Asia pacific journal of information systems

The Korea Society of Management Information Systems (한국경영정보학회)
권호 표지
DOI QR코드

DOI QR Code

Examining the Effects of Vocabulary on Crowdfunding Success: A Comparison of Cultural and Commercial Campaigns

  • Xiang Gao (Research Center of Finance, Shanghai Business School) ;
  • Weige Huang (Wenlan School of Business, Zhongnan University of Economics and Law) ;
  • Bin, Li (Raj Soin College of Business, Wright State University) ;
  • Sunghan Ryu (USC-SJTU Institute of Cultural and Creative Industry, Shanghai Jiao Tong University)
  • Received : 2021.07.07
  • Accepted : 2022.03.23
  • Published : 2022.06.30
Download PDF
⟨ Previous Next ⟩

Abstract

Crowdfunding has emerged as an important financing source for diverse cultural projects and commercial ventures in the early stages. Unlike traditional investment evaluation, where structured financial data is critical, such information is typically unavailable for crowdfunding campaigns. Instead, campaign creators prepare pitches containing essential information about themselves and the campaigns, which are crucial in attracting and persuading contributors. Prior literature has examined the effects of different aspects in campaign pitches, but a comprehensive understanding of the theme is lacking. This study aims to fill this gap by identifying the lexicon of frequently used vocabulary in campaign pitches and examining how they are associated with crowdfunding success. Moreover, we examine how the association differs between culture and commercial crowdfunding campaigns. We randomly collected 50,000 campaigns from the cultural and commercial categories on Kickstarter and extracted the 100 most used verbs in the campaign pitches. Based on a machine learning approach combined with principal component analysis, we constructed sets of verbal factors statistically significant in predicting crowdfunding success. The findings also show that cultural and commercial campaigns consist of different verbal components with different effects on crowdfunding success.

Keywords

References

  1. Agrawal, A., Catalini, C., and Goldfarb, A. (2015). Crowdfunding: Geography, social networks, and the timing of investment decisions. Journal of Economics & Management Strategy, 24(2), 253-274. https://doi.org/10.1111/jems.12093
  2. Adaval, R., and Wyer Jr., R. S. (1998). The role of narratives in consumer information processing. Journal of Consumer Psychology, 7(3), 207-245. https://doi.org/10.1207/s15327663jcp0703_01
  3. Ahlers, G. K. C., Cumming, D., Gunther, C., and Schweizer, D. (2015). Signaling in equity crowdfunding. Entrepreneurship Theory and Practice, 39(4), 955-980. https://doi.org/10.1111/etap.12157
  4. Allison, T. H., Davis, B. C., Short, J. C., and Webb, J. W. (2015). Crowdfunding in a prosocial microlending environment: Examining the role of intrinsic versus extrinsic cues. Entrepreneurship Theory and Practice, 39(1), 53-73. https://doi.org/10.1111/etap.12108
  5. Alsos, G. A., and Ljunggren, E. (2017). The role of gender in entrepreneur-investor relationships: A signaling theory approach. Entrepreneurship Theory and Practice, 41(4), 567-590.
  6. Anglin, A. H., Short, J. C., Drover, W., Stevenson, R. M., McKenny, A. F., and Allison, T. H. (2018). The power of positivity? The influence of positive psychological capital language on crowdfunding performance. Journal of Business Venturing, 33(4), 470-492. https://doi.org/10.1016/j.jbusvent.2018.03.003
  7. Bapna, S. (2019). Complementarity of signals in early stage equity investment decisions: Evidence from a randomized field experiment. Management Science, 65(2), 933-952. https://doi.org/10.1287/mnsc.2017.2833
  8. Basu, S., Ma, X., and Tran, H. (2021). Measuring multidimensional investment opportunity sets with 10-K text. Available at SSRN. Retrieved from https://ssrn.com/abstract=3372691.
  9. Baumeister, R. F., Bratslavsky. E., Finkenauer, C., and Vohs, K. D. (2001). Bad is stronger than good. Review of General Psychology, 5(4), 323-370. https://doi.org/10.1037/1089-2680.5.4.323
  10. Beier, M., and Wagner, K. (2015). Crowdfunding success: A perspective from social media and e-commerce. ICIS 2015 Proceedings.
  11. Belleflamme, P., Lambert, T., and Schwienbacher, A. (2014). Crowdfunding: Tapping the right crowd. Journal of Business Venturing, 29(5), 585-609. https://doi.org/10.1016/j.jbusvent.2013.07.003
  12. Bettman, J. R. (1970). Information processing models of consumer behavior. Journal of Marketing Research, 7(3), 370-376. https://doi.org/10.1177/002224377000700314
  13. Bruton, G., Khavul, S., Siegel, D., and Wright, M. (2015). New financial alternatives in seeding entrepreneurship: Microfinance, crowdfunding, and peer-to-peer innovations. Entrepreneurship Theory and Practice, 39(1), 9-26. https://doi.org/10.1111/etap.12143
  14. Burger, T., and Kleinert, S. (2021). Crowdfunding cultural and commercial entrepreneurs: An empirical study on motivation in distinct backer communities. Small Business Economics, 57(2), 667-683. https://doi.org/10.1007/s11187-020-00419-8
  15. Burtch, G., Ghose, A., and Wattal, S. (2013). An empirical examination of the antecedents and consequences of contribution patterns in crowd-funded markets. Information Systems Research, 24(3), 499-519. https://doi.org/10.1287/isre.1120.0468
  16. Burtch, G., Ghose, A., and Wattal, S. (2015). The hidden cost of accommodating crowdfunder privacy preferences: A randomized field experiment. Management Science, 61(5), 949-962. https://doi.org/10.1287/mnsc.2014.2069
  17. Burtch, G., Hong, Y., and Liu, D. (2018). The role of provision points in online crowdfunding. Journal of. Management Information Systems, 35(1), 117-144. https://doi.org/10.1080/07421222.2018.1440764
  18. Buttice, V., Colombo, M. G., and Wright, M. (2017). Serial crowdfunding, social capital, and project success. Entrepreneurship Theory and Practice, 41(2), 183-207. https://doi.org/10.1111/etap.12271
  19. Cai, W., Polzin, F., and Stam, E. (2021). Crowdfunding and social capital: A systematic review using a dynamic perspective. Technological Forecasting and Social Change, 162, 120412.
  20. Cerchiello, P., and Scaramozzino, R. (2020). On the improvement of default forecast through textual analysis. Frontiers in Artificial Intelligence, 3(16), PMID: 33733135; PMCID: PMC7861220.
  21. Chan, C. R., Park, H. D., Huang, J. Y., & Parhankangas, A. (2020). Less is more? Evidence for a curvilinear relationship between readability and screening evaluations across pitch competition and crowdfunding contexts. Journal of Business Venturing Insights, 14, e00176.
  22. Cholakova, M., and Clarysse, B. (2015). Does the possibility to make equity investments in crowdfunding projects crowd out reward-based investments?. Entrepreneurship Theory and Practice, 39(1), 145-172. https://doi.org/10.1111/etap.12139
  23. Ciuchta, M. P., Letwin, C., Stevenson, R. M., and McMahon, S. R. (2016). Regulatory focus and information cues in a crowdfunding context. Applied Psychology, 65(3), 490-514. https://doi.org/10.1111/apps.12063
  24. Colombo, M. G., Franzoni, C., and Rossi-Lamastra C. (2015). Internal social capital and the attraction of early contributions in crowdfunding. Entrepreneurship Theory and Practice, 39(1), 75-100. https://doi.org/10.1111/etap.12118
  25. Connelly, B. L., Certo, S. T., Ireland, R. D., and Reutzel, C. R. (2011). Signaling theory: A review and assessment. Journal of Management, 37(1), 39-67. https://doi.org/10.1177/0149206310388419
  26. Courtney, C., Dutta, S., and Li, Y. (2017). Resolving information asymmetry: Signaling, endorsement, and crowdfunding success. Entrepreneurship Theory and Practice, 41(2), 265-290. https://doi.org/10.1111/etap.12267
  27. Crosetto, P., and Regner, T. (2018). It's never too late: funding dynamics and self pledges in reward-based crowdfunding. Research Policy, 47(8), 1463-1477. https://doi.org/10.1016/j.respol.2018.04.020
  28. Dacin, P. A., Dacin, M. T., and Matear, M. (2010). Social entrepreneurship: Why we don't need a new theory and how we move forward from here. Academy of Management Perspectives, 24(3), 37-57.
  29. Dai, H., and Zhang, D. J. (2019). Prosocial goal pursuit in crowdfunding: Evidence from Kickstarter. Journal of Marketing Research, 56(3), 498-517. https://doi.org/10.1177/0022243718821697
  30. Davis, B. C., Hmieleski, K. M., Webb, J. W., and Coombs, J. E. (2017). Funders' positive affective reactions to entrepreneurs' crowdfunding pitches: The influence of perceived product creativity and entrepreneurial passion. Journal of Business Venturing, 32(1), 90-106. https://doi.org/10.1016/j.jbusvent.2016.10.006
  31. Dern, D. (2014). Crowdfunding for hardware. IEEE Spectrum, 52(1), 22-23. https://doi.org/10.1109/MSPEC.2015.6995625
  32. Diane S. B., Pennebaker, J. W., Mueller, J. S., and Hiller, W. S. (1997). Linguistic bases of social perception. Personality and Social Psychology Bulletin, 23(5) 526-537. https://doi.org/10.1177/0146167297235008
  33. Dikaputra, R., Sulung, L. A., and Kot, S. (2019). Analysis of success factors of reward-based crowdfunding campaigns using multi-theory approach in ASEAN-5 countries. Social Sciences, 8(10), 293.
  34. Fiedler, K. (2008). Language: A toolbox for sharing and influencing social reality. Perspectives on Psychological Science, 3(1), 38-47. https://doi.org/10.1111/j.1745-6916.2008.00060.x
  35. Formanowicz, M., Roessel, J., Suitner, C., and Maass, A. (2017). Verbs as linguistic markers of agency: The social side of grammar. European Journal of Social Psychology, 47(5), 566-579. https://doi.org/10.1002/ejsp.2231
  36. Frydrych, D., Bock, A. J., Kinder, T., and Koeck, B. (2014). Exploring entrepreneurial legitimacy in reward-based crowdfunding. Venture Capital, 16(3), 247-269. https://doi.org/10.1080/13691066.2014.916512
  37. Gafni, H., Marom, D., and Sade, O. (2019). Are the life and death of an early-stage venture indeed in the power of the tongue? Lessons from online crowdfunding pitches. Strategic Entrepreneurship Journal, 13(1), 3-23. https://doi.org/10.1002/sej.1293
  38. Gosain, S., and Agrawal, N. (2021). Factors affecting the financial success of crowdfunding campaigns: A systematic literature review. South Asian Journal of Management, 28(3), 132-164.
  39. Grimshaw, J. (2005). Semantic structure and semantic content in lexical representation. In J. Grimshaw (Ed.), Words and Structure (pp. 75-89). Stanford: CSLI.
  40. Hobbs, J., Grigore, G., and Molesworth, M. (2016). Success in the management of crowdfunding projects in the creative industries. Internet Research, 26(1), 146-166. https://doi.org/10.1108/IntR-08-2014-0202
  41. Kaminski, J. C., and Hopp, C. (2019). Predicting outcomes in crowdfunding campaigns with textual, visual, and linguistic signals. Small Business Economics, 55, 627-649.
  42. Kang, L., Jiang, Q., and Tan, C. H. (2017). Remarkable advocates: An investigation of geographic distance and social capital for crowdfunding. Information and Management, 54(3), 336-348. https://doi.org/10.1016/j.im.2016.09.001
  43. Kim, K., and Viswanathan, S. (2018). The experts in the crowd: The role of experienced investors in a crowdfunding market. MIS Quarterly, 43(2), 347-372.
  44. Kim, M., McGregor, K. K., and Thompson, C. K. (2000). Early lexical development in English- and Korean-speaking children: Language-general and language-specific patterns. Journal of Child Language, 27, 225-254. https://doi.org/10.1017/S0305000900004104
  45. Kuppuswamy, V., and Bayus, B. L. (2017). Does my contribution to your crowdfunding project matter?. Journal of Business Venturing, 32(1), 72-89. https://doi.org/10.1016/j.jbusvent.2016.10.004
  46. Koch, J. A., and Siering, M. (2015). Crowdfunding success factors: The characteristics of successfully funded projects on crowdfunding platforms. Proceedings of the 23rd European Conference on Information Systems (ECIS 2015). Muenster, Germany.
  47. Lee, C. H., Bian, Y., Karaouzene, R., and Ahmed, N. (2019). Roles of narrative in civic crowdfunded project: Linguistic style, message substance, and crowdfunding success. Industrial Management and Data Systems, forthcoming.
  48. Leone, D., and Schiavone, F. (2019). Innovation and knowledge sharing in crowdfunding: How social dynamics affect project success. Technology Analysis, 37, 803-816. https://doi.org/10.1080/09537325.2018.1554858
  49. Li, Y., Xiao, N., and Wu, S. (2021). The devil is in the details: The effect of nonverbal cues on crowdfunding success. Information and Management, 58(8), 103528.
  50. Lin, M., and Viswanathan, S. (2016). Home bias in online investments: An empirical study of an online crowdfunding market. Management Science, 62(5), 1393-1414. https://doi.org/10.1287/mnsc.2015.2206
  51. Lin, Y., Boh, W. F., and Goh, K. H. (2014). How different are crowdfunders? Examining archetypes of crowdfunders and their choice of projects. Academy of Management Proceedings. 13309.
  52. Lion, R. W., and Bolinger, A. R. (2016). An assessment of pronouns as linguistic cues for predicting work attitudes. Performance Improvement Quarterly, 29(2), 125-144. https://doi.org/10.1002/piq.21221
  53. Liu, D., Brass, D., Lu, Y., and Chen, D. (2015). Friendships in online peer-to-peer lending: Pipes, prisms, and relational herding. MIS Quarterly, 39(3), 729-742. https://doi.org/10.25300/MISQ/2015/39.3.11
  54. Lounsbury, M., and Glynn, M. A. (2001). Cultural entrepreneurship: Stories, legitimacy, and the acquisition of resources. Strategic Management Journal, 22(6-7), 545-564. https://doi.org/10.1002/smj.188
  55. Maass, A., Karasawa, M., Politi, F., and Suga, S. (2006). Do verbs and adjectives play different roles in different cultures? A cross-linguistic analysis of person representation. Journal of Personality and Social Psychology, 90(5), 734-750. https://doi.org/10.1037/0022-3514.90.5.734
  56. Madrazo-Lemarroy, P., Barajas-Portas, K., and Labastida Tovar, M. E. (2019). Analyzing campaign's outcome in reward-based crowdfunding: Social capital as a determinant factor. Internet Research, 29(5), 1171-1189. https://doi.org/10.1108/INTR-03-2018-0115
  57. Manning, S., and Bejarano, T. A. (2017). Convincing the crowd: Entrepreneurial storytelling in crowdfunding campaigns. Strategic Organization, 15(2), 194-219. https://doi.org/10.1177/1476127016648500
  58. Martens, M. L., Jennings, J. E., and Jennings, P. D. (2007). Do the stories they tell get them the money they need? The role of entrepreneurial narratives in resource acquisition. Academy of Management Journal, 50(5), 1107-1132. https://doi.org/10.5465/amj.2007.27169488
  59. Mitra, T., and Gilbert, E. (2014). The language that gets people to give: Phrases that predict success on Kickstarter. Proceedings of the 17th ACM Conference on Computer Supported Cooperative Work & Social Computing, 49-61.
  60. Mohammad, S. M., and Turney, P. D. (2010). Emotions evoked by common words and phrases: Using mechanical turk to create an emotion lexicon. Proceedings of the NAACL HLT 2010 Workshop on Computational Approaches to Analysis and Generation of Emotion in Text, 26-34.
  61. Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study. Journal of Business Venturing, 29(1), 1-16. https://doi.org/10.1016/j.jbusvent.2013.06.005
  62. Noonan, D. S., Breznitz, S. M., and Maqbool, S. (2021). Looking for a change in scene: analyzing the mobility of crowdfunding entrepreneurs. Small Business Economics, 57, 685-703. https://doi.org/10.1007/s11187-020-00418-9
  63. Nowak, A., and Smith, P. S. (2017). Textual analysis in real estate. Journal of Applied Econometrics, 32(4), 896-918. https://doi.org/10.1002/jae.2550
  64. Parhankangas, A., and Renko, M. (2017). Linguistic style and crowdfunding success among social and commercial entrepreneurs. Journal of Business Venturing, 3(2), 215-236. https://doi.org/10.1016/j.jbusvent.2016.11.001
  65. Pennebaker, J. W., Mehl, M. R., and Niederhoffer, K. G. (2003). Psychological aspects of natural language use: Our words, our selves. Annual Review of Psychology, 54, 547-577. https://doi.org/10.1146/annurev.psych.54.101601.145041
  66. Prollochs, N., Feuerriegel, S., and Neumann, D. (2018). Statistical inferences for polarity identification in natural language. PLOS ONE, 13(12), e0209323.
  67. Roundy, P. T., and Asllani, A. (2018). Understanding the language of entrepreneurship: An exploratory analysis of entrepreneurial discourse. Journal of Economic and Administrative Sciences, 35(2), 113-127. https://doi.org/10.1108/JEAS-08-2017-0084
  68. Ryu, S. (2019). Beauty of Crowdfunding: Blooming Creativity and Innovation in the Digital Era. Routledge.
  69. Ryu, S., and Kim, Y. G. (2016). A typology of crowdfunding sponsors: Birds of a feather flock together?. Electronic Commerce Research and Applications, 16, 43-54. https://doi.org/10.1016/j.elerap.2016.01.006
  70. Ryu, S., and Kim, Y. G. (2018). Money is not everything: A typology of crowdfunding project creators. The Journal of Strategic Information Systems, 27(4), 350-368. https://doi.org/10.1016/j.jsis.2018.10.004
  71. Ryu, S., Kim, K., and Hahn, J. (2021). Crowdfunding research in the information systems discipline and beyond: Development and outlook. Asia Pacific Journal of Information Systems, 31(4), 575-581. https://doi.org/10.14329/apjis.2021.31.4.575
  72. Ryu, S., Park, J., Kim, K., and Kim, Y. G. (2020). Reward versus altruistic motivations in reward-based crowdfunding. International Journal of Electronic Commerce, 24(2), 159-183. https://doi.org/10.1080/10864415.2020.1715531
  73. Ryu, S., and Suh, A. (2021). Online service or virtual community? Building platform loyalty in reward-based crowdfunding. Internet Research, 31(1), 315-340. https://doi.org/10.1108/INTR-06-2019-0256
  74. Rijanto, A. (2021). Creative industries project financing through crowdfunding: The roles of fund target & backers. Creative Industries Journal, forthcoming.
  75. Ryan, R. M., and Deci, E. L. (2000). Selfdetermination theory and the facilitation of intrinsic motivation, social development, and well-being. American Psychologist, 55(1), 68-78. https://doi.org/10.1037/0003-066X.55.1.68
  76. Shneor, R. and Munim, Z. H. (2019). Reward crowdfunding contribution as planned behaviour: An extended framework. Journal of Business Research, 103, 56-70. https://doi.org/10.1016/j.jbusres.2019.06.013
  77. Skirnevskiy, V., Bendig, D., and Brettel, M. (2017). The influence of internal social capital on serial creators' success in crowdfunding. Entrepreneurship Theory and Practice, 41(2), 209-236. https://doi.org/10.1111/etap.12272
  78. Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355-374. https://doi.org/10.2307/1882010
  79. Spence, M. (2002). Signaling in retrospect and the informational structure of markets. American Economic Review, 92(3), 434-459. https://doi.org/10.1257/00028280260136200
  80. Strickler, Y. (2011). Shortening the maximum project length. The Kickstarter Blog. Available at: www.kickstarter.com/blog/shortening-the-maximum-project-length.
  81. Stiglitz, J. E. (2002). Information and the change in the paradigm in economics. American Economic Review, 92(3), 460-501. https://doi.org/10.1257/00028280260136363
  82. Thies, F., Wessel, M., and Benlian, A. (2018). Network effects on crowdfunding platforms: Exploring the implications of relaxing input control. Information Systems Journal, 28(6), 1239-1262. https://doi.org/10.1111/isj.12194
  83. Tibshirani, R. (1996). Regression shrinkage and selection via the LASSO. Journal of the Royal Statistical Society Series B-Methodological, 58(1), 267-288. https://doi.org/10.1111/j.2517-6161.1996.tb02080.x
  84. Yang, L., and Hahn, J. (2015). Learning from prior experience: An empirical study of serial entrepreneurs in IT-enabled crowdfunding. In The 36th International Conference on Information Systems. Fort Worth, TX.
  85. Yang, L., Wang, Z., and Hahn, J. (2020). Scarcity strategy in crowdfunding: An empirical exploration of reward limits. Information Systems Research, 31(4), 1107-1131. https://doi.org/10.1287/isre.2020.0934
  86. Zhang, X., Lyu, H., and Luo, J. (2020). What contributes to a crowdfunding campaign's success? Evidence and analyses from GoFundMe data. arXiv preprint, arXiv:2001.05446.
  87. Zheng, H., Li, D., Wu, J., and Xu, Y. (2014). The role of multidimensional social capital in crowdfunding: A comparative study in China and US. Information and Management, 51(4), 488-496. https://doi.org/10.1016/j.im.2014.03.003
  88. Zheng, H., Xu, B., Zhang, J., and Wang, T. (2018). Sponsor's cocreation and psychological ownership in reward-based crowdfunding. Information Systems Journal, 28(6), 1213-1238. https://doi.org/10.1111/isj.12190
  89. Zhou, M. J., Lu, B., Fan, W. P., and Wang, G. A. (2018). Project description and crowdfunding success: An exploratory study. Information Systems Frontiers, 20(2), 259-274. https://doi.org/10.1007/s10796-016-9723-1