The wisdom of the crowd in funding: information heterogeneity and social networks of crowdfunders
By F. Polzin, Helen S. Toxopeus, E. Stam. 2018
145 citations recorded by the source corpus.
Crowdfunding has enabled large crowds to fund innovative projects. This type of funding might tap into the wisdom of crowds who were previously disconnected from the funding process. We distinguish between in-crowd and out-crowd funders (with and without ties to project creators) in order to test for heterogeneity in their information use. Based on the analysis of a large-scale survey amongst project funders, this paper shows that in-crowd investors rely more on information about the project creator than out-crowd investors. Out-crowd investors do not seem to attach more importance to information about the project itself than in-crowd investors, except in the case of donation-based crowdfunding. For financial return crowdfunding, financial information becomes less important once a strong relationship with the project creator is established. Our study allows project creators to target information to specific audiences based on their relationship strength across different types of crowdfunding projects.
Subfields: Accounting, Economics and Econometrics, Management Information Systems
View Paper: https://www.semanticscholar.org/paper/b71019ac4aaa453b7b0a3d4848ad436c89261c42
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Citations in the corpus
- Crowdfunding and social capital: A systematic review using a dynamic perspective (2021, unknown): “After conducting a survey covering all types of crowdfunding backers, Polzin et al. (2018) suggest that investors with direct ties to fundraisers are motivated to invest in a project not only for financial returns but to maintain a good relationship with the fundraisers.”
- Dynamics of Lending-Based Prosocial Crowdfunding: Using a Social Responsibility Lens (2018, background): “Traditional sources of venture funding have included ‘in-crowd’ lenders (Polzin et al. 2018) such as self/family/friends, bank loans, angels, and venture capital (Burgelman and Hitt 2007; De Clercq et al.”
- Which updates during an equity crowdfunding campaign increase crowd participation? (2016, unknown): “…determinant of equity crowdfunding participation has been overlooked in the literature so far, and as such, there is an important gap on the effects of information disclosure on crowd participation (Ahlers et al. 2015; Moritz et al. 2015; Bernstein et al. 2017; Vismara 2016b; Polzin et al. 2017).”