Institutional background in crowdfunding: trust, signals, and backers’ decisions

Prabal Shrestha, Veroniek Collewaert and James Thewissen
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Prabal Shrestha: Université catholique de Louvain, LIDAM/LFIN, Belgium
Veroniek Collewaert: KU Leuven
James Thewissen: Université catholique de Louvain, LIDAM/LFIN, Belgium

No 2026005, LIDAM Reprints LFIN from Université catholique de Louvain, Louvain Finance (LFIN)

Abstract: We propose that institutional backgrounds derived from the project location and the entrepreneur’s country-of-origin act as heuristic cues that facilitate swift trust judgment and, therefore, influence international digital exchange decisions. Using a dataset of 101,583 Kickstarter campaigns, we find that stronger institutional environments linked to the project and the entrepreneur positively affect backers’ participation. Moreover, the two institutional cues can compensate for one another. We also show that stronger institutional background of the project (yet not the entrepreneur) enhances low-cost signals’ credibility; and in the presence of some high-cost signals, institutional background (of the entrepreneur in particular) is less consequential.

Keywords: Crowdfunding; Transaction platforms; Institutions; Signaling; Financing (search for similar items in EconPapers)
JEL-codes: F39 G41 L26 M13 (search for similar items in EconPapers)
Pages: 50
Date: 2026-04-15
Note: In: Small Business Economics, 2026, vol. 67(2), p. 865-914
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Persistent link: https://EconPapers.repec.org/RePEc:ajf:louvlr:2026005

DOI: 10.1007/s11187-026-01209-4

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