The Effect Of Management Responses Strategy On Investors' Behavior In Online Crowdfunding Market

Crowdfunding has grown rapidly in the past decade and has greatly improved the efficiency of capital acquisition.Albeit the growth of funding scale,the failure rate of projects is very high.Facing this problem,scholars have conducted a series of research to analyze how to improve the possibility of obtaining funds.Most studies focus on cues that determined before projects are launched or cues generated by other backers during the funding.Signals sent by fundraisers during the funding,including updates and responses,are often ignored.Serving as ways to keep in touch with backers,updates and responses can be regarded as two types of management responses(MRs)from fundraisers.Update is undirected MR for entire backers,while response is directed MR that target a specific backer.However,most of the current research on management response focus on the specific attributes of management response based on communication model.Few studies have identified a taxonomy of management responses based on communication modes and systematically compared the effects of them.This article studies the management responses of Indiegogo.com.In this study,we differentiate management responses in crowdfunding platform into undirected update and directed response according to communication modes.Drawing on cue diagnosticity framework,we examine how high-scope cues(updates)and low-scope cues(responses)are combined or integrated in the process of backers' investment when they exist simultaneously.We collected our project-level data from Indiegogo.Our data cover 5 months from November1,2018 to April 30,2019.Data on every projects that started and ended in this timeframe was gathered automatically in a daily routine with a self-developed web crawler to retrieve time-series data of all projects on the website.After removing invalid data,the final dataset contains 5,602 projects and approximately 219,397 data points.Considering the characteristics of the data and the existing research,we tested our proposed research model by using conditional fixed-effects Poisson regression model.The results of the study show that update and response will have a significant positive impact on the number of new investors added each day.The results also demonstrate that the effect of high-scope updates overwhelmingly predicts a larger number of investment compared with the effect of low-scope responses.And when existed simultaneously,the effect of responses will be attenuated by updates.Different from expectations,the researchshow that the effects of management responses in different periods do not have significate differences on the whole.Subsequent analysis found that this result may due to the differences of project categories or the implicitness of successful and failed projects.Based on the results,we recommend fundraisers not to ignore update and response.Besides,they should pay attention to the balance of updates and responses.