Coordination and Dynamic Promotion Strategies in Crowdfunding with Network Externalities

Zhuoxin Li, Jason A. Duan and Sam Ransbotham

Production and Operations Management, 2020, vol. 29, issue 4, 1032-1049

Abstract: Crowdfunding, a peer‐to‐peer fundraising mechanism, solicits capital from individual backers to support entrepreneurial projects. Entrepreneurs set a funding target and deadline; the project will be funded only if it reaches this funding target by the deadline. Backers individually decide whether to contribute, but their total contributions collectively determine whether the project will be successfully funded. This study models the dynamics of backers’ contributions in the presence of success uncertainty and analyzes managerial promotion strategies to maximize the likelihood of funding success. Two opposing forces affect backer decisions: backers are more likely to back a project that has already reached a greater fraction of its funding goal (positive externalities), but the backing propensity declines over time (negative deadline effects). These two competing forces give rise to a time‐dependent critical threshold of funding that a project must attain to achieve successful funding. We evaluate actionable promotion strategies (when to promote the project and how much promotion effort to spend) for entrepreneurs to dynamically manage their crowdfunding campaigns.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
https://doi.org/10.1111/poms.13150

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:popmgt:v:29:y:2020:i:4:p:1032-1049

Ordering information: This journal article can be ordered from
http://onlinelibrary ... 1111/(ISSN)1937-5956

Access Statistics for this article

Production and Operations Management is currently edited by Kalyan Singhal

More articles in Production and Operations Management from Production and Operations Management Society
Bibliographic data for series maintained by Wiley Content Delivery ().