Impact Of Crowdfunding Project Participants’ Efforts On Potential Backers’ Decisions

With the continuous integration and development of internet technology and the traditional financial industry,the total amount of global online crowdfunding projects has surged every year,with the "reward based crowdfunding model" occupying the dominant position.However,the "All-Or-Nothing" mechanism adopted has led to a large number of projects failing due to insufficient fundraising from backers.As a result,project participants,the sponsors and backers,make efforts toward the common goal of crowdfunding’s success.However,there may be significant differences in the effort of participants in different roles at different stages of project fund-raising,such as comments and replies.Meanwhile,due to the information asymmetry of the crowdfunding market,potential backers will seek more quality signals to assist decision-making.Comments and replies from participants on message boards can be received by potential backers as quality signals.Moreover,as the intensity of market competition changes dynamically,the impact of the efforts of participants on the decisions of potential backers maybe affected.In a word,it is necessary to understand the impact of crowdfunding participants’ efforts on potential backer’s funding decision and how this impact is adjusted by the intensity of market competition.This paper takes Make100 projects on Kickstarter as the research object,which is the world’s largest reward-based crowdfunding platform.We construct econometrical models based on goal gradient theory,signal theory and HHI theory by combing the relevant literature and the participant role labels displayed in the platform’s message board.From January 1,2020 to May 15,2020,we crawled the panel data of all projects in Make100 page on Kickstarter at an interval of 5 minutes,including 1592 projects,totaling 7083703 project data.By constructing a paired sample t test,this paper reveals the differences in the efforts of participants in different roles at different stages of the crowdfunding cycle,such as project sponsors(project creators and project collaborators)and backers(ordinary backers and super backers).Subsequently,the panel linear regression model with two-way fixed effects was determined through F test and Hausman test,which explores the impact of participants’ efforts on the funding decision of potential backers.Further,the HHI index is used as an indicator of market intensity to study how the intensity of project competition on the crowdfunding platform regulates the relationship between participants’ efforts and potential backers’ decisions.Finally,the robustness test is carried out by replacing the explained variable,replacing the moderating variable,adjusting the time window,replacing the model and adding the control variable.The results verify the conclusion of the main model again.The following important research findings are obtained in this paper: 1)The effort level of the project sponsors and backers is significantly different at different stages of project fund-raising.Project creators make more efforts to post comments at the initial stage of the project fund-raising,and make more reply efforts at the end of the project,while the project collaborators do not show comment efforts and reply efforts in both stages.Moreover,backers post more in the stage when the project is close to success and there is no significant difference in backers’ reply efforts in different stages of project fund-raising.2)The comment efforts and reply efforts of project participants have a significant impact on the decisions of potential backers.In particular,the comment efforts of creators,collaborators and super backers have a significant positive impact on the decision of potential backers,while the comment efforts of ordinary backers have a negative impact.Besides,the reply efforts of all participants positively affect potential backers’ decision.3)When the competition intensity of the crowdfunding market is high,that is,when the HHI index is low,the impacts of creators’ comment efforts are weakened,while the impacts of the collaborators’ comment efforts are strengthened.Meanwhile,the effects of super backers’ comment efforts on the potential backers’ decisions are strengthened while the effects of ordinary backers’ comment efforts are weakened.Moreover,the high market competition intensity weakened the positive effects of creators’ reply efforts,super backers’ reply efforts and ordinary backers’ reply efforts,while collaborators’ reply efforts don’t change with the intensity of market competition.In a word,this study expands the application of goal gradient theory,supplements the theoretical system of potential backers’ decisionmaking factors,and reveals the impact mechanism of market competition intensity on the relationship between participants’ efforts and backers’ decision-making.At the same time,the empirical results of this study puts forward targeted suggestions for project sponsors,backers and crowdfunding platform managers,which help to improve the success rate of the projects and maintain the effective operation of the platform.