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Reward-based crowdfunding of entrepreneurial projects: the effect of local altruism and localized social capital on proponents’ success

Giancarlo Giudici, Massimiliano Guerini and Cristina Rossi-Lamastra ()
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Giancarlo Giudici: Politecnico di Milano - School of Management
Massimiliano Guerini: Politecnico di Milano - School of Management
Cristina Rossi-Lamastra: Politecnico di Milano - School of Management

Small Business Economics, 2018, vol. 50, issue 2, 307-324

Abstract: Abstract Despite the omnipresent reach of the Internet, evidence exists that geography matters in crowdfunding. This paper shows that some salient characteristics of the geographical area in which entrepreneurs reside affect the success of the crowdfunding projects they propose. Specifically, we theoretically discuss and empirically document that the altruism of people residing in the area (i.e., local altruism) increases the likelihood of success. Moreover, the strength of this effect depends on the level of social capital in the area (i.e., localized social capital). Building on the extant literature, we claim that localized social capital has two main dimensions: the social relations among residents and their compliance with social norms. Using a dataset of 618 proponents that launched 457 crowdfunding projects on 13 Italian reward-based platforms, we find that social relations magnify the effect of local altruism. Conversely, compliance with social norms does not have any moderating effect.

Keywords: Reward-based crowdfunding; Crowdfunding of entrepreneurial projects; Local altruism; Localized social capital (search for similar items in EconPapers)
JEL-codes: G3 L26 (search for similar items in EconPapers)
Date: 2018
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