Decoding backers’ pledging decisions with incomplete information in reward-based crowdfunding

What the paper says

Purpose This study aims to examine the transformative impact of crowdfunding on entrepreneurial ventures, focusing on backers’ decision-making on reward-based platforms. It investigates why crowdfunding is popular among creators and backers, despite the inconsistent success rates of projects. The study empirically analyzes the factors influencing backers’ pledging decisions, particularly past crowdfunding experience, herding behavior and product innovativeness. By exploring these dimensions, the research aims to provide insights into backers’ decision-making dynamics in crowdfunding. Design/methodology/approach The study used logistic and ordered logistic regression models to assess the effects of key determinants, including prior crowdfunding experience, herding behavior and perceived product innovativeness. A total of 402 valid responses were collected from individuals with experience on a reward-based crowdfunding platform. The model specifications tested both the likelihood of changes in backers’ initial decisions and their final pledging intentions. Findings Backers’ crowdfunding experience significantly increases the likelihood of changing their initial decisions. The number of backers positively influences impulse purchases. However, product innovativeness does not have a statistically significant impact. Interestingly, the interaction between crowdfunding experience and time pressure – measured by the number of remaining days – reveals that backers are more likely to alter their decisions in the early stages of campaigns, contrary to expectations. Originality/value This research examines how crowdfunding transforms entrepreneurial ventures by analyzing backers’ decision-making on reward-based platforms. Despite its popularity, project success rates vary, highlighting the need to understand decisions made with incomplete information. Using a multi-step approach that includes literature review, campaign analysis and online surveys, the study explores factors influencing impulse purchases. Findings show that backers’ crowdfunding experience and campaign dynamics significantly affect decision changes, offering implications for campaign management. This study provides valuable insights into backer behavior and practical guidance for creators and platform operators to optimize crowdfunding campaigns.