Making-The-Product-Happen: A Driver of Crowdfunding Participation

Abstract

Crowdfunding campaigns, where entrepreneurs seek consumer funding to develop new products, foster dynamics that go beyond traditional seller-buyer transactions. This research studies how consumers increase their participation when they believe their contribution is pivotal to product creation. Utilizing controlled experiments we find that making-the-product-happen motivates participation above and beyond the desire to help the entrepreneurs. Moreover, we show how this motivation, which increases when an all-or-nothing campaign is drawing to a close and its financing target is within reach, is driven by future product availability. Furthermore, we identify conditions where making-it-happen dominates herding and an increase in the backing actions of others decreases one’s willingness to back. Lastly, consistent with the notion that individual backers can determine campaign success, an analysis of over 200,000 Kickstarter projects shows that 33% of all successful campaigns hinge on the marginal support of no more than three average backers.

Keywords: Crowdfunding, Motivation, Goal Attainment, Herding