In recent years, entrepreneurs have increasingly turned to crowdfunding, a new form of entrepreneurial finance, to fund projects. While research has shown that signals originating from the entrepreneur and project can affect the outcome of crowdfunding, how different signals work together under different signalling environments remains underexplored. Drawing on signalling theory, we examine how signals of entrepreneurs’ credibility (success, failure, backer, and industry experience) and project quality (preparedness and third party endorsements) produce crowdfunding success in different signalling environments. We collected a unique dataset with matched projects listed on both Kickstarter and Indiegogo, but with different funding models, to represent two distinct signalling environments. Results based on qualitative comparative analysis (QCA) identify two distinct signalling patterns that show entrepreneur’s credibility and project quality signals can complement each other to produce crowdfunding success. In an environment with less uncertainty, entrepreneur’s credibility in terms of crowdfunding experience can also compensate absent project quality to produce crowdfunding success. In an environment with higher uncertainty, entrepreneur’s credibility and project quality need to be both present to establish the necessary legitimacy for crowdfunding to be successful. Further, by integrating positive (i.e., success) as well as negative (i.e., failure) signals, we demonstrate how signal incongruence can enhance crowdfunding success.
- signalling theory
- qualitative comparative analysis (QCA)
- entrepreneurial finance