There have been many research developments in the field of crowdfunding, in the past decade. While the focus for IS practitioners has been on optimising crowdfunding efforts in order to reach a specific measure of success (usually financial success eg: target funding amount), less focus has been placed on identifying the psychological and motivational queues that lead individuals to contribute monetarily to campaigns.
What makes people want to contribute in the first place, to a crowdfunding campaign?
Zvilichovsky et al (2017) have devoted their research efforts on investigating the motivational factors that lead individuals to contribute to crowdfunding campaigns. Their research analyses how consumers increase their participations when they believe their contribution is pivotal to product creation. In crowdfunding platforms, consumers consciously and willingly fund a product that does yet no exist in the market. The essence of crowdfunding platforms is to involve individuals in early stages of the product development process. This context sparks consumer motivations that transcend traditional transactional interactions.
Rather than being motivated by a sense of generosity towards the laborious efforts of the entrepreneur, consumers are driven by the notion of seeing the product become a reality and become in possession of it. The authors conceptualise making-the-product-happen motivation as an attempt by consumers to contribute to the creation and commercialisation of a product by means of monetary funding and making-it-happen motivation as an attempt by consumers to contribute to the realisation of the campaign’s financial goal. When consumers feel that the existence of the product depends on the success of the crowdfunding campaigns and that their financial backing is pivotal to the creation of the product, making-the-product-happen motivation peaks.
The authors conducted a total of four studies controlling for future product availability, funding mechanism and funding stage target to provide empirically validated answers to the question above.
- The first study, tests whether all-or-nothing funding mechanisms vs keep-it-all funding mechanisms see differences in the willingness to back propensity of consumers. The participants were provided information regarding an air cleaning system and asked using a 7-item likert scale how likely they would be to pay $50 to back the campaign. The result of the first study determined that all-or-nothing funding mechanisms drove the participants’ making-it-happen motivation and willingness to back the campaign.
- The second study tested whether consumers were more willing to back a campaign that was closed to reaching its target vs one that had already reached it target. The results found that consumers’ perceived impact on making-the-product happen, led to a higher willingness to participate in a project whose financial target is close to its goal.
- In the third and fourth study, the researchers tested whether future availability of the product would affect their willingness to contribute. They found that when future availability of the product depends exclusively on the success of the campaign (thus that the backer’s financial donations are pivotal in making-the-product happen) consumers are more willing to back the campaign.
To test for generalisability the authors of the study conducted a field experiment on 193,312 campaigns by analysing the average contribution per backer compared to the length of the campaign.
Apart from validating the results found in the lab study, they discovered that most of successful campaigns achieve their goal only by a slight margin above the target (computed to be $195 or three $65 donations) indicating the importance of communicating the importance of the backer’s role in product realisation process.
The authors found very interesting insights that serve as insights to campaign designers to optimise their probability of success. If entrepreneurs are able to effectively and sincerely communicate to consumers the importance of their role as backers in making-the-product happen then the results of the study indicate a positive correlation with financial success (for the entrepreneur) and future product availability for the consumer.
While the study did provide insights as to which motivational factors lead consumers to back campaigns, it is not short with its limitations. The data collected from Kickstarter does not report the amount contributed by backers, which had to be assumed by the authors. Furthermore, the results applied only to consumer products and not to public goods, who see crowdfunding as a viable source of funding.
The above limitation set a precedent in the direction that future research should take in further developing the crowdfunding literature. The researchers hint that studying the interactions that occur in the post-crowdfunding stage would provide a more complete portrait of crowdfunding literature.
Zvilichovsky, D., Danziger, S. and Steinhart, Y. (2018). Making-the-Product-Happen: A Driver of Crowdfunding Participation. Journal of Interactive Marketing, 41, pp.81-93.