Title: Broken promises in crowdfunded projects: reasons and mitigating governance mechanisms

Authors: Sophia Shtepa; Oleksiy Osiyevskyy

Addresses: Haskayne School of Business, University of Calgary, 2500 University Dr NW, Calgary, AB T2N 1N4, Canada ' Haskayne School of Business, University of Calgary, 2500 University Dr NW, Calgary, AB T2N 1N4, Canada

Abstract: Reward-based crowdfunding is a popular method of obtaining financing for new ventures, allowing to attract funding for projects from numerous individual backers, who pledge small amounts of money in return for future products/services, discounts, acknowledgement, or branded merchandise. Yet, more than half of all crowdfunded projects deliver rewards to backers late (i.e., after the promised date), and around 5% do not deliver at all. Relying on the premises of bounded reliability and bounded rationality of project creators, we pose the following research questions: 1) What are the reasons for failed commitments (i.e., delayed or cancelled delivery) in crowdfunded projects? 2) Which governance mechanisms prevent these failed commitments? We address these questions using a qualitative investigation of reward-based crowdfunded projects, comparing cases of successful and failed implementation.

Keywords: crowdfunding; failed commitments; bounded reliability; governance mechanisms.

DOI: 10.1504/IJEIM.2022.124858

International Journal of Entrepreneurship and Innovation Management, 2022 Vol.26 No.3/4, pp.161 - 194

Received: 23 Dec 2020
Accepted: 28 Dec 2021
Published online: 11 Aug 2022 *

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