The value of backers’ word-of-mouth in crowdfunding projects filtering: an empirical investigation

Haichao Zheng (), Zihao Qi (), Xin Luo (), Liting Li () and Bo Xu ()
Additional contact information
Haichao Zheng: Southwestern University of Finance and Economics
Zihao Qi: Southwestern University of Finance and Economics
Xin Luo: University of New Mexico
Liting Li: Southwestern University of Finance and Economics
Bo Xu: Fudan University

Electronic Commerce Research, 2020, vol. 20, issue 4, No 4, 757-782

Abstract: Abstract The current study aims to investigate whether backers’ electronic word-of-mouth (eWOM) is a valuable input when it comes to generating collective intelligence for projects filtering in crowdfunding. Based on theories of collective intelligence and WOM, we developed a research model and conducted an empirical study using a cross-section dataset with 845 crowdfunding projects and a panel dataset of the funding dynamics of those projects. The results indicated that backers’ negative WOM rather than positive WOM can effectively predict project implementation performance. Besides, for entrepreneurs with a high reputation, negative WOM has stronger predictive power for the complaints of product quality. We also found that projects with more accumulated negative WOM tend to attract fewer subsequent backers. Compared with positive WOM, negative WOM has a stronger effect on subsequent investments in a crowdfunding project. Finally, positive WOM can reduce the diffusion of responsibility effect in crowdfunding, that is, a backer is less likely to take responsibility for investing in a project when others have already backed it. Based on these findings, we conclude that backers’ WOM, especially the negative WOM, contributes to projects filtering in crowdfunding.

Keywords: Reward-based crowdfunding; Word-of-mouth; Projects filtering; Collective intelligence; Crowd-based filtering (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s10660-018-9322-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:elcore:v:20:y:2020:i:4:d:10.1007_s10660-018-9322-y

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10660

DOI: 10.1007/s10660-018-9322-y

Access Statistics for this article

Electronic Commerce Research is currently edited by James Westland

More articles in Electronic Commerce Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().