Winner Takes All? The Blockbuster Effect on Crowdfunding Platforms

Zhiyi Wang (), Lusi Yang () and Jungpil Hahn ()
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Zhiyi Wang: Organizational Leadership and Information Analytics, Leeds School of Business, University of Colorado Boulder, Boulder, Colorado 80309
Lusi Yang: Computer Information Systems, J. Mack Robinson College of Business, Georgia State University, Atlanta, Georgia 30303
Jungpil Hahn: Information Systems and Analytics, School of Computing, National University of Singapore, Singapore 117417

Information Systems Research, 2023, vol. 34, issue 3, 935-960

Abstract: Crowdfunding platforms are characterized by an uneven distribution of quality and resources. Some projects achieve outstanding and exceptional performance. Those projects, which we call “blockbuster projects,” are believed to have a considerable impact on crowdfunding platforms, especially on other concurrent projects. There are two plausible yet opposing predictions: they may exhibit both a negative effect by monopolizing backer attention and resources and a positive effect by increasing the activeness of backer side. This tension could be further complicated, considering that blockbusters are inherently heterogeneous, which could result in different interrelations with other concurrent projects. To fully understand this tension, this study examines the effects of blockbuster projects on the overall performance of concurrent projects on the platform and the nuances of such effects for different interrelations between blockbusters and other projects. Drawing on the cross-side network effects literature and integrating insights from the unique features of crowdfunding, we develop a theoretical framework that highlights the multidimensional view of blockbuster effects: we propose that blockbuster projects have an overall positive effect on the performance of concurrent projects ( overall effect ), and such positive effect is stronger for related blockbusters ( local effect ) and blockbusters emerging before the focal project ( temporal effect ). Using data from a leading reward-based crowdfunding platform, the proposed hypotheses are tested and largely supported. Additional analyses, based on off-platform data and backer data, verify the mechanism driving the blockbuster effects: blockbusters increase the popularity of the platform, whereby backers participating in the blockbusters tend to develop positive impressions and heightened expectations, so that they are likely to participate in other concurrent projects. This study contributes to the crowdfunding literature on interactions among projects, the literature on distinctive agents in online markets, and the cross-side network effects literature. We also discuss practical implications for project creators and platform operators.

Keywords: blockbuster effects; cross-side network effects; overall effect; local effect; temporal effect; backer participation; economics of crowdfunding (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orisre:v:34:y:2023:i:3:p:935-960

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