Launching for success: The effects of psychological distance and mental simulation on funding decisions and crowdfunding performance

Stefan Rose, Daniel Wentzel, Christian Hopp, Jermain Kaminski*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This research examines how potential backers form mental representations of products in reward-based crowdfunding campaigns, and how these representations affect funding decisions and campaign performance. To test our framework, we conducted four experiments and also drew on a sample of 961 Kickstarter campaigns. Our results show that two campaign characteristics – the product's development stage and the indicated time to product delivery – determine the psychological distance that supporters experience in response to a campaign, and that psychological distance, in turn, inhibits individual campaign contributions and cumulative campaign success. Furthermore, we find that encouraging supporters to imagine the benefits of product usage is an effective means to increase support for campaigns that elicit high psychological distance.
Original languageEnglish
Article number106021
JournalJournal of Business Venturing
Volume36
Issue number6
Early online date13 May 2020
DOIs
Publication statusPublished - Nov 2021

JEL classifications

  • g24 - "Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies"
  • g32 - "Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill"

Keywords

  • Crowdfunding
  • New product development
  • Entrepreneurial financing
  • Construal level theory
  • Psychological distance
  • Mental simulation

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