Research on crowdfunding decision making has focused on the effortful analysis of the focal entity’s characteristics while paying less attention to the heuristics and oftentimes observations of similar entities. A recent study by Megan Yuan Li investigated the role of category, in particular category legitimacy spillover, in investors’ decisions. The work is published in Entrepreneurship: Theory and Practice (ETP), one of the top 50 leading journals in the business and management field (FT50) and rated as 4 star according to the ABS ranking list. The abstract of the paper is copied below.

Research on entrepreneurial crowdfunding has focused limited attention to the role of category in investors’ decisions. We examine the legitimacy spillover effect of projects within the same category of industry on the focal project’s fundraising. We decompose category legitimacy into two types—stable versus transient—and investigate their distinct effects on fundraising. Our dataset, derived from 31,767 projects on Kickstarter from 2010 to 2020, confirms the spillover effect of category legitimacy on entrepreneurial fundraising. Furthermore, the spillover effect of stable legitimacy is much stronger than that of transient legitimacy, and this effect weakens when entrepreneurs have greater past successes.

Figure Category legitimacy and entrepreneurial fundraising

If you are interested in the research, please read the paper:

Li, Megan Yuan; Dong, Cancan; Makino, Shige. 2022. Does a past category’s success influence existing entrepreneurial fundraising? A legitimacy spillover perspective. Entrepreneurship Theory and Practice. DOI: 10.1177/10422587221138228.

A full version of this article could be viewed at: 

http://dx.doi.org/10.1177/10422587221138228