Love cannot buy you money: Resource exchange on reward‐based crowdfunding platforms. (4th January 2021)

• Record Type: Journal Article
• Authors: James, Tabitha L.; Shen, Wenqi; Townsend, David M.; Junkunc, Marc; Wallace, Linda
• Is Part Of: Information systems journal. Volume 31:Number 4(2021)
• Page Start: 579
• Page End: 609
• Publication Date: 2021-01-04
• Subjects: economic exchange -- Kickstarter -- resource theory of social exchange -- reward portfolios -- reward‐based crowdfunding -- social exchange theory; Information technology -- Periodicals; Management information systems -- Periodicals; 303.4833
• DOI: 10.1111/isj.12321
• Languages: English
• ISSNs: 1350-1917

Abstract

Abstract: Reward‐based crowdfunding platforms – in which campaigns exchange rewards for financial backing to develop a product or service – are one of the fastest‐growing segments of the crowdfunding industry. We use an extension of social exchange theory (SET) called the resource theory of social exchange (RTSE) to examine resource exchanges through rewards on Kickstarter. A resource exchange occurs when a project backer and project creator exchange money (ie, financial backing) for a reward (eg, a thank you or a t‐shirt). A project creator can develop a reward portfolio that contains various types of resources, which in the RTSE are categorised as love, status, information, money, goods and services. Our study provides a comprehensive examination of resource exchange on a major reward‐based crowd funding platform, answering the call to investigate the effects of a key element of such platforms – rewards. We find that the types of resources project creators include in the reward portfolios they offer should be carefully considered. Specifically, our results indicate it is more beneficial to offer rewards that contain universal and concrete resources (eg, goods, services) than resources that are particularistic and symbolic (eg, love, status). However, the positive effect of offering universal and concrete resources as rewards is diminished as the fundraising goal is increased, which suggests that the optimal design of the reward portfolio is contingent on other characteristics of the campaign. Moreover, our findings reveal that while it is advantageous to offer more rewards, it is disadvantageous to offer too many different types of resources across those rewards. Overall, our study adds depth to the understanding of resource exchange in reward‐based crowdfunding and provides practical insight into how to design reward portfolios.