The Power of Conversation: Analyzing the Impact of Starter Response on Backer Accumulation in Crowdfunding

The unique dynamics of the crowdfunding process have attracted substantial scholarly attention over the past decade. In this study, we investigate how crowdfunding campaign starters’ response to potential backers in the discussion board influences backer accumulation in reward-based crowdfunding platforms. We suggest that the starter response serves to reduce information asymmetry and signal the positive qualities of the campaign starter(s). Accordingly, we shed light on the threefold implications of starter response in (a) directly attracting more backers, (b) strengthening the herding effect (i.e., the extent to which cumulative backers help attract new backers), and (c) mitigating the goal-attainment effect (i.e., the decline in new backers after campaign goal attainment) in reward-based crowdfunding. Utilizing a unique panel data set of JD Crowdfunding, we found a positive relationship between starter response and new backers the next day. Moreover, our data showed that the volume of cumulative backers was positively related to new backers the next day (i.e., showcasing the herding effect), and the starter response served to amplify this positive herding effect. Last, our analyses revealed that campaign goal attainment was negatively related to daily new backers (i.e., supporting the goal-attainment effect), but starter response served to mitigate this negative effect. We discuss the implications of our findings for the literature on crowdfunding.

History: Xiaoquan (Michael) Zhang, Senior Editor; Huaxia Rui, Associate Editor.

Funding: W. You received financial support from Beijing Municipal Social Science Foundation [Grant 22GLB023].