mouth
ARBOR DOI:	10.24451/arbor.11986
URI:	https://arbor.bfh.ch/id/eprint/11986