All posts by bartkogeler

Persuasion in crowdfunding: An elaboration likelihood model of crowdfunding performance

Authors paper: Allison, T. H., Davis, B. C., Webb, J. W., & Short, J.C.

Since 2009, crowdfunding and crowdfunding platforms have experienced a high growth in popularity (Google Trends, 2018). Simultaneously, quite a lot of studies have been conducted on this topic. One finding of those studies was the fact that only 36% of the launched projects succeed in reaching their goal (Courtney, Dutta, & Li, 2017). One potential reason for the failure of the majority of the launched projects, is the lack of convincing information and peripheral cues. Allison et al. (2017) study exactly this in the context of the crowdfunding platform Kickstarter. In addition, they also study how attributes of the funders determine the effect of persuasion.

Using the elaboration likelihood model (ELM) of persuasion, the following questions take a central position in the paper: 1) How can crowdfunding entrepreneurs successfully persuade potential funders to provide capital through the use of issue-relevant information and peripheral cues? And 2) How does the motivation and ability of funders influence the way in which persuasion occurs?


The elaboration likelihood model of persuasion tells us that persuasion happens through two distinct routes: The central route where people evaluate information critically and consciously and the peripheral route where people evaluate the message more affectively based on contextual cues, such as the underlying tone of a given text. In the case of this study about crowdfunding projects, specific concepts are measured to study both routes and their effect on the performance of the crowdfunding campaign. The data for the concepts was collected from 383 crowdfunding projects.

The following concepts represent the evaluation of funders through the central route:

  • The education and experience of the entrepreneur
  • The perceived quality and usefulness of the product

For the peripheral route, the presence of the following cues in the product’s pitch represent the route’s strength:

  • The portrayal of a dream
  • The adoption of a group identity
  • A positive narrative tone throughout the text

In addition, the ability of the funder is measured through their crowdfunding experience (number of funding actions in previous crowdfunding campaigns), and the motivation of the funder is measured through the required funding commitment of the campaign. Commitment was high when someone funded while the lowest-priced reward of a crowdfunding project was above $10, and commitment was low when someone funded while the lowest-priced reward of a project was lower than $10. Both ability and motivation of funders were assumed to moderate the effects of the central route and peripheral route on the crowdfunding performance.



After modeling all the variables, only the positive narrative tone of a campaign text did not have a significant effect on the performance of crowdfunding campaigns. All the other variables, related to the campaign text, characteristics of the product and the entrepreneurs, had a significant impact on the success of the crowdfunding campaign. So if the education or experience of an entrepreneur is high, the crowdfunding campaign is more likely to succeed. Similarly, the success of the campaign is positively related to the product quality or usefulness. Lastly, if peripheral cues like the portrayal of a dream and the adoption of a group identity is used in the text, the crowdfunding performance is likely to be higher.

The strength and likelihood of these effects is increased when the motivation and ability of the funder are high, which was validated within an experimental setting in a second study.


The primary strengths of this paper relate to the hypothesis development and the study approach. Because so many crowdfunding campaigns fail, it is very good to know about practical approaches that attract more funds. This is exactly what the authors study in this paper. Combining a classic model with emerging businesses provide very useful insights for the field. Related to this strength of the paper, the approach of the authors in hypothesizing is also very good. They develop hypothesis fully based on the theory and past studies, to increase the robustness of their potential findings and to really add value to the academic field as well. Lastly, another strength is the second study that was conducted, that used participants, surveys and an experimental setting. This increases the validity of their findings, as the first study only used scraped data from Kickstarter to model the outcomes.


Next to the strengths, the paper also has its weaknesses. The most obvious, yet most impactful, weakness is the lack of generalizability due to the data from only one crowdfunding platform. While Kickstarter is one of the biggest crowdfunding platforms, the 383 selected projects and their funding could differ from other platforms in terms of guidelines, funding mechanisms and interface. If other platforms were considered as well, the specifically studied cues could have different forms and consequently, results, than Kickstarter.

A second weakness is potentially influencing the general results of the study. In a crowdfunding platform like Kickstarter, projects can experience unusually high performance when they get featured on a ‘trending’ or ‘what’s hot’ page, as well as when they receive a lot of external  media attention. The authors of this paper have not measured or controlled for these events. Out of 383 projects is it quite likely that one or more of them have received more funding because they were featured on a specific page or news medium. Uncontrolled variables like this cause a decreased causality of the hypotheses, because a couple of these projects with similar entrepreneur education (for instance) could easily skew the results in a way that it reaches significance, while this was not the case if one or two of these projects were dropped  (Type I error). Therefore, the authors should have included more controlling variables that had an impact on the project’s performance.



Allison, T. H., Davis, B. C., Webb, J. W., & Short, J. C. (2017). Persuasion in crowdfunding: An elaboration likelihood model of crowdfunding performance. Journal of Business Venturing32(6), 707-725.

Courtney, C., Dutta, S., & Li, Y. (2017). Resolving information asymmetry: Signaling, endorsement, and crowdfunding success. Entrepreneurship Theory and Practice41(2), 265-290.

Crowdfunding. (2018). Google Trends. Retrieved 9 March 2018, from

 Written by Bart – 383128

Betting on your Footsteps: App lets users earn money through exercise

While fitness trackers and other health-technologies are on the rise, the global obesity rate is still increasing (NCD Risk Factor Collaboration, 2016). One of the main reasons for the increase in obesity is the general lack of physical exercise, often caused by a lack of motivation. To combat this, a variety of apps and fitness trackers have introduced the combination of social aspects of a community with physical exercise. People often find themselves more motivated if they can share their results afterwards or engage in a (subjective) virtual competition (Chen & Pu, 2014). A startup called StepBet takes these incentive-based activity apps to the next level by including financial compensation for the number of steps you set outdoor.

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How does it work?

StepBet (currently in beta) is an app for smartphones that allows users to bet on their own behavior using their existing activity tracker. After joining a game, users bet around 50 euros on a personalized goal of daily steps to complete for a few weeks. If their goal is met after the specified period, they receive a cut of the total stake in the game. If users don’t meet their goals, the money they put in is distributed to the other players. The business model of StepBet tells us that StepBet retains 15% of the total pot, unless the game only consists of paying premium users (Stepbet, 2018).

Although not all the money goes towards the players, StepBet has been proven to be very effective in motivating players. Past research has shown that long-term motivation and engagement is increased by providing a combination of user interface elements, financial- and social incentives for exercise (Mitchell et al., 2013). Next to central financial incentives, the online community potentially influences the participation rate of StepBet by motives such as enjoyment or reputation in the community (Hamari, Sjöklint, & Ukkonen, 2016). The feeling of connectedness is both present in the community and within the games, although the players within the game could be less positive due to the competitive nature of the game. After all, the more players fail to meet their goal, the more profit the succeeding players receive.

Efficiency Criteria

The business model of StepBet is quite unusual, yet it seems that both the company and the connected users benefit from the system. StepBet receives revenue of participating users or paid memberships, but their business model also encourages physical activity. While StepBet does take a share of the profit that is actually meant for the ones that accomplish their goals, those users don’t really notice. Simultaneously, the users do reach their goals while potentially earning some money and participating in a rising community.  Therefore the joint profitability is considered high.

Although the benefits are clear for the parties that use StepBet, the future is not that clear. Because the business model is new in a sense that users bet money for their own physical activity, the final version of the app should maintain a strict policy. Some examples of risks that StepBet is facing are cheating users and the appropriate penalties,  the security of financial resources, and legal issues. According to the law, users StepBet are not officially gambling, but the company is undoubtedly subject to strict regulations. The current terms and agreements are extensive, but it is very important to reevaluate them regularly.  A final potential risk is the high competitiveness within the community of the platform, which may cause contrary effect of an online community as discussed before (Hamari et al., 2016). However, the social-political environment could provide opportunities since it helps to increase the worldwide activity levels of the populations and similarly, the people using the app seem to be very satisfied with the results (according to the online reviews; 4,5 star rating on Google play and Apple store). Concluding, the institutional environment is not as favorable as the joint profitability due to some risks and the subjugation of regulations, but should not block the growth of StepBet as a whole.


Chen, Y., & Pu, P. (2014, April). HealthyTogether: exploring social incentives for mobile fitness applications. In Proceedings of the second international symposium of chinese chi (pp. 25-34). ACM.

Hamari, J., Sjöklint, M., & Ukkonen, A. (2016). The sharing economy: Why people participate in collaborative consumption. Journal of the Association for Information Science and Technology67(9), 2047-2059.

Mitchell, M. S., Goodman, J. M., Alter, D. A., John, L. K., Oh, P. I., Pakosh, M. T., & Faulkner, G. E. (2013). Financial incentives for exercise adherence in adults: systematic review and meta-analysis. American journal of preventive medicine45(5), 658-667.

NCD Risk Factor Collaboration. (2016). Trends in adult body-mass index in 200 countries from 1975 to 2014: a pooled analysis of 1698 population-based measurement studies with 19· 2 million participants. The Lancet387(10026), 1377-1396.

Stepbet (2018). Walk More. Win Money | StepBet for iOS. [online] Available at: [Accessed 18 Feb. 2018].