Understanding the Joint Impact of Reward Option Quantity and Uncertainty on the Reward-based Crowdfunding Performance

Reward-based crowdfunding has become the most prevalent form of online crowdfunding. The market size of this innovative funding approach was US$2.68 billion globally in 2015 and it has grown exponentially in recent years (CrowdfundbeatDataCenter 2016). In a reward-based crowdfunding, the fundraisers usually provide a reward scheme, which is a list of reward options with varying funding prices, yields, and the odds of securing the yield, to project backers. Most of the researchers believe that the reward scheme is a key determinant of the reward-based crowdfunding performance (Kunz et al. 2016). They have conducted a series of studies that investigated the impact of reward scheme’s disposition (Ryu and Kim 2017). Amongst them, however, the joint impact of reward option quantity and reward option uncertainty has not been carefully examined. Thus, it creates an empirical vacuum in addressing the research question: how do reward option quantity and reward option uncertainty jointly influence reward-based crowdfunding performance?

The reward-based crowdfunding performance can be assessed by examining the effectiveness of fundraising (e.g., fundraising performance), as well as the project backers’ decision- making experience of backing the project (e.g., participation performance) (Du and Wang 2016). Specifically, the reward option quantity and uncertainty are two important antecedents of the crowdfunding performance (Mollick 2014). During project backers’ decision-making process, the reward option uncertainty could increase their cognitive cost in choosing the preferred option, thus influencing the crowdfunding performance (Pavlou et al. 2007). However, prior literature did not clearly identify the project backers’ decision-making behavior in selecting reward option under different reward option quantity conditions. This empirical gap impedes scholars and practitioners alike from identifying the deliberate design of the reward scheme that could potentially maximize the crowdfunding performance. Thus, the investigation of the proposed research question could significantly improve our theoretical understanding of the underlying mechanism of the joint impact, which has been largely overlooked in the extant crowdfunding literature.

In this project, we adopt the theoretical underpinning of the assortment research and human’s decision-making to conduct a series of studies. The multi-method approach will be applied. Based on the empirical investigations, we will highlight the practical implications for fundraisers and service providers in Hong Kong (but not limited to this area) who are currently engaging in online crowdfunding or contemplating such a move. In addition, the practical implication on designing the reward scheme in crowdfunding would also serve as an important strategic tool for commercial and research purposes.