The wisdom of the crowd in funding: information heterogeneity and social networks of crowdfunders
Friedemann Polzin (),
Helen Toxopeus and
Erik Stam ()
Additional contact information
Friedemann Polzin: Utrecht University School of Economics (USE)
Helen Toxopeus: Erasmus School of Accounting and Assurance
Small Business Economics, 2018, vol. 50, issue 2, 251-273
Abstract Crowdfunding has enabled large crowds to fund innovative projects. This type of funding might tap into the wisdom of crowds who were previously disconnected from the funding process. We distinguish between in-crowd and out-crowd funders (with and without ties to project creators) in order to test for heterogeneity in their information use. Based on the analysis of a large-scale survey amongst project funders, this paper shows that in-crowd investors rely more on information about the project creator than out-crowd investors. Out-crowd investors do not seem to attach more importance to information about the project itself than in-crowd investors, except in the case of donation-based crowdfunding. For financial return crowdfunding, financial information becomes less important once a strong relationship with the project creator is established. Our study allows project creators to target information to specific audiences based on their relationship strength across different types of crowdfunding projects.
Keywords: Crowdfunding; Social networks; New ventures; Entrepreneurial finance; Information asymmetries; G23; G32; D82; D85; L26 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s11187-016-9829-3 Abstract (text/html)
Access to full text is restricted to subscribers.
Working Paper: The wisdom of the crowd in funding:: Information heterogeneity and social networks of crowdfunder (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:50:y:2018:i:2:d:10.1007_s11187-016-9829-3
Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/11187/PS2
Access Statistics for this article
Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch
More articles in Small Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla ().