Cultural Distance and International Crowdfunding

Abstract

International crowdfunding involves foreign entrepreneurs using a local platform to attract stakeholders. These stakeholders primarily come from either the entrepreneur’s home-country, or from the platform’s host-country. We conjecture that success in mobilizing these stakeholders is largely culturally dependent. Cultural distance from the platform can act as an impediment to mobilizing home-country stakeholders. Whereas, the benefit of attracting host-country stakeholders is uncertain and small when entrepreneurs come from culturally proximate countries. With this in mind, we theorize that the fundraising prospects of culturally-distant entrepreneurs improve when they attract backers from the platform’s host-country. Whereas, for culturally-proximate entrepreneurs, the fundraising prospects are enhanced when they successfully mobilize backers from their home-country. We examine 55,266 foreign projects on Kickstarter. The data examined are consistent with our contentions.

Keywords: rewards crowdfunding, international, shareholders, stakeholders, culture

JEL Classification: G23, G32